The mining industry is often portrayed in the media as being inherently destructive and having little regard for local communities and their environment.
In particular, there have been numerous recent examples in Latin America where local stakeholders have expressed strong dissatisfaction with the impacts of projects on their communities. However, many Canadian mining companies are striving to rebuild the credibility of the extractives sector through their commitment to sustainable practices and to fulfilling their corporate social responsibility. In doing so, they’re acquiring the necessary “social licence” to operate and reducing project risk for all parties.
In Latin America alone, according to MICLA data, Canadian mining companies are working to develop between 1,200 and 1,500 mining projects each year. The North-South Institute’s research shows that mining investments in Latin America account for more than half of all Canadian mining investments worldwide.Canada is one of the main players in the global mining league. According to the McGill Research Group Investigating Canadian Mining in Latin America (MICLA), roughly 75% of all mining companies are headquartered in Canada and nearly 60% of the world’s publicly traded mining companies are listed on the Toronto Stock Exchange.
With such a lead role in investment and development comes an equal measure of responsibility to local communities, and in many cases the Canadian mining industry is stepping up to the plate.
The underlying causes of these risks are complex and can include:Mining endeavours in Latin America involve a significant amount of risk for Canadian resource companies.
- a legacy of conflict and systematic repression and abuse of rural and indigenous communities by governments;
- misdistribution of the economic benefits within the community;
- inconsistencies between legislative instruments within some Latin American countries; and
- local public opinion that the natural resources sector lacks legitimacy and transparency.
With its unique history, socio-political dynamic and geography, Latin America is nevertheless an attractive opportunity for Canadian resource companies.
The task of building positive relationships with the communities in which mining companies wish to operate can be arduous. While local opposition is occasionally rooted in absolute rejection of the extractives sector, it’s more frequently motivated by local desire to participate in decisions affecting the community’s environmental, social and economic health. As a result, many Canadian mining companies operating in Latin America are crafting tailored approaches to risk management as part of their commitment to fulfil their corporate social responsibility and establish sustainable social licences.
While domestic authorities are responsible for issuing permits and licences to explore, develop and operate, a project’s meaningful long-term support may be obtained only through social acceptance of mining. That social licence to operate must be granted by local communities and stakeholders. Evolving as an offshoot of the broader concept of corporate social responsibility, the social licence to operate has become an essential part of project development, as evidenced by a number of Latin American mining projects that have been derailed by community opposition in recent years, including Manhattan Minerals’ Tambogrande mine and Bear Creek Mining’s Santa Ana mine. Not only is a social licence an essential component of project development, it is also key to reducing project risk throughout the life of a mine.
In achieving these social licences, many Canadian mining companies operating in Latin America work hard at engaging local stakeholders in structuring environmental and socioeconomic programs that directly benefit local communities in both the near and long term.
Those programs have included building and funding schools, medical centres, recreation halls, sports fields and other community infrastructure as well as implementing skills training programs and providing business and employment opportunities.
There are many examples of Canadian mining companies, including Yamana Gold Inc. and Goldcorp Inc., that have committed to drawing most of their workforce from local communities.
Further, the Canadian mining industry’s focus on adherence to international practice standards improves accountability and promotes sustainable initiatives.
While there remains significant room for improvement in managing Latin American mining project impacts and community benefits, most Canadian resource companies are acutely aware of the need to establish and continuously earn a social licence to operate. To that end, many are increasingly committed to working co-operatively with local stakeholders to develop environmental and socio-economic commitments and programs that will establish a positive legacy in local communities. •
Karen MacMillan ([email protected]) is a partner and the chief inclusiveness officer at Lawson Lundell LLP. She practises corporate and commercial law with an emphasis on commercial arrangements in the mining and energy sectors.