Developing a business in a fragile economy brings responsibilities as well as rewards. It’s all about building partnerships on the ground and unlocking local potential
The impact of a major international business on a fragile developing economy can be almost overwhelming.
Last year, AIM-listed London Mining began producing iron ore at Marampa in Sierra Leone. It’s an old mine and, as a result of a civil war, has been dormant for decades. London Mining expects production of 1.5Mtpa in 2012 and plans to expand capacity to 5Mtpa in 2013. Ultimately the resource could support production of over 16Mtpa of high quality iron ore to supply the global steel industry.
“Marampa requires $2 billion (£1.26 billion), which will be an enormous boost to the local and national economy,” says Graeme Hossie, London Mining’s chief executive, “and over the next 25 years we will pay significant tax and royalties.”
This is great news for Sierra Leone, but it imposes great responsibilities on London Mining, Hossie believes. “The old model was for a foreign company to become the ‘only game in town’. Governments and local communities felt excluded, and when the company pulled out, a gap was left and the regional economy could implode.”
London Mining sees the future differently. “Natural resource development, particularly mining, is the fastest way to impact the development of a nation,” says Hossie. “Every job we create can support many more, and our presence in Sierra Leone demonstrates to other internationals that the country is a viable place to do business.
“But our operations need to be sustainable in the broadest sense. We want to help educate and build indigenous businesses, sustainable agriculture and social and physical infrastructure that will thrive after the mine is depleted in 25 to 50 years.”
This means working in partnership with many stakeholders including national and regional government, local communities, NGOs and international financial institutions such as the African Development Bank and bilateral development agencies such as UKaid.
The company needs to be a catalyst for change rather than the engine for change, says Claude Perras, London Mining’s recently-appointed head of sustainability. “We must not give the impression that we’ll do everything, or let the community believe they can rely on handouts,” he says. “Sustainability means working with people to help them become self-sufficient.
“There’s no point building a school if the local government has no money to run it. It’s much better to support start-up businesses with small loans, advice and contracts to work for the mine: their prosperity will provide the employment and revenues that will enable the community to flourish,” says Perras.
“An educated workforce will be vital, developing alongside the mine operations to provide for Sierra Leone’s regeneration”, Perras adds. So London Mining is looking at launching a scholarship for school, college and university students and a long-term vocational and skills training programme. Eventually even senior technical jobs at Marampa should be filled by Sierra Leone citizens which is empowering for local people and more efficient than importing foreign staff for the company.
Malaria is a major problem in Sierra Leone and currently costs London Mining $120,000 (£75,000) a year in treatment and absenteeism, so the company is working with various stakeholders to tackle the disease. Similarly, working to improve sanitation will reduce the economic and social impact of water-borne diseases on the workforce and local communities.
If this sounds like mutual self-interest rather than philanthropy, that’s because it is. “We believe in direct social and community investment and we’ve allocated 1 per cent of our turnover to it,” says Hossie. “That’s 10 times more than the statutory requirement.
“But corporate social responsibility isn’t an expense. It’s an investment to protect and create value. In order to be truly sustainable, our operations have to support everybody involved – and we intend to make sure they do.”