A May 2014 joint report from the University of Queensland Centre for Social Responsibility in Mining and the Harvard Kennedy School confirms the real costs of public opposition to development.
Researchers analysed over fifty mining, oil and gas projects in India, Chile, Peru, Australia and Argentina to examine and total the costs of public opposition to their businesses. The results were staggering but not unexpected from industries often faced with costly cancellations and delays caused by public objection.
“There is a popular misconception that local communities are powerless in the face of large corporations and governments,” according to key study contributor Dr. Daniel Franks.
Franks asserts that this sentiment is false and concludes that the study’s findings “show that community mobilization can be very effective at raising the costs to companies.”
The study points out that project delays resulted in the most frequent source of costs to companies, with approximately $20 million per week wasted for mining projects valued between $3 billion and $5 billion.
However, project suspensions caused the most overall economic damage. One example the study referenced is a gold and copper mine established in Peru by the Newmont Mining Corporation. The mine, known as the Conga project, aimed to extract 350,000 ounces of gold and 120 million pounds of copper from Peru’s Cajamarca region annually.
But after some initial investments in the $5 billion project were made, local residents grew increasingly concerned that the mine could have negative effects on water quality in the area. Citizens’ concerns eventually lead to a series of protests that escalated into violence and a government order to halt all work at the mine. Two years later, the mine remains closed, leaving Newmont with a $2 billion loss on the investment.
Switching to an industry-wide perspective, in 2012 Swiss financial firm Credit Suisse found “environmental, social and governance risks” across the Australian mining, oil and gas sector to be worth $8 billion.
According Dr. Frank, this level of risk could be negated if companies focus more on investment in risk mitigation at the outset of projects rather than acting retroactively. Franks argues that companies should focus on “meaningful” dialogue at the outset of a project and that this attempt to reach out “is something that the best practice companies are doing at the moment, and something that the International Council for Mining and Metals argues that companies should be doing.”
Contributor Rachel Davis of the Harvard Kennedy School’s Corporate Social Responsibility Initiative notes that “it is much harder for a company to repair its relationship with a local community after it has broken down; relationships cannot be ‘retro-fitted.’”
What is the best course of action for companies going forward then? While there may not be one perfect formula, companies can start by taking a few important steps to formulate a strategy that minimizes public opposition.
Strive to create an open environment for dialogue. Even if opposition appears limited, it only takes a few angry voices to change the atmosphere into one of intimidation and disapproval. Local residents may want a development to succeed, but not at the cost of angering their neighbors. Therefore, the moment a project is internally approved, project managers must have an infrastructure for communication ready, both on the ground and in cyberspace. This way, rapid communication to build an advocacy network can take place by the time opposition starts. Receptive citizens will then have the resources necessary to receive information and voice approval.
Those with new mining proposals must engage residents as their new neighbors by creating a dialogue and allowing residents to develop a sense of familiarity with the company coming to town. Successful projects inform and educate the community using a variety of communication vehicles, including phone calls, direct mailing, press conferences and releases, and open house information sessions. People are invested in their communities; they want to be informed and to know the assets and drawbacks a project will bring. If developers neglect to inform them, opposition groups will.
Furthermore, some locals may have very legitimate concerns that require in-depth answers. It is paramount that these concerns are answered in plain and direct language from the company itself. Rather than ignoring a citizen’s complaint, engage the resident even if a solution is not immediately feasible.
Keeping in touch
Companies must also build a database of supporters and call upon them.
Supporters want the success of the development, and they will help if asked. Let both advocates and the community know about the status of a project – where it is doing well and where it needs help. A few supportive voices at a town meeting will make a significant difference.
Additionally, social media cannot be neglected. Creative content that can be shared easily is an important digital dialogue facilitator.
Staunch opposition will never tire out in its public outreach, and neither can those putting forth the proposal.
Turning local support into legislative support
Finally, supporters must be made aware that success at the local level can be overturned at the state level.
Teach supporters how to engage most effectively with their local and state elected officials through the platforms upon which officials most frequently engage.
Make sure that every mining project is accompanied by a grassroots advocacy campaign that will keep the project popular both with locals and state governments. Politicians will be much more likely to stand behind the industry if it is backed by voting constituents.
With a strong local and legislative advocacy network built by an active grassroots campaign, mining projects will reduce the risk of project delays that can cost millions.