Engaging communities and respecting the environment can make the difference between success and failure for companies
Mining companies have to keep a lot of people. As well as shareholders, other stakeholders are setting standards they expect businesses to reach – whether it’s taking care of the environment or considering the communities in which they operate.
CEOs are scampering to find ways to handle these competing pressures. “This is not altruism and not warmed-over corporate social responsibility,” says Britt Banks, a recently retired executive of the Newmont Mining Corporation, based in the US, and vice-chair of the World Economic Forum’s Global Agenda Council on the Future of Mining and Metals.
In that latter role, he helped create the Responsible Mineral Development Initiative, which develops guidelines for companies that want to improve their relationships with governments, communities, and non-governmental firms. “If they want access to land and capital, they need to improve on these issues,” Banks says.
By taking extra steps to be good corporate citizens, executives hope to buy insurance against nationalisations, excessive regulation, higher taxes and protests that could hamstring operations.
At a speech last October in Melbourne, BHP Billiton CEO Marius Kloppers said mining companies should aim for more than profits. “Companies need to include measures such as their level of community acceptance in their approach to value.
Sirius Minerals, which recently started mining on a potash project in North Yorkshire, has tried hard to integrate the project into the community. CEO Chris Fraser says: “What we are doing is innovative and will add a great deal to the skills base for the UK’s mining industry.
“We are working hard to establish an industry that could well be here for the next 150 years, and the depth of the skills base will be important not just to Yorkshire’s economy, but the national economy as well.”
Fraser expects the project to create 1,000 jobs directly, and an additional 4,000 indirectly. And the company insists it is working to reduce its environmental impact and has been in regular contact with the North York Moors National Park Authority to ensure impact will be minimal and damage will be repaired.
Even Chinese mining firms, which are traditionally very slow to consider social responsibility, are beginning to join the parade. “They are hiring local people, including at the senior level,” says Kobus van der Wath, founder and group manager of China-based consultancy the Beijing Axis. “And the Chinese government tells expats that they have to respect local ways of doing things.”
Some that haven’t adjusted have found themselves unable to negotiate deals to expand their operations in Africa, van der Wath adds.
Which goes to show that keeping everyone on your side is good business.
by Bill Hinchberger and Andrew Rosenbaum