2012 Americas School of Mines

Transcription

1 Americas School of Mines License to operate social impact and return on investment Speakers: Rob Campbell-Watt, Director, US Patricia Awad, Manager, Chile Natalie Siegel, Director, Australia

2 Agenda Four topics covered: 1. Social license to operate 2. Conflict minerals update 3. Social impact assessment 4. Indigenous community investment: outcomes not inputs 2

3 Topic one Social license to operate 3

4 Introduction to concept of license to operate Success of mining operations is dependent on a license to operate What is a social license to operate and its significance? ICMM: Ties social license to operate to Sustainable development principles, includes social and economic development World Bank: acquiring free, prior and informed consent from indigenous peoples, and local communities through mutual agreements US context why is this important? Good vs bad operators Industry dealing with reserve access constraints, lost opportunity NMA and other representatives looking at leading practice 4

5 US context Unlock future potential of US mining Nonfuel Mineral assessment: National Coal Resource Assessment: National Coal Resource Assessment 5 highest production regions: (1) Northern and Central Appalachian Basin (2) Gulf Coast (3) Illinois Basin (4) Colorado plateu (5) Northern Rocky Mountains and Great plains 5

6 Role of minerals in US economy 6

7 Developing thinking on leading practice ICMM Sustainable Development Principles Implement and maintain ethical business practices and sound systems of corporate governance. Integrate sustainable development considerations within corporate decision-making process. Uphold fundamental human rights and respect cultures, customs and values in dealing with employees and others who are affected by our activities. Implement risk management strategies based on valid data and sound science. Seek continual improvement of our health and safety performance. Seek continual improvement of our environmental performance. Contribute to conservation of biodiversity and integrated approaches to land use planning. Level of stakeholders and assymetries Source: Boutilier & Thomson, 2011 Facilitate and encourage responsible product design, use, reuse, recycling and disposal of our products. Contribute to the social, economic and institutional development of the communities in which we operate. Implement effective and transparent engagement, communication and independently verified reporting arrangements with our stakeholders 7

8 Stakeholders and their material issues 8

9 Example methodology for displaying economic benefits & social return of mining operations 9

10 Topic 2 Developments associated with Conflict Minerals (regulatory and social license) 10

11 What are Conflict Minerals? Columbite (Tantalum) Tungsten Cassiterite (Tin) Gold Update as of May

12 Requirements of S1502 of the Dodd-Frank Act Examine products to determine whether and to what extent Section 1502 applies Comply with disclosure requirements Develop and conduct due diligence protocol Acquire private sector audit Update as of May

13 The SEC continues to grapple with the complexity of conflict minerals Dec OECD releases Due Diligence for Responsible Supply Chains guidelines Jul. 21, 2010 Dodd-Frank Act signed into law July 2011 House Committee on Financial Services submits letter to SEC urging to adopt transitional implementation Summer 2011 Common reporting tools released by EICC and GeSi May 2011 EICC / GeSI announce first conflict free smelters Oct SEC reopens Comment Period and hosts a public Conflict Minerals Roundtable. Oct California passes conflict minerals law regarding state procurement Dec SEC misses extended deadline for final SEC rules March 2012 SEC Chairman Shapiro indicates at a House Subcommittee meeting that rules will not be released till mid-year March 2012 Maryland legislature approves HB 425 regarding conflict minerals Feb Senator Leahy and others send letter to SEC regarding stricter liability and use of reliable cost studies April 2012 Hearing held with SEC to discuss cost benefit analysis of rules making more broadly

14 SEC comments have provided hints about the potential direction of the final rules The SEC has indicated that the final rules may: Include transition period for companies to report indeterminate origin so that due diligence and upstream certifications mechanisms can mature Likely not include a de minimis exception In addition, the SEC has been under further pressure to: Incorporate rigorous cost-benefit analysis for measures proposed Adhere to stricter liability definitions by requiring the conflict minerals report to be filed rather than furnished 14

15 Despite the delay, industry initiatives continue to proceed Within DRC Adjoinin ng Countrie es Global Markets Artisanal or Commercial Mine Ris k Négociant Comptoirs Traders Smelter/Refiner Component Manufacturer Product Manufacturer Original Equipment Manufacturer (OEM) Upstrea am Downstream Traceability and certification mechanisms continue to be implemented across the DRC countries First gold and tin audits completed The number of Conflict free tantalum smelters grows to 10 AIAG and EICC continue to refine questionnaire tools OECD 3T pilot groups to issue interim findings report in Spring 2012 OECD Gold pilot group to commence in

16 Progress is increasing at the upstream levels On the ground initiatives are slowly expanding Preliminary reports from the OECD s upstream pilot group indicate Awareness of due diligence expectations is increasing Majority of comptoirs report that they have adopted a policy There is slow convergence of on-the ground initiatives Smelter have been slow to join the conflict free smelter program Some downstream companies have become aggressive about vertically integrating up the supply chain to the mines 16

17 Leading downstream companies have begun to prepare for the final rules Key steps include: Implementing conflict minerals policy Leveraging the EICC / GeSI Common Reporting Tool and Dashboard Identifying Tier 1 suppliers and products which contain 3T&G Beginning to develop updates to existing supplier/product management platforms to address conflict minerals requirements Inserting contractual clauses and terms & conditions to ensure compliance with disclosure requirements and/or required policies Developing process to prioritize supplier engagement and data collection Disclosing potential conflict minerals risks in filings 17

18 Topic 3 Social Impact Assessment and Chilean experience How do we say no? Assessing the social impacts of mining projects and developing a community strategy 18

19 What the companies are saying We spend lots of money on CI, but relations with communities don t improve (and sometimes even deteriorate) Our CI program has become a source of conflict among communities Local stakeholders have become dependent on us There are endless requests from communities how do we say no? We get pulled in a hundred different directions We ve ended up having to take over the government s role We are doing all these good things for the community, but no one gives us any credit In the end, we have little to show for all the resources we ve spent From: IFC, Community Investment A Good Practice Guide for Companies doing Business in Emerging Markets 19

20 A simple definition of SIA The process of assessing or estimating, in advance, the social consequences that are likely to follow from specific project developments. From: Social Impact Assessment in the Mining Industry: Current Situation and Future Directions Susan A. Joyce Golder Associates Ltd., Canada & Magnus MacFarlane Warwick Business School, UK. 20

21 Let s take a look at the facts Mining activity has impacts (+) (-) Mining companies spend money Chile > US$20 Million Yet risk and conflict prevails What goes wrong? 21

22 What goes wrong? There is a gap between the real impacts and CI practices or strategy Who s in charge? When? SIA as an ongoing process, throughout the life cycle of the mine? Underestimating the risks of the open chequebook the wrong kind of empowerment 22

23 Exploration Construction Operation Closure Social Baseline Assessing the expected impacts and risks Mitigation measures CI plan Monitoring Ongoing stakeholder engagement Re-focusing CI efforts Monitoring Ongoing stakeholder engagement New social baseline for programmes Re-focusing CI efforts Monitoring Ongoing stakeholder engagement Sustainability of communities after closure 23

24 Assessing the cumulative impacts of a mine expansion + 6 other developments: a practical example Quality of life Economic development Employment Landscape Transportation Health Tourism Housing Water 24

25 SIA is a dynamic, ongoing process of integrating knowledge on potential and real social impacts into decision making and management practices. From: Social Impact Assessment in the Mining Industry: Current Situation and Future Directions Susan A. Joyce Golder Associates Ltd., Canada & Magnus MacFarlane Warwick Business School, UK. 25

26 Topic 4 Bang for your Buck: Changing how we do business in Indigenous/Local communities so we get value for money and so do they. 26

27 Why would you invest in the local community? Is it just to tick a box? Is it just to be nice? When you are mandated There are big commercial advantages in doing so 27

28 If you are already spending on the community, what are you getting for it? If you are about to start spending, how will you design your investment so you get something for it and the community does to? Some Local examples 28

29 Lessons: Australian Indigenous Employment Programs 29

30 So what does this mean? Key lessons for going forward with local community activity and investment design: What is the value to your business of this activity; Does it have a dollar value? What are the risks of doing it poorly Determine community need using an evidence base. This means really understanding the local community and its context This means research plus proper (not tokenistic) consultation Can we just pass it off by saying this stuff is the government s responsibility? What is the real risk to our business in saying that? 30

31 Thank you 2012 PricewaterhouseCoopers LLP. All rights reserved. refers to the United States member firm, and may sometimes refer to the network. Each member firm is a separate legal entity. Please see com/structure for further details.