Mario Ramirez, MASc Mining Engineering // April 30, 2015
Is the future of the mining industry depending on the legacy it leaves behind?
It might be!
During recent years a good percentage of mining projects have been delayed due to lack of social acceptance or Social license to operate (SLO). Last year, the Prospectors and developers association of Canada, presented a report about “the relationship between capital markets and environmental and social risks[1]”. This report shows that during the last 8 years 31 out of 67 (46%) mining projects have been delayed and 54 out of 102 oil and gas projects have also suffered delays due to Social acceptance or environmental concerns. For the mining sector out of the 46% projects delayed, 42% of those were due to social opposition, and another 35% due to environmental concerns. Another important piece of information is the graph shown by Ernest&Young in its yearly report about Business risks facing mining and metals[2]. This year, SLO ranks in the top 3 risks for this business.
Social License to operate (SLO) is becoming more important than ever. Stakeholders, meaning, the people, communities and organizations affected by a mining project have shown more interest in learning and have become actively involved in projects affecting their surroundings or ways of life. Therefore, companies need to allow its stakeholders to have a broader and better understanding of the project’s goals and objectives. Basically SLO is defined as existing when a project has the ongoing approval within the local community and other stakeholders, ongoing approval or broad social acceptance and, most frequently, as ongoing acceptance[3].
ONGOING is one of the key words in the quote above, and ACCEPTANCE another. In the pyramid of earning a social license to operate, if a project is only accepted it is expected to still have a good deal of opposition, threats and watchful monitoring. Therefore, for a project to really be socially accepted it needs to go a couple steps up from only the acceptance level. The next step would be to gain approval or support, in this step the company is seen as a good neighbor. However, for a mining project to achieve the highest level, the company needs to reach the psychological identification step, meaning, have full support from most, if not all, stakeholders and achieve co-management of projects.
On the other hand, ONGOING means that the psychological identification should be present in all phases of the mining life cycle which begins with the exploration phase, and ends with the post-closure one. If at any point of the cycle, the psychological identification breaks, the mining projects begin to show the effects of such rupture almost immediately.
Looking at the question posed in the beginning, my answer would be YES. The future of the mining industry is becoming more and more dependent on the current legacy it leaves behind (sustainable practices), and this legacy dictate the Social License to Operate for future projects.
[1] http://www.pdac.ca/docs/ default-source/public-affairs/ erm-presentation—pdac-2014o. pdf?sfvrsn=4
[2] http://www.ey.com/GL/en/ Industries/Mining—Metals/ Business-risks-in-mining-and- metals
[3] http://socialicense.com/ definition.html