Is mining a development industry?
In an earlier post I wrote about how mining companies have evolved to take into account the needs of their host communities. I suggested ways they can broaden the application of their “social programmes” to understand, embrace and contribute to development at a higher, societal level than simply serving some of the expressed needs of the local or host community.
Having just returned from spending a week discussing related issues with staff of one of the large and relatively enlightened international miners, I’d now go further. One of the questions we discussed was whether the mining industry needs to re-label itself as a “development industry”.
While this was a controversial idea for some people, who saw it as suggesting a dangerous drift beyond their core business, for me it’s a no-brainer. Indeed, I’d go as far as to say that mining already does see itself as a development industry. A glance at the websites of a few randomly selected examples yielded the following:
We deliver natural resources that are at the heart of everyday life and are central to the development of society. (Xstrata)
We … work in partnership with our stakeholders to promote sustainable development. Our goal is to maximise our positive contributions, alongside governments and society, and reduce any negative impacts. (Anglo American)
[…] we continue to meet the changing needs of our customers and the resources demand of emerging economies at every stage of their growth…. [We] establish long lasting relationships with our host communities where we work together to make a positive contribution to the lives of people who live near our operations and to society more generally. (BHP Billiton)
Our products help fulfil vital consumer needs and improve living standards. (Rio Tinto)
These quotes were all readily available within moments of landing on the respective home pages. Clearly mining companies already see themselves as agents of development and progress. In any case, we are long past the point where progressive companies saw their role in value creation as being limited to shareholder value. They know they create value in many other ways – through their products, their culture, their taxes, employment, goodwill, etc. – and contribute to the creation of value by others. The correct question is probably not “is mining a development industry”, but “how to maximise mining’s contribution to development?”
Maximising mining’s contribution to development
Answering this requires us to define “development”, which is of course somewhat contested and ideological. After all, it is about the nature and arc of human progress, which is what political parties often seem to argue over. But when one looks closely at most different ideologies today, they seem to diverge more in the question of development process than in development outcomes. So for the purposes of this blogpost, I’ll use the simple and quite widely accepted view that broadly speaking, a more developed society is one in which people have sustainable and fair opportunity to participate in decision making which affects them, and in economic activities allowing them a decent standard of living and a chance to accumulate assets; feel and are safe from harm; have access to impartial justice and to the services and other requirements of well-being such as health, education, water, shelter, and a decent living environment. This is in line with the globally agreed Millennium Declaration, so not too controversial.
I don’t propose to explore here the difficult question of how these outcomes are arrived at. Development processes are pretty context-specific in any case, and (if we are honest) often quite random in nature, so it can be unhelpful to make generic prescriptions. But one thing we do know is that the way to achieve a particular outcome is not necessarily, or not only, by working on that issue. So for example one doesn’t necessarily achieve better access to justice or security simply by working on “justice sector” or “security sector” issues, nor better participation in decision-making simply by working on “governance sector” issues. The arc of development or human progress is more complex than that, and pretty much everything is organically linked to everything else. Improved governance can be a result of bringing local stakeholders together to examine and debate the costs and benefits of a mining or other economic project, and contribute to discussions about how the project will fit into local development plans, as much as through introducing or improving democratic elections.
So, what does a developmental mining company do?
So how does a responsible mining company contribute to the development arc as part of its core business? Alternatively put, this question has two parts: which mining company operations offer the opportunity to contribute to development, and how best to do so?
In a real sense, pretty much everything a large mining company does, provides an opportunity to contribute to progress. Raising funds, employing staff, acquiring land, procuring goods and services, investing in infrastructure, restoring mined land, dealing with waste, selling products, paying taxes and royalties, obtaining licences, establishing relations with governments, local communities and others, and so on. All these and more can be done in ways which promote progress. Naturally this is a twin-edged sword, i.e. they can also be done in ways which hinder, or even reverse progress, which is one of the criticisms often levelled at mining. So how can a company maximise its contribution, and minimise its negative impact?
International Alert has published and offers detailed guidance on this. But looked at more simply, there are two main elements to it. First, the miner needs to understand as well as it can, the context in which it is operating or planning to operate, from a developmental perspective: what is the actual or potential development arc, and where do we fit in? The company needs to see itself as a stakeholder in a wider set of dynamics, rather than seeing others mainly as potential stakeholders in its plans. This means looking not just at the local communities living around the potential site of the mine or other planned infrastructure, but at society more widely. In South Africa for example, one could argue that pretty much all development needs to take account of and contribute to certain key processes such as the evolving post-apartheid settlement with its delicate balance between stability and empowerment; and improved security for and empowerment of women and girls. In Liberia, the equivalent issues might be post-war reconciliation and an improved social contract between citizens and the state. In China the equivalent issues might be ensuring that the 500 million people who have been left behind in the race for growth are treated fairly, even as the urban middle class continues to to earn and save more, and achieve more openness and less repression.
All these examples are of course arguable and partial, and I include them only to illustrate my point that a responsible miner extracting minerals in South Africa or Liberia needs to take account of its impact on such factors, make a judgement about what is good and bad, and adopt strategies to maximise the goods while minimising the bad. And if the same company is selling products to China it needs to make a judgement about its impact on the key issues there, too. So questions like “how do we help strengthen the social contract in Liberia, improve the lot of rural Chinese people, and redress the imbalance between races and genders in South Africa through our core business and work practices?”, become not just relevant, but critical. And similarly at an even higher level, as in “how do we minimise our contribution to climate change and help enable peaceful adaptation to the environmental changes caused by climate change?”
The second element of the “how to?” part of this question is that, given that none of these issues are simple or black and white, the miner needs not only good political and development expertise to help analyse and resolve them, but also a clear idea of its core values or ethics, to guide decision making. These sit alongside other influential factors like shareholder value, government regulations, and semi-voluntary frameworks like the Voluntary Principles on Security and Human Rights, Free Prior Informed Consent and the UN Global Compact, to provide a reference point for those faced with difficult decisions.
Company narrative and incentives
In the background alongside these, I would suggest that some companies need to rework their internal narrative too. In addition to the usual explanation about excellence, shareholder value, long-term assets, health and safety, low unit costs and so on, this broader narrative explains how the company sees itself in the world, how it creates value in society, that it is a stakeholder in others’ projects and plans, a good corporate citizen and an actor alongside others. This will help move miners’ staff away from the company-centric and often rather transactional approach epitomised by the concept of “social licence to operate”.
Finally of course, incentives are key to everything. The progressive mining companies of the future will be those whose systems and culture reward staff who operate in line with the changed company narrative. Dare I also say that the mining companies of the future will have a far more evident feminine side to them, compared to now? I don’t necessarily mean there will be more women on staff and a better gender balance across all functions and departments, although that will certainly be the case. I mean rather that the qualities we tend to think of as feminine will be more useful – qualities like empathy and consensus-building – and will therefore be rewarded with promotion and influence.
In conclusion then, it’s clear that miners are already agents of development; that they are doing and can do more to contribute to the arc of human progress locally and in society more broadly, by recognising their developmental role, making sure they understand well the development priorities in the contexts where they work, and knowing why and how they contribute to them as part of their core business.