Victoria Gold’s Eagle mine site groundwater highly contaminated, Yukon government says
Groundwater flowing from Eagle mine shows signs of high cyanide contamination, though much of the water is being contained on site.
The Social License is the tacit approval that a community gives to a development project and is dependent on many tangible elements and other that aren’t quite tangible. In recent years, the number of projects (mining, hydroelectric, natural gas etc.) that have seen their Social License revoked has been on the rise and obtaining one is increasingly difficult. Why is success so elusive? How there seems to be an increasing opposition to projects from the community that will receive the most benefits? The answer to these questions is twofold and relies on the misconception of the role that a project plays in the long term development of the community and the root cause of the community’s discontent.
The role of mining
Mining, in and of its own, is not a sustainable activity; neither is forestry, tourism, agriculture or their ecologically labeled incarnations of recent times. In fact, believing that any human activity can be assumed as sustainable is not only wrong, but will inevitably lead to expectations impossible to fulfill.
The term Sustainable Development refers to the socioeconomic mechanism or model that a community or society choses as a means to satisfy their needs and reach their wellbeing, thus the role of a mining project in the development of a community should be seen not in isolation, but as a contributor, a partner with other productive efforts, with the legal framework provided by governments, the organizations of the civil society and the community. It does not matter how environmentally friendly a mine is or how socially responsible their activities are, if the mine’s productive efforts are not directed towards a greater goal, one that involves all the stakeholders, its contribution to the Sustainable Development of the community might be negligible. What is sustainable, then, is the combined contribution of all the stakeholders, not single activities independent from one another.
The high impact of some of the activities related to mining, for example: water usage, hazardous waste, land-use change, energy consumption, etc. has driven mining companies to implement programs that tend to minimize the social and environmental effects of these impacts with the final objective of having a conflict free project. These efforts are sincere and in a great number of cases effective, but they fall flat when mining executives try to present them as a banner for the sustainability of their operations. So, in order to understand the role of a mining project in the development of a community, we must try to find answers to these other questions first.
How can a high-impact/low duration productive activity contribute to the sustainable development of a community?
How can a 15 year operation, that will impact the modus vivendi of large and small communities, be seen as a positive contributor to the sustainable development of the region?
Hopefully, the answer to these questions brings some perspective of the historical importance of mining in a determined community by making clear that, with some well-known exceptions, mining is a fleeting activity that has not been a major force in the development of the region, making this is a central argument in the discussion.
It is true that there are several mining operations around the world that have operated successfully for 50 or more years with almost no interruption, and that there are communities and regions with important mining culture and tradition, but we have to admit that the great majority of the mining projects are a collection of entrepreneurial efforts that operate intermittently in pretty much the same manner as Christmas lights.
The traditional approach recommended by NGOs, mining companies and blessed by governments to turn mines into more sustainable operations, has been based on the thorough diagnostic of the needs and desires of those communities that are within the Area of Influence of the project. These diagnostics usually provide the CEOs and managers with targets and objectives that are later materialized through budgets and plans into schools, electrification, roads, health centers, playgrounds and many other improvements to the community. These efforts together with the evident increase in local jobs, indirect employment, contributions by way of taxes and enhanced opportunities through a local and regional supply chain are the core of the sustainability efforts of mining companies and are widely trumpeted via bulletins, radio shows, TV spots, billboards and countless PR efforts that cost the companies a pretty penny.
But the mining industry after many years of adopting these policies and many kilometers of roads and transmission lines still wonders why the Social License is not getting any easier. And seeing cases of companies deciding to withdraw from a project after many years and many millions of dollars invested is increasingly common, while communities and governments see hundreds of millions of dollars in direct investment vanish in midair.
The root cause
Is it greed? ignorance? corruption? Maybe the realization that mining is incompatible with the Sustainable Development of a region? Well, it’s my position that neither of the above can be blamed for the increasingly difficult task of obtaining the coveted Social License. In reality, while the results of these Social Responsibility programs are a direct benefit to the community, they do not address the root cause of the problem.
As stated above, mining companies are keen in understanding the needs and desires of the communities, in order to do their part in helping them to find the means to achieve their goals, but these needs and desires are volatile and change with time and circumstances.
When a mining company approaches a community to talk about the development of a mine and the implications that a project might have for the community, the mining executives talk about what they will offer to the people, while the people are mostly concerned about what they are going to lose. Once a community perceives that they might lose something of value, fear starts to creep in every aspect of the development of the project. Fear is a strong emotion that cannot be tamed by reason alone and all the PR efforts made to explain the safety of the tailings dam, the protection of the water sources and the best management practices in the use of cyanide are saying nothing to the people that are worried about losing their sacred grounds or their water supply. Fear is the driving mechanism that prevents communities and companies to see eye to eye and if you are not sure, just listen to what the groups opposed to mining spread in their messages all over the world.
The thesis that says that a person reacts with more intensity to the prospect of losing something that to the prospect of wining something of equal value is called the Endowment Effect. This proposition explains the fact that people tend to consider loses to be more significant than gains, therefore making all the offerings of new goods and services provided by the mining project pale in comparison to what they perceive could be at risk.
This Endowment Effect explains why it is so common to find no correlation whatsoever between the investment in Social Responsibility (schools, health centers, etc.) from a mining company and the cost to obtain and maintain the Social License. Especially when the Social Responsibility programs are directed towards highlighting the goods and services that the communities are gaining by engaging with the company, while ignoring the perception that they could lose something in return.
What to do to gain the Social License?
The aversion to loss is rooted very deep in the human mind and causes communities to adhere to the status quo. After all, they have lived generation after generation without the benefits that the mining company is offering and the new neighbor is, in the most optimist case, a good friend that will be around for a brief period of time. So, what should the approach of a mining company be?
How can you design your Social Responsibility program to avoid falling into the Endowment Effect trap? Well, initially by asking yourself some questions. First, what are those values that the community holds that are non-negotiable, that they consider sacred? What are they most afraid to lose? Then, create honest strategies that show to the community that these are as valuable to you as they are to them and that protecting them is your top priority. Keep in mind that these sentiments are not always associated to tangible components, but have a moral dimension related to customs and traditions that have been part of the community for millennia. Second, how can this operation promote the Sustainable Development of the surrounding community? While taking into consideration the relatively brief lifespan of the operation, the intensity and duration of the environmental impacts, the expectations of all the stakeholders, the strength/scope/reach of the institutions involved and the volatility of the project based on the ups and downs of the market for the specific commodity.
The positive contribution that an intensive project such as a mine can give to the Sustainable Development of a community and therefore the focus of its Social Responsibility efforts should be based on the implementing of policies that promote and strengthen existing local and regional efforts to improve the standard of living of the community in a way that its contribution will last long after the reserves are exhausted and the closure program is completed, and do not promote dependency. In order to understand how they could contribute to the development of the community, companies large and small should ask themselves:
In addition to the two major questions above, mining CEOs and managers should avoid the false relief provided by the promises of gains to be obtained in the future once the project is operational. Also the creation of relations of dependency such as those were the electricity supply of the town is totally dependent on the healthy operation of the mine or the maintenance of the road requires machinery and supplies from the company.
Conclusion
Mining executives keep asking why after so much time in a determined region or country and so much effort and money invested in the local communities, the barrier to do business is not getting easier to cross. It seems that sometimes, even after major PR campaigns and multi-million dollar efforts to directly improve the wellbeing of the communities, they still do not seem to trust the company.
It appears to me, that the focus of these efforts is directed to highlight the gains that a community would obtain and to the factual explanation of the reasons why the operations would be safe, but do not pay enough attention to the emotions and the sentiment of loss that might be felt trough the community based on lack of familiarity with the activity or too much familiarity with previous negative experiences.
In simple terms, you cannot fight emotions with reason and since the Social License is the tacit approval given by a community based on trust, expectations and good relations, it has a very strong emotional component that must be recognized early in the project and incorporated in the first stages of the Social Responsibility programs.
By Sergio A Rivera
