ESG (continued)
A guide to community engagement
Based on conversations with more than 60 mining companies, we extrapolated some common principles and practices that we hope will guide mining players in this region to better engage with the communities around them. There will be many guides out there written by ESG professionals, but this speaks primarily to the universe of mining companies operating in Latam North and Caribbean and is based purely on the experiences as case studies.
Know your stakeholders
How many communities are in your direct and indirect area of influence, are there artisanal miners in the region and what is their role, and, very importantly, are you competing with any other stakeholders, such as local “lords” or even the government?
Direct and indirect areas of influence: Some projects, like Prime Mining’s Los Reyes project in the Sierra Madre Occidental mountains in Mexico, are fully encapsulated within one Ejido (area of communal land), in this case the Ejido Tasajera. The company signed a 30-year community agreement with this Ejido. In other places, the area of impact is more complex and sometimes haphazard. In Ecuador, for instance, Solaris Resources has signed community impact and benefit agreements with the two ancentral indigenous communities that own the surface rights to their tenements, namely the Warintz and Yawi communities, but the company also went further out to sign multiple agreements with the Shaur indigenous populations residing in the broader Morona Santiago province. It is worth remembering that for GoldQuest’s Romero project in the Dominican Republic, it was a community further away from the project that posed opposition and ended up delaying the project by many years.
Artisanal mining: The presence of artisanal mining is a key factor. Small scale or illegal mining can be a serious challenge, but sometimes it can be used to the benefit of the project. Newly formed explorer Greenheart Gold uses artisanal workings as a vector towards hard rock sources of gold at its early-stage projects in Suriname and Guyana.
“In the Segovia province of Colombia, artisanal mining is a way of life,” according to Alexandre Boivin, the CEO of explorer Quimbaya Gold. Its neighbor in Segovia, leading gold producer Aris Mining, has indeed integrated artisanals as Contract Mining Partners, purchasing mill feed from the small scale miners to process at their facilities. An astonishing 50% of the gold at their Segovia mine comes out of this process. “We must recognize that we, as a foreign mining company, are the new kids on the block, whereas the locals and their forebears have been mining in the area for 450 years. My belief is that we can work together to create mutually beneficial and profitable partnerships. The partnership approach has had a huge impact on our reception at the community level, with the local miners becoming our greatest advocates,” commented Neil Woodyer, the CEO of Aris Mining.
Other stakeholders: In Guatemala, Volcanic Gold was met with opposition from a small but “aggressively anti-mining group,” in the words of CEO Simon Ridgway. This group agitated some members of the community to set fire to one of the company’s drill rigs. For the past two years, Ridgway and his team have been engaging the local communities who support the project to ensure the restart of exploration is safe and no further boycotts will take place. “sometimes it is wealthy people within the community who are opposing mining because mining introduces higher wages, which can make it difficult for local employers to attract workers. You have to strike a delicate balance between paying a fair wage without disrupting the local economy,” Ridgway said.
“Grandfathers, fathers and sons, as well as daughters now, work with us, and we are completely assimilated locally. Aside from one Canadian, our entire workforce at the site is Mexican, and we have never experienced a work stoppage or community opposition since 2006.”
Frederick Davidson, CEO, Impact Silver
Focus on employment
When done well, mining can have a transformative impact on communities. The provinces hosting large mining operations stand out massively. The Zamora Chinchipe province in Ecuador, which hosts both Ecuacorriente’s Mirador copper mine and Lundin Gold’s Fruta del Norte, used to be the 23rd poorest out of 24 in the country. It has since climbed up to the top 10 most well-off.
Though investments in infrastructure, health, education, and social developmet leave long-lasting benefits, the biggest impact tends to come through employment. For every person working at Pueblo Viejo, nine other employment opportunities are generated. The employment ratio is equally high at the Mirador mine in Ecuador, which generates a total of 16,000 jobs, of which 1,324 are direct, 1,905 contractors, and the rest are created through the reinvigoration of the local economy.
Smaller operations can also have considerable impact. In the historic Mexican mining town of Temascaltepec, Sierra Madre Gold and Silver has brought back into production the La Guitarra underground silver mine, which had previously been on care and maintenance under First Majestic. Since the reopening on January 1st of this year, the town has been going through what Alex Langer, Sierra Madre’s CEO calls “a honeymoon period.” Along with the mine, the entire town came back to life, with restaurants and hotels reopening and many former workers regaining their jobs: “The multiplying benefit is immense, with every 1 new direct job generating 11 other indirect or ancillary jobs. 20,000 people live within our project boundary.”
In Temascaltepec, La Guitarra is refilling a mining void, but mining activities can fill up other vacuums too. Ian Graham, the president of Oroco Resource, which is developing the Santo Tomas project in Sinaloa, Mexico, explained: “The legalization of cannabis in Canada/US has collapsed the illicit cartel businesses. As a result, the people who made a living out of cannabis cultivation have switched to farming tomatoes, sesame, corn and other legal crops, and cartel interest in the area withered. Small local mining companies, and principally Oroco, have since organically filled the social vacuum resulting from the changed economic landscape. Now we are the main agent for social support, whether by reopening a gummed-up water well, painting a school, bringing basic medications to the town clinic, or maintaining local access roads.”
Similar accounts have been expressed by companies across the region. In Jamaica, the main question asked by the community is around job creation, said Dan Symons, the CEO of explorer C3 Metals. For companies like Avino Gold and Silver with a 100% local workforce, employment has been the surest way to local assimilation and acceptance.
Simon Ridgway brings in another argument for employment in the region, as anti-immigration policies in the US drive out immigrants from Central America. That, in Ridgway’s view, will create an influx of people returning to El Salvador, Guatemala, or Mexico, rising unemployment levels while remittances from the US into the region dry up: “Countries in the region need employment above anything else. The typical narrative we hear is that people flee Central America due to violence, but for the most part, they are leaving because they want a better life. Before the Escobal mine was shut down, it was employing around 1,200 people, people who never regained their jobs. The economic argument for mining in the region has never been so strong.”
“With the closure of the Sauzal mine 30 km east of us, many people lost their jobs and we get a lot of inquiries about ‘when are we getting our high-paying jobs back?’ There is strong community support for development and a desire to see a major mining operation at Santo Tomás.”
Ian Graham, President, Oroco Resource
Livelihoods beyond mining
While the employment opportunity may be exciting, sometimes mining activities clash with the local ways of life, disrupting traditional livelihoods like agriculture. Resettlements represent the most extreme change. In the major resettlement carried out by Barrick Mining at Pueblo Viejo, 3,000 meetings with local communities have been held, ensuring the resettlement is not just a relocation of housing but also an improvement in livelihoods. “The locals involved got to choose the size and nature of their lot depending on their family size (...) Each family concerned will also have a livelihood project tailored to their needs,” said Juana Barceló, president and country manager at the Pueblo Viejo Dominicana Corporation, a Barrick-Newmont JV.
Though most projects do not entail such major changes as a resettlement, mining companies do need to map out the social, cultural and economic contexts to help preserve a continuity in traditional livelihoods while also introducing new alternatives. And the industry has not failed to come up with exciting projects: GoldQuest, for instance, has developed a roadmap to help the ecotourism sector in the region take off and created a local cooperative to launch a fish farming operation in the reservoir sitting downstream of its concessions, among other initiatives.
With the social license becoming a quasi-legal permit, mining is becoming a quasi-institution - a proxy for the government and a proxy for change.
Article header image courtesy of Ecuador Chamber of Mines