TORONTO (miningweekly.com) – Companies need to embed risk assessment and corporate social responsibility (CSR) from the inception of a mining project’s life, Control Risks’ VP for global services in the Americas, Daniel Linsker, told delegates at the Canada-South Africa Chamber of Business risk mitigation and CSR seminar on October 17.

Failure to do so will increase a company’s threat exposure and could have crippling long-term consequences.

FORGET THE GRANOLA

Linsker began by noting how outmoded opinions can still surface when a company is faced with opposition. As an example, he highlighted a quote from one anonymous COO: “[Just] give me a day in the ring with those granola eaters.”

Fortunately, this is a minority stance and most in the industry view risk assessment and CSR strategies as essential tools to reduce threat or, if opposition is met, help achieve a favourable resolution.

But many fail to appreciate the on-going nature of successful risk assessment and CSR. Not only do they often overlook both the importance of integrating these aspects early in a project’s life; they also neglect the fine-tuning required at each development stage.

“I also suggest feasibility be extended into politics, social affairs, security and integrity as well. And while this sounds very intuitive, most companies don’t actually do it,” Linsker said.

Within the political realm, companies need to be aware of what central governments can promise and what they can actually deliver.

“[Many companies] highlight how they’ve met the president or have spoken with an important minister. Sometimes, they’ll even say they have all the support needed … Unfortunately, in most of these cases, the word of the central government counts for very little,” Linsker warned.

“Often we’ll [look at a project] with fantastic opportunities and [then] find an issue with the local community has flared up. Suddenly, there’s very little the central government can do to help,” he added.

Royalties and their effects should be considered within the political sphere as well. “The way royalties are divided is often left out of consideration. But this is where tension can be created between central and regional governments. Additionally, it also often dictates the way communities behave towards companies,” he said.

KEEP CALM AND CARRY ON

The potential threat posed by artisan or informal mining groups should be closely monitored. “There’s been a lot of effort to integrate these people into operations, although these seem to be failing due to the influence exerted by other controlling groups, sometimes criminal,” Linsker said.

Meanwhile, the threat of opposition seeking the removal of a company from a project will increase as exploratory work progresses and resources are defined in greater detail. “If a company identifies an ore body and then is forced to leave, they [the opponents] can then mine the material for themselves or strike a better deal with another entity,” he said.

“[That’s why these groups try] to outlast companies by delaying projects and they are well aware of the funding cycles and time pressures that publically-listed companies face,” he explained.

Infrastructure development and construction phases can also be risky periods, Linsker added. This is often when various entities or interested parties ramp up their opposition or, on the flip side, demand an increased involvement and a greater share of the proceeds.

Thankfully, the explicit threat of violence towards mining companies is rare. However, criminal pressure is frequently exerted on a local community or on subcontractors instead.

“Most criminals know a European or North American company will not or cannot pay [extortion] fees, so they target [communities or] subcontractors,” Linsker said.

Thankfully, there are well-established mechanisms in place to neutralise or contain these threats. “You can protect against most of this stuff and I’ve not heard of a single mining project that has failed to progress because of security issues,” he said.

Maintaining integrity when faced by these specific pressures or more general corruption is difficult but essential. “Bribery and corruption is something that clients have to deal with on a daily basis and is very challenging,” he said.

HAVE A POWER MAP

In order to better understand where potential pressure may come from, or which stakeholders hold the greatest levels of influence, companies should start to formulate power maps.

“Also try to figure out hidden interests,” Linsker said. “A company should ask ‘who wants a piece of this?’ or ‘how do we manage these stakeholders and best cater to their interests?’”

Companies should always stress test their CSR plans and proposals by directly seeking out the opinions of those they are aimed at.

“Clients sometimes spend too much time producing CSR reports [and not enough] time making it count at the local level,” Linsker said.

“As a test, I tell clients to take their translated CSR reports into the community to see whether they are agreed with,” he said. “It can only be considered a good job when people on the ground are happy.”

Discussions between the company and community must also be mature and viewed as a conversation between two equal parties. “A company should talk about rights and responsibilities … You have to empower a community,” he said.

Seeking validation from leading community members was another vital step. “Validation is where other people, specifically leaders in the community, support what you are doing and help produce good will,” he added.

Linsker then emphasised the close attention that was required for sub-contractors, with particular care taken to ensure they understand their role and their parameters.

“[For example, some subcontractors] don’t mind saying to a community ‘let us work in peace and, when we’re done, the mining company will arrive and employ everyone’. Obviously, this can create a lot of problems,” he said.

Finally, a company cannot rest on its laurels. “It’s amazing to still find company executives who’ll say ‘oh we’ve got a fantastic community engagement plan and never have any issues’. Then, later on, you read the news and discover they’ve suddenly had a lot of issues,” Linsker said.

“Always assume things will change and always assume that conflict can occur,” he added.