What Are the Top Social Risks Facing the Mining Industry?

Source: Mining Review
Source: Mining Review

“The [mining] industry’s relationship with society is both critical and under pressure”[1]. This statement made four years ago by Canada’s former Extractive Sector Corporate Social Responsibility (CSR) Counsellor is still as relevant today as it was back then, maybe even more. With metal prices on the rise, a trend that is expected to continue[2], conflicts and social opposition are more likely to appear[3]. Under these circumstances, the top social risks facing the mining industry today are communities’ higher expectations, dependency, and lack of public trust.

With the CSR movement gaining more and more momentum in the consumer, investment and legal spheres[4], and the rising prices of metals, local communities’ expectations towards mining companies have increased significantly. The industry is now faced with demands requesting the negotiations of agreements that would allow communities to obtain a greater benefit.

A more equitable value-sharing should, however, be established in a manner that will support communities in becoming more independent. The risk of creating dependency of local communities to the mining project is of great importance given that the natural resources extracted are limited and non-renewable and that the industry is cyclic. Mining corporations are challenged to be development actors that work alongside governments instead of replacing them[5] and to help create diversification of mining-based regions[6].

Additionally, the industry is currently facing a lack of public trust. Mining activities are automatically connected with important negative impacts. From environmental concerns to corruption, local communities fear the disruptions that projects may cause. It is therefore critical for the industry to adopt high and continuous transparency and accountability standards and effective methods of information sharing and dialogue. Effective management of this risk directly impacts the two previously discussed issues. As citizens are given practical means to monitor the execution of the project, they not only gain responsibility and therefore independence but also reassurance that benefits are being fairly shared.

In conclusion, although all three identified risks are crucial, the weight of each in a specific project will largely depend on the development status of the country where it is carried out. Demands of greater transparency and accountability will probably need to be addressed more immediately in countries with a very high or high Human Development Index while issues of equitable value-sharing and dependency will be more pressing in countries with a low or medium index.

  1. Marketa D. Evans, Escalating Social Risk Around Mining, 134 Can. Min. J. Don Mills 36 (2013).
  2. Evolución de Precios de los Metales, Semana Económica (2017), http://semanaeconomica.com/infographics/evolucion-de-precios-de-los-metales/ (last visited Oct. 27, 2017).
  3. Alvaro Roncal, Mejores Precios Elevan Riesgos Sociales para las Mineras, Semana Económica (2017), http://semanaeconomica.com/article/sectores-y-empresas/mineria/220476-enfrentando-nuevos-retos/ (last visited Oct. 27, 2017).
  4. Ashley Walter, Introducing Corporate Social Responsibility Law, 42 No. 4 Law Prac. 12 (2016).
  5. Lynne Featherstone, The Changing Role of Mining in Development Economies, https://www.gov.uk/government/speeches/the-changing-role-of-mining-in-developing-economies (last visited Oct. 27, 2017).
  6. OECD Mining Regions: Building a Network to Enhance Productivity and Well-Being, Antofagasta, Chile, 5-7 October 2017, http://www.oecd.org/regional/regional-policy/Mining-regions-network-background.pdf (last visited Oct. 27, 2017)