Sustainable Mining and Local Communities: Maximizing Stakeholder Benefits through Effective Social Impact Management

Assocham conference on Indian Mining and Metal Sector: Turning Risks into Opportunities

B.S.Nagaraj

Hill & Associates

2006 Hill & Associates

Mitigating the Risks of Globalisation

India: A Global Mining Destination in the Making

Large Resources base Estimated 82 billion tons of reserves of various metals yet to be tapped Fourth in iron ore production and sixth in reserves; fifth in bauxite production; third in coal production Policy changes, coinciding with rising global demand, beginning to show results

FDI flowing; Posco & Mittal sign MoUs many others in the pipeline; Projected investments at over USD 50 billion over 10 years

2006 Hill & Associates

Mitigating the Risks of Globalisation

Outlook rosy but concerns remain

Mining sectors contribution to GDP at a low of around 2.5%; sectors contribution to Australian GDP in 2004-05 8%
Indian mining pulled back growth of Indian economy

Policy frameworks need alignment with those in developed mining economies

Lack of communitys confidence in resources-based industrialization

2006 Hill & Associates

Mitigating the Risks of Globalisation

Community is key to success

Investment Climate: Influencers
Law Policy

Security Investment Climate

Supply Chain

Infrastructure

Politics

COMMUNITY

Community becoming the biggest hurdle for growth

2006 Hill & Associates

Mitigating the Risks of Globalisation

Absorption of Investments
Rising Community Opposition a Nightmare
Orissa Jharkhand Andhra Pradesh
Projects have faced protests/disruptions NGOs, interest groups, political parties catalysts

Looming Threat of Cost & Time Overruns

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2006 Hill & Associates

Community Opposition: Why? 1

Most mineral-rich clusters inhabited by population which relies on land for livelihood

Land being central to their sustenance, displacement is a big issue

Rising awareness of rights as a result of mobilization by NGOs, interest groups R&R policy landscape inadequate in addressing concerns Constraints on making land-for-land mandatory Community ill-equipped compensation to take advantage of cash

Clamor for jobs but opportunities limited; skillsets paucity

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2006 Hill & Associates

Community Opposition: Why? 2

Industrys commitment towards community & sustainable mining largely missing Reliance on quick-fix/firefighting solutions Inability/Unwillingness to recognize community as the central stakeholder Over-dependence on government to show the way Unwillingness to go beyond compliance

2006 Hill & Associates

Mitigating the Risks of Globalisation

Community: Core R&R Demands

Consultation
R&R customization Land for land

Skill upgradation

Environment Protection

Employment

2006 Hill & Associates

Mitigating the Risks of Globalisation

Community Management: Why the Failure? 1

Kneejerk responses & patchwork strategies by government, industry

R&R policies do not anticipate longterm adversarial trends

R&R policies not backed up by other enablers Lack of transparency about project information No effort to set realistic community expectations

2006 Hill & Associates

Mitigating the Risks of Globalisation

Community Management: Why the Failure? 2

Concerns

Socio-economic context

PROJECT

Response

Social impact mitigation

Projects suffer risk of failure if they fail to understand the community

2006 Hill & Associates

Mitigating the Risks of Globalisation

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Better Management of Conflict: How?

Hill & Associates Sustainable Mining Framework Comprehensive Social Impact Assessment (SIA) Community Development Plan Stakeholder Consultative Forum

2006 Hill & Associates

Mitigating the Risks of Globalisation

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Why Social Impact Assessment?

Definition Process of assessing/estimating in advance social consequences, both positive and negative, of project developments/actions Components Assessment Mitigation Consolidation of Key Learnings Monitoring Audit Benefits Estimates social cost Increases stakeholder benefits Minimizes community resistance Reduces project disruption & increase project success Reduces project cost in the long run

Make SIA mandatory on lines of EIA; tie it to project approvals

2006 Hill & Associates

Mitigating the Risks of Globalisation

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SIA The Stages

Project Nature/Size Socio-economic context Law & Policy

Baseline Data Collection

Measurement Tools Prediction Techniques

Communication Strategy

Implementation Strategy

Assessment of Mitigation Measures

2006 Hill & Associates

Mitigating the Risks of Globalisation

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Stakeholder Consultative Forum

Information sharing & dialogue critical but platform missing

Stakeholder Consultative Forums (project-specific for industry & mineral area-wise for government) Benefits Better understanding of stakeholder concerns More transparency and information sharing Lower mistrust between industry-government & community

2006 Hill & Associates

Mitigating the Risks of Globalisation

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Community Development Plan

Envisages Assessment of socio-economic needs of community Designing of need-based development plans for expanding livelihood options Benefits Increases goodwill for project proponent Enhances visibility of corporate social performance Contributes to goal of sustainable mining

2006 Hill & Associates

Mitigating the Risks of Globalisation

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To Conclude

Social Risk posing biggest challenge to industrialization Social Risk more difficult to mitigate, and combined with other factors the risk landscape becomes more complex Incorporating best practices in community management key to minimizing conflict and achieving success

2006 Hill & Associates

Mitigating the Risks of Globalisation

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Thank You

2006 Hill & Associates

Mitigating the Risks of Globalisation

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