Do Mining Companies Help Development?

Are the CSR programs of Canadian mining companies adequate?
By: /
June 20, 2012
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Many argue that, when it comes to development, mining is a recipe for disaster. It is a low-labour industry, employing relatively few people. Wealth quickly accumulates in the hands of a few, at high environmental costs for many. Control over this wealth is a source of contention and accounts for conflicts and wars, especially in developing countries. There are, however, those who argue that the irresponsible mining practices that result in these inequalities belong to the past, and that modern mining can be a strong vector for development. Today, some miners say they are conscious of their responsibilities and that they accept their role and influence as promoters of development.

Recent examples from Peru seem to support this idea.

Canadian mining corporations arrived in Peru in the 1990s. Peru is Canada’s third-largest bilateral trading partner in Latin America and the Caribbean (excluding Mexico). Today, Canada’s interest in Peru’s extractive sectors is significant, accounting for about 40 per cent of Canadian investment in the country. There are more than 90 Canadian exploration companies in Peru (mining and oil & gas), as well as three mines in operation.

Canada is working closely with Peru to promote corporate social responsibility practices in mining communities. The Canadian International Development Agency (CIDA) is the largest bilateral donor that assists the Peruvian government on mining issues. In November 2011, CIDA sponsored a CAD$4-million project on conflict-resolution strategies related to mining disputes in Peru, which is being executed by the United Nations Development Programme (UNDP). Also, several private Canadian companies based in Peru are actively supporting the development programmes of local and international NGOs, which generally aim to reduce socioeconomic inequality and promote education.

Toronto-based Barrick appears to have established effective social and environmental practices in its youngest gold project in the country, Lagunas Norte. According to Barrick’s representatives, this project reflects the company’s efforts to promote a sustainable mining model. The project is a modern operation that incorporates lessons learned from previous experience in Peru and abroad, and demonstrates that it is possible to ensure clean and sustainable production and promote local development while maintaining low production costs. Local communities surrounding the open pit seem to agree that Barrick is keeping promises most of the time.

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Some companies are branding Canadian values as a guarantee for sustainable mining (“HUDBAY: Proud Canadian roots, brilliant future in South America, beginning in Peru”).

Despite the promising example of Lagunas Norte, Peru is plagued with social conflicts, some relatively violent, involving mining corporations and local communities that oppose them. Since 2006, conflicts related to mining activities increased from a dozen per month to more than one hundred in May 2012. During the same period, more than 2,300 people were injured during such conflicts and more than 200 were killed. Experts claim the level of violence is increasing.

Evidence seems to indicate that, overall, corporations easily preach sustainable mining, but implement it only cautiously.

According to classical economic theory, the creation of wealth brings, or equals, development. However, wealth tends to be unevenly distributed and usually becomes concentrated in small segments of society – hence the proverb “the rich get richer and the poor get poorer.” Indeed, recent studies suggest that the accumulation of wealth does not necessarily mean development for all. Is mining contributing only to the increase of wealth (and of inequality), or can it also be a driver for broader development?

Development for all is still not the primary goal of either miners or investors, and they cannot be expected to supplant governments or donor agencies in this area.

Development encompasses improvements in education, health, and economic growth, to mention a few. Depending on the level and pace of these changes, societies and nations have been defined as being more or less developed, relative to one another. Overall, increases in these indicators have been regarded as improvements, and few have proposed alternative models.

Mining companies should be expected not to harm the social and environmental contexts. This can be done by, among other things, ensuring that mining activities are respectful of the rights of local communities, are compliant with best environment practices, guarantee transparency in contract management, and address the past mismanagement of social and environmental liabilities.

Sustainable mining could fight social exclusion. If miners and governments wish to uphold this statement, they need consistent and concrete results, over time, to convince anti-mining movements that sustainable mining is not a fiction. Centuries of malpractice cannot be erased by a few years of corporate social responsibility policies. Time will tell whether the new era for the extraction of natural resources can promote peace and development. Indeed, there is hope.

Photo courtesy of Reuters