By Grain Wyson Phillip Malunga FIMMM Mining and Environmental Management Expert
Building Community Trust in the Mining Sector
FPIC and Social Contracts offer opportunities for building community trust in the mining sector. During mining project development cycle, mining companies need to acquaint themselves with the environment in which they are going to operate. They become neighbours of local communities and for them to be welcomed, they need to identify interest groups whose rights and way of living needs to be protected or improved through benefit sharing and protection of the environment.
This paper is trying to encourage all stakeholders to work together to build community trust for obtaining social contract through FPIC.
The global perception about mining is mostly negative. Resource rich poor countries are characterised by corruption and lack of transparency in the management of mining revenue. Mining communities feel there is lack of equitable benefit sharing of mine revenues and governments lack transparency and accountability. Environmental issues are not adequately addressed. The above issues have led to lack of trust between mining communities and mining companies. The only solution to this is to undertake community engagement to address issues that will lead to obtaining of “Social Contract” or what OXFAM prefers to call “Free Prior Informed Consent (FPIC)”. This Social Licence leads to smooth and orderly implementation of mining projects through endorsement of local communities.
This looks at ways in which FPIC directly helps local mining communities to directly benefit from mineral resources.
- FACTORS THAT BUILD COMMUNITY TRUST IN MINING
Governments should come up with pro poor mining policies that protect local communities and empowers them to have better livelihoods. Improving rural livelihoods requires provision of infrastructure, public utilities and promotion of local content through stimulation of entrepreneurship to support provision of goods and services in the mine. Bryan et. al., 2007, confirms this by stating that mineral resources can be used as a basis for industrialization, job creation, poverty eradication, capacity building and community empowerment and improvement of people’s lives.
Government, mining communities and mining companies form a tripartite relationship that promote this trust and this tripartite relationship leads to sustainable development.
Figure 1: Building Community Trust in Mining – Malunga, 2016
Mining community expect social investments, economic benefits and environmental protection from mining companies under monitoring by government. Social investments include provision of water, health services and education facilities. These should be reasonable enough and should not replace government obligations. Communities are happy where mining companies contribute to local economic development such as employment, partnerships with local communities on programs that empower local people to supply agriculture produce and other services. Electricity and roads open up rural areas to industrialisation and access to markets. Environmental protection helps local communities to avoid pollution to water, air and land. Compensation and minimum deforestation build long lasting relationship with local communities.
Government is trusted by its people when it is transparent and accountable. Access to information on mine revenue generation and use is of paramount importance. Pre-agreed benefit sharing with local communities helps projects to be implemented smoothly without any disruptions. Community engagement at all levels of project implementation must have the presence of government officials too.
Mining companies are attracted by projects that offer high return on investment. This encourages them to engage communities on benefit sharing. Community engagement should dwell on benefit sharing, infrastructure provision, economic empowerment and environmental protection. These should be the basis for FPIC. Sustainable development is a product of the three stakeholders working together in a transparent and accountable manner driven by mutual respect for each other.
- BENEFITS OF FPIC
FPIC is a process that helps mining companies identify interest groups whose rights must be protected. These groups or communities are first identified and participatory approach is used to understand socio-demographics, economic activities, political and cultural dynamics that are essential in building community trust during mining project implementation.
It is imperative that the mining sector should undertake inclusive participation throughout all stages of exploration, development, mining and post mining closure activities in order to obtain consent, minimize misconception and risks such as disputes and conflicts.
- CIVIL SOCIETY ORGANISATIONS (CSOs)
The role of CSOs in promoting FPIC rests in them working with local communities and mining companies as mediators not instigators of social conflicts and violence. The more CSOs act on non-evidence based issues the more they will become irrelevant to mining communities, government and mining companies.
Mining is capital intensive, highly technical and does not generate super profits as communities think. This is why government has a special tax called resource rent to also benefit from super profits. Similarly arrangements can be made for local communities to benefit from such revenue. Mining companies expect CSOs to be responsible, respectable and relevant to all stakeholders in mining.
- Bryan, S and Hofmann, B.2007. Transparency and Accountability in Africa’s Extractive Industries: The Role of the Legislature. Washington DC: National Democratic Institute for International Affairs.
- Malunga, G. W. P. 2016. Sustainable development, mining and EITI. Paper presented to media experts on 28th October 2016 in Blantyre.
- Wise, H. and Shtylla, S. 2007. The Role of the Extractive Sector in Expanding Economic Opportunity. New York: Harvard University and John F. Kennedy School of Government.
This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).