Sustainable Mining and Local Communities:

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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 H
ill Associates
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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

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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
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Community is key to success
Investment Climate Influencers
Community becoming the biggest hurdle for growth
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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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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
• RR policy landscape inadequate in addressing
  concerns
• Constraints on making land-for-land mandatory
• Community ill-equipped to take advantage of cash
  compensation
• Clamor for jobs but opportunities limited
  skillsets paucity

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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

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Community Core RR Demands
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Community Management Why the Failure? 1

• Kneejerk responses patchwork strategies by
  government, industry
• RR policies do not anticipate long-term
  adversarial trends
• RR policies not backed up by other enablers
• Lack of transparency about project information
• No effort to set realistic community expectations

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Community Management Why the Failure? 2
Projects suffer risk of failure if they fail to
understand the community
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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

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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
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SIA The Stages
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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

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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

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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

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• Thank You

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