The importance of maintaining ‘social licence to operate’

By Jeames McKibben and Jacki Waters of Xstract Mining Consultants

Images of deserted mines, tailings dumps, waste rock piles, and abandoned communities have significant resonance with the general public.
Responding to this negative image continues to be an uphill battle for the mining industry as a whole as it is burdened by certain fundamental conditions. The most significant of these is that mining must take place where the deposit occurs, not in the most suitable social, environmental, logistical and economic location.
The industry often cannot compete through the price of its products (since its products are commodities whose prices are determined in international markets) but must strive for production at the lowest possible cost.
The gold mining industry is particularly susceptible since the utility of its product to the global good is often questioned. The only way the gold mining industry can divert increased regulation (and restore its social license to operate) is to boost engagement with local communities. It needs to approach the issue of local mine safety even more diligently, and invest more resources in local communities, safety and environmental monitoring and emergency response. Investors would be wise to expect higher costs in these areas in the future.
The need to accommodate social parameters in planning new mining development is becoming increasingly evident, yet the means to integrate these into the design process and the tools to assess and manage on-going social risks remain ambiguous.
A ‘social licence’ fundamentally changes the manner in which mining companies are required to do business. In many cases it is seen as being even more important than Government approvals/licences as it is one that is renewable every day.
A ‘social licence to operate’ is earned by acquiring free, prior and informed consent from indigenous peoples and local communities. At a project level, the ‘social licence’ is intimately tied to the beliefs, perceptions and opinions held by the local population and other stakeholders involved in the project. The aim for mining companies should be to preserve the distinct differences between communities, their cultures and way of life. It also implies that a means exists for society to monitor and measure the social performance of a project and/or company throughout the entire mining life cycle.
It is important to remember however that ‘social licence’ is mostly intangible and therefore can be difficult to measure. Whilst there are a number of indicators to measure the amount of community rejection, acceptance or approval of a project, the ‘social licence’ is also dynamic and can easily be influenced by local or external factors. It is vitally important therefore that mine operators are vigilant in ensuring that ‘social licence’ is maintained.
Importantly, ‘social licence’ provides a framework to assist the mining industry supply the minerals required by modern society whilst mitigating some of the risks to and preserving the sustainability of individual communities. Only in this way will mining truly shed its reputation as the global dirty business.

* Written by Jeames McKibben and Jacki Waters - from Xstract Group, a team of specialist mining consultants.
For more information email: jmckibben@xstractgroup.com or visit: www.xstractgroup.com