/ 19 February 2015

Mining for goodwill will reap profits

Companies need to consider and interact with everyone affected by mining.
Companies need to consider and interact with everyone affected by mining.


Africa’s top mining chief executives met and addressed thousands of industry professionals at the Investing in African Mining Indaba in Cape Town last week. Although the challenges of conducting business in Africa were noted, overwhelmingly positive sentiments were expressed about mining on the continent.

But, just a few kilometres away from the indaba, hundreds of civil society activists who could not afford the almost $2 000 admission fee convened the Alternative Mining Indaba to grapple with concerns about the mining sector’s negative impact on human rights.

Two protests, one staged by delegates of the Alternative Mining Indaba and another by indigenous leaders, made it clear that mining industry leaders should be worried about their image – with good reason, it seems: the 2014 Edelman Trust Barometer puts mining third from the bottom when it comes to public trust in business. In the same poll, a majority (81%) of respondents said that companies could improve the economic and social conditions of the community where they operated and still increase profits, and 75% of respondents also thought that companies could be profitable while working to improve the communities where they mined.

But the industry’s woes go way beyond an image problem. There are real-life stories of fraught relationships among mining companies, their workers and their communities: locals are threatened by private security companies, resettlement is mismanaged and workers’ lives are endangered.

The Marikana massacre in 2012, in which 34 miners were shot and killed by police while miners were on strike at a Lonmin-owned platinum mine, highlighted these tensions between mining companies and their workers.

Companies’ profits are also compromised by the negative impact of mining on human rights. The South African mining industry is estimated to have lost R15-billion in the period leading up to and following the Marikana massacre. Legal challenges to and community protests about mining operations are estimated to cost $20-million a week globally in delays, and potential payments to 17 000 former mineworkers for silicosis claims could amount to R51.5-billion.

Better relationships with communities and workers could have mitigated, or even avoided, the harm caused in these cases and in many others highlighted in the Business and Human Rights Resource Centre’s latest briefing note on mining in Southern Africa. To manage these risks coherently and better respect human rights, mining companies should move beyond just adopting human rights policies and a “mainstream” respect for human rights. In Southern Africa, three areas are key to this: transparency, engagement and respect for communities’ and workers’ rights to health and safety.

Amid widespread calls at the indabas for greater corporate transparency, Melissa Fourie of the Centre for Environmental Rights said fear is behind the nondisclosure in the industry. She asked: “What, indeed, would happen if everyone could see how noncompliant the mining industry really is with environmental and social obligations?”

She called for increased government support to ensure more comprehensive compliance by mining companies.

There are examples of the government being robust about transparency: the Vaal Environmental Justice Alliance recently scored a significant legal victory when the Supreme Court of Appeal ordered ArcelorMittal to release records to verify the company’s environmental claims independently and better understand its impact on local communities’ health.

The court said: “[C]orporations … must be left in no doubt that, in relation to the environment in circumstances such as those under discussion, there is no room for secrecy and that constitutional values will be enforced.”

Transparency also applies to financial outflows. According to the chairperson of the African Union Commission, Nkosazana Dlamini-Zuma, extractive industries are the greatest culprits in avoiding taxes, depriving governments of much-needed funds that could be allocated to health, education and development. The problem is so serious that the AU has launched an initiative to stem the illicit financial outflows, citing in particular the mining industry in South Africa.

Mining companies, then, need to be progressive about transparency and show leadership in this regard. A good example of this is Rio Tinto reporting annually on its payments to dozens of countries, including Madagascar, Mozambique, Namibia, South Africa and Zimbabwe.

“It’s not a cost, it’s a necessity,” said Stephen Vermaak, the principal investment officer of the International Finance Corporation (IFC), while addressing a panel at the Mining Indaba. He stressed the importance the IFC places on the need to work with stakeholders when considering investments.

Responsible engagement is needed with all relevant stakeholders, particularly workers, affected communities and governments.

This not only means speaking to them and acting on the concerns of workers and the community, but also avoiding being complicit in or causing government abuses, and respecting and protecting the defenders of human rights.

Marikana raised these concerns when it emerged that emails sent at the time by Lonmin’s management to Cyril Ramaphosa, a Lonmin board member and now deputy president of South Africa, appealed for government intervention in ending the strike. His response called for the police to act against the strikers, to whom he referred as “criminals”, and has been seen in some quarters as contributing to the killings.

Mining investors have reportedly also stoked state and private security violence in Zimbabwe.

To better manage the danger of harming communities, companies must gain free, prior and informed consent, continually manage the impact of their operations, and meaningfully respond to complaints and remedy the issues.

To put communities on a more even footing with mining corporations, the Bench Marks Foundation recently announced that it would approach companies to garner their support for an independent fund that would increase communities’ access to expertise.

Right to health
Mining companies in Southern Africa should take steps to better protect the rights to health and safety of workers and communities near mining sites.

Some companies have taken positive steps towards doing this. Anglo American has set an industry-leading goal of zero worker fatalities in its global operations. Fatalities have fallen in recent years, although the company still reported nine deaths at its South African mines in 2013.

Regarding health, the International Council on Mining and Metals has reported on community health initiatives by its member companies and highlighted key lessons learnt.

Governments are increasingly taking a hard line on the impact of mining companies on health and safety. The Zambian government cancelled the licence of Chinese-owned Collum Coal Mining after it was alleged that Chinese supervisors shot at protesting workers and that a local worker had killed a Chinese supervisor.

Regulatory authorities in Zimbabwe have been angered by the pollution of water, the degradation of the landscape and the negative health impacts that mining companies have left in their wake.

A group of nongovernmental organisations, including the Zimbabwe Environmental Law Association, has launched a project “to promote knowledge, understanding and [the] implementation of [the United Nations’s guiding principles on business and human rights] by mining companies in Zimbabwe”.

Not only is it right to respect human rights, it is also sound business practice. A commitment to human rights in all aspects of corporate governance and management is beneficial not only to employees, supply chains and the broader community but also, ultimately, to shareholders.

The mining sector, to play its full part in national development, promoting human rights and regaining its social licence to operate, must now take the lead.

For more information on mining in Southern Africa and on how to address the human rights risks highlighted in this article, see the Business and Human Rights Resource Centre’s briefing note at business-humanrights.org. Khanya Mncwabe is the centre’s Southern and Western Africa representative.