Mineral Policy

10. Social development Indigenous Forest Inhabitants in Cameroon Rain Forest, picture courtesy of Luis Devin

Obligations and regulations relating to socio-economic and community development

A few years’ ago, the term “social license to mine” was coined. It came from a senior mining executive who helped to run a large, global gold mining company. It arose out of the company’s experience dealing with community issues in some challenging operating environments, including Papua New Guinea, Tanzania, and Venezuela. 

Long thought of as “soft” issues by company mining engineers and managers, community relationships in some of these jurisdictions were now front and centre in terms of the mine’s continuing ability to operate.

When communities become dissatisfied with the negative impacts of a mine, the lack of respectful consultation, or scarce benefits, they can express their feelings through acts of civil disobedience.

Often, indigenous people that live from forest, plain or foreshore resources suffer from the presence of a mine. A mine can disturb a community’s access to traditional sources of food (through hunting and gathering). These issues are sensitive and when a policy does not consider the needs of these “original” people, the government may find that its Foreign Direct Investment (FDI) objectives around mining development may not be fulfilled.

Case study: Community unrest in Papua New Guinea

In Papua New Guinea, the community expressed its dissatisfaction with the mining operation in a very dramatic and impactful way. It cut down power poles that were supplying electricity to a mine. The mine was shut down for almost two months, losing millions of dollars.

Increasingly, companies believe that doing well by their neighbouring communities is simply good business. It reduces the risk of having mining operation shut down and increases the potential for positive government relations and strong shareholder earnings.

How a country manages this aspect of mining development is a key policy question. Government may therefore want to take local conditions into consideration to create an enabling policy environment that allows companies to maintain their “social license to operate”.

Most stakeholders, including governments and the private sector, now wish to make provision for local communities to benefit from the presence of a mine. Along with the local content opportunities discussed earlier, mining companies can contribute to the creation of social infrastructure at a local level. Many mines are now providing schools, hospitals, clinics, and dispensaries for mine workers, their families, and often the surrounding communities.

Effective policies need to be put in place to ensure that these contributions are coordinated with government programmes that aim to provide health and education facilities to the people. In planning such interventions, it is important to define the role of government and the role of the company and allow for their sustainability.

Many governments have chosen to pursue a policy where government provides basic services such as water, electricity and sanitation facilities and companies assist in the construction of social infrastructure. These elements should be contained in a country’s mineral policy as part of the discussion related to benefit sharing.