#Mining Project failure resulting from lack of social license is extraordinary expensive @Mineweb

Social development shortcomings blamed for mining project failures - Danielson

Although
mining’s record on social license to operate is often seen as poor,
sustainability expert Luke Danielson is confident mining can “lead the
way in pioneering new and more effective social relationships”.

Author: Dorothy Kosich 

Posted:
Monday
,
31 Mar 2014
 

RENO (Mineweb) -



“A large and growing number of project failures
are a direct result of the inability to deal successfully with the
combination of environment, community and social” concerns, said former
Mining, Minerals and Sustainable Development project administrator, Luke
Danielson.


In a speech to the 2014 Mining and Land Resource Institute in Reno,
Nevada, attorney Danielson observed, “(Mining) Project failure and
conflict resolution resulting from lack of social license is
extraordinary expensive.”


“Lengthy conflicts are all too frequent and debilitating” for
companies, governments, communities, shareholders and other
stakeholders, he said.


Danielson, now the president and co-founder of the Sustainable
Development Strategies Group highlighted several major mining projects
which have had difficulty with issues stemming from social license to
operate.


For instance, Freeport-McMoRan Copper & Gold’s Grasberg project
in Indonesia has experienced 51 incidents since July 2009, which
resulted in 17 fatalities and 59 injuries, Danielson noted. He estimated
that the company has incurred $352.3 million in direct security costs
from 2001-2012.


Plans by Rosemont to build North America’s largest new copper mine
were dealt a major blow in November when congressional supporters of the
project canceled their vote after Native American tribes through the
United States lobbied against the Arizona mining project.


The difficulties of securing a social license to operate also proved a
headache for Pebble Project partner Anglo American, which eventually
wrote off $300 million on the project, he observed.


The stalled Newmont Conga Project may be headed for the same fate of
the Cerro Quilish project, which was suspended in 2004, Danielson
suggested.


Vedanta’s battles with indigenous tribes resulted in the suspension
of its Orissa bauxite mining project in India after the company had
invested $800 million in it, Danielson observed.


Among the other stalled projects highlighted by Danielson are the
Lucky Jack Molybdenum project in Colorado, Ascendant Copper’s Junin
project in Ecuador, along with Glencore-Xstrata’s intent to sell its
ownership in the controversial Tampakan copper-gold mine in the
Philippines.


Meanwhile, as global populations grow, so does the demand for
minerals to support their economic development, Danielson noted.
Ironically, securing a social license to operate has become even more
challenging for mining companies because it is becoming “harder and
harder to find places to mine that don’t have people living in them.”


He observed that the top five countries for mining investment also
have low populations. Even in the gold mining state of Nevada, the
percentages of persons employed by the mining industry have declined
dramatically, although the Nevada population has increased 17-fold since
1950, according to Danielson.


Danielson, who has served as a legal and sustainable development
consultant to a number of hardrock mining companies, highlighted what he
viewed as the questionable tactics of mining companies, including major
mining companies, to secure a social license to operate. Among the
tools utilized by miners is using high-tech software to identify and
track members of anti-mining project groups; or buying hundreds of radio
spots which promote the message that the Bible says minerals are good,
while the Catholic Church is wrong to oppose mining projects.


Mining companies have hired detectives to track opposition, while
other miners have doubled campaign contributions in an effort to buy
project approval, Danielson alleged.


A chairman of a mining company once reportedly declared,” We’ll give
10% of our stock to the Army and then see how long these [community]
protests last,” said Danielson.


Yet, another company has been engaging in a highly technical debate
of what constitutes a glacier. “Engaging in technical debates…with a
bunch of local farmers doesn’t work,” Danielson declared.


Meanwhile, most banks now subscribe to the Equator Principles, a
credit risk management framework for determining, assessing and managing
environmental and social risk in project finance transactions.


“The negotiation of community development agreements is now expected
in much of the world,” Danielson said. “We are headed toward of system
in which some form of community consent in the norm.”


“In Canada it’s almost impossible to develop a (mining) project without a community development agreement,” he added.


Another potential problem involves first contact between mining and
exploration employees and community members. Studies show community
attitudes are highly impacted by the actions and attitudes of the first
company representatives on the ground,” said Danielson. “How many drill
crew chiefs are trained in community relations?” he asked.


Nevertheless, Danielson is confident that mining will make the same
kind of strides in community consent for mining operations that the
industry has already made in environmental and health and safety issues.


Observing that in the past the mining industry has often employed
highly trained experts to analyze problems and devise solutions, “Today,
mining can lead the way in pioneering new and more effective social
relationships,” Danielson advised.


“These issues are extremely important to the future of the industry,”
Danielson concluded, adding they can become “very expensive when things
go wrong.”



Read the article online here: Social development shortcomings blamed for mining project failures - Danielson - SUSTAINABLE MINING - Mineweb.com Mineweb