Social impact underestimated

9th July 2021 By: Darren Parker

Social impact underestimated

DARRYLL KILIAN The timeous resolution of all substantive ESG issues is vital

Many mines in Africa have underestimated their social impact and often struggle to manage this constructively, consulting engineer and scientist firm SRK Consulting partner and principal scientist Wouter Jordaan tells Mining Weekly.

He says an added complication is the shift in corporate culture that can occur during mergers or acquisitions – a frequent occurrence in the mining industry.

“Communities will have expectations based on past engagement and agreements with a mine, and new owners need to continue building on these good relationships and repair relationships where needed.”

Another major ongoing challenge mining companies operating in Africa face, in terms of environmental, social and governance (ESG) management, is the legacy of environmental damage, where earlier mining may not have been conducted responsibly.

“This may add a financial and compliance burden, which requires closer collaboration with other stakeholders such as government,” says SRK Consulting DRC country manager and mining engineer Susa Maleba.

The legacy issues that mines face include not only previous environmental damage but also previous social commitments that were not properly addressed or followed through on, making the social licence to operate a key risk for many years.

“Unfulfilled promises, for instance, are often the basis of community discontent at a later stage. It must be recognised that community demands and expectations are likely to grow over time, so the timeous resolution of all substantive ESG issues is vital,” states SRK Consulting partner and principal environmental consultant Darryll Kilian.

He notes that one of the sustainable development strategies that mines use to build a positive legacy is sharing value creation using a local supply chain.

“Often, however, local suppliers lack the capacity to provide what the mine needs. Mines in many parts of Africa face this challenge,” says Kilian, adding that SRK Consulting is working on this using practical guidelines and proven practices to help guide mining and exploration companies operating in Africa.

Another aspect of ESG management that mining companies find challenging is communicating effectively with stakeholders, says SRK Consulting director and principal consultant Andrew van Zyl.

He explains that, when commodity prices are high, for example, companies may deliver optimistic messages to the markets, thereby raising expectations among other stakeholders, including host governments and communities.

This, in turn, can complicate negotiations for new mines, expansions or other compliance requirements that depend on negotiated settlements and a sense that value is shared.

Covid-19 also poses its share of additional challenges to mines’ ESG management, although many of these were short term, Mabela says.

Kilian, however, notes that the pandemic exposed the lack of adequate water, sanitation and health services in many areas of Africa.

“This has revealed an opportunity for intervention – not only by governments but also mining companies and their community development initiatives,” he says.

How Africa Measures Up

Most African countries have laws that require mines to protect the environment and contribute to social development.

However, many African countries lag behind world-class ESG standards in the application of environmental standards, including air quality, water quality and noise levels, which they often adopt from other jurisdictions, such as South Africa, or from international bodies such as the World Bank or the World Health Organisation.

Regulatory frameworks in other African countries are “evolving and reforming to align with global ESG trends and will hopefully not lag behind the rest of the world for much longer”, Kilian notes.

“While Western countries are driving the global responsible sourcing and decarbonisation agendas in terms of policies and regulations, Africa is actually a leader when it comes to developing and implementing ESG in the mining sector,” Van Zyl states.

He notes that the African mining industry has “far more experience” in terms of starting and running mines, and in identifying and engaging communities and other stakeholders, with many ESG requirements having had to be developed from scratch in Africa to deal with mining-related risks as they emerge.