Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
In 1996 the World Food Summit came up with a definition for ‘food security’, namely that it is achieved “at the individual, household, national, regional and global levels, when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life“.
Although the definition doesn’t take into account some important criteria like ‘food sovereignty’ (the right of people to choose their own agricultural and food systems) and ‘food self-sufficiency’, it is nevertheless the most commonly accepted standard for determining whether or not a country / community / population is ‘food secure’.
Mining and other extractive industries can have a significant impact upon a local population’s food security, especially in areas where much of the food production cycle is subsistence in nature, and where regulatory authorities / local governments are weak, corrupt, inadequate, and unresponsive. High levels of unemployment, discrimination, lack of security, and poor living conditions further exacerbate food insecurity.
Mining and other extractive industries can have a significant impact upon a local population’s food security, especially in areas where much of the food production cycle is subsistence in nature
These types of scenarios are unfortunately relatively common across swathes of Sub-Saharan Africa. Many communities throughout this region are economically poor and heavily reliant on small-scale crop production that can be very adversely affected by near-by mining operations, particularly in the absence of strong protective local governance.
There’s no doubt that extractive industries in general can significantly improve the lot of local communities, including their food security. We’ve seen this happening with improved water and transport infrastructure courtesy of mining operations across a number of developing regions, including Africa.
Usually however, how much of a positive (or negative) impact mining makes generally comes down to how the country / state concerned views and legislates control over, and access to, its mineral resources and the land they sit in/on. Corrupt political systems and governments are renowned for being more interested in selling out to the highest bidders than they are in ensuring their citizens, their livelihoods, and their well-being are protected – before and after miners move in.
Potential benefits to local communities that can have flow on improvements in food security include:
Disadvantages To Local Communities And Their Food Security Caused By Mining:
Whilst monetary compensation (if it happens) for families affected by this may offset the loss of their land in the short term, evidence strongly suggests it negatively affects both their long-term future income and their ability to continue producing food. This has inevitable flow on effects around food security for the affected farming families themselves and for the communities they provide food for.
Several research papers have proposed that multinational and foreign owned mining companies, particularly those without a percentage of domestic ownership, tend to have a greater negative impact upon local food security in some parts of Africa than domestic companies do, for various reasons. Notably, such companies can act as triggers for disruptive social conflict within local communities that eventually impacts food production, and can lead to escalating violence. Some research for instance indicates that where foreign owned extractive companies set up shop (particularly oil companies), forcible state suppression of local dissention has a tendency to follow, or escalate, especially if a repressive regime is already in place.
Researchers have found that foreign owned companies tend to catalyse land ownership issues, particularly in jurisdictions where access to natural resources is poorly governed and/or subject to corruption (ie where resource ownership, and thus resource rent, is ‘allowed’ to fall into foreign hands). The subsequent ‘siphoning’ of this rent out of the local community understandably creates significant resentment. Very often, the land in question was used for agricultural purposes and was part of the local food supply chain. Foreign ownership of the resources on their land effectively cuts locals out of any benefits they would otherwise gain from the compensatory loop, making it harder for them to afford to buy food to replace what they once grew on the land they can’t use any more.
Unless there is legislation in place that requires foreign companies to train and employ locals in a variety of skilled roles, they may bring in foreign workers for all bar some of the most low paid, unskilled work. This reduces the job opportunities available for locals, hinders knowledge and skills transfer, and removes valuable training opportunities. Under such conditions locals essentially remain ‘low skilled’ workers with little prospect of improving their lot in life.
Companies owned by foreign interests may also import many of the products and services they require, including food (the international oil sector in Nigeria has traditionally done this). This significantly reduces the amount of money flowing back into local economies, and provides very little firsthand fiscal value to them.
Modern public perception expects, or even demands, that extractive industries accept they have an environmental obligation to restore the land they’ve used to something at least approaching its pre-mining state. Unfortunately, the reality is that whilst jurisdictions do have ‘rehabilitation’ clauses written into their mining licences, the clarification around what constitutes ‘natural’ or ‘adequate’ rehabilitation can be open to interpretation.
Very often, the land in question was used for agricultural purposes and was part of the local food supply chain
Companies may be (and often are) left to their own devices and will take the cheapest way out. Often that means simply replacing the top soil, throwing seeds on top, providing the bare minimum of TLC required under the terms of their licence, and hoping for the best. If the land was agricultural, and much of it was, it can take years to re-establish farming operations back to what they were pre mining under those circumstances. Yet, the potential is there to create vastly improved post-mining agricultural environments through soil, topography, and pasture improvements.
Domestic mining companies on the other hand, particularly those that are state-owned or controlled, typically have a legislated and/or vested interest in (over) employing locals, and in training and equipping them to take out skilled roles within their operations. They also tend to utilise local businesses and suppliers wherever possible, and are more prepared to invest in upgrading these to meet the increased demand.
Furthermore, when resource ownership remains in domestic hands there may be less resentment about the resource rent because it isn’t being ‘siphoned’ away into foreign hands. Indeed, under socially responsible regimes some of it is undoubtedly invested back into the local communities from whence it came.
Many of the benefits mining can bring to African communities depend upon state and local authorities ‘doing the right thing’ and legislating / levering advantageous terms and conditions for their citizens (and not themselves!) into the mining licences they hand out. Companies that are committed to dealing ethically, morally and responsibly with the communities affected by their operations, regardless of their legal and basic social obligations, can also go above and beyond to become major players in the future well-being of those communities. Some of the various initiatives currently carried out by mining, oil and gas companies include
(This article first appeared in Mining International Inc.)
