Sustaining the Social License Enduring Challenges, Evolving Solutions John Strongman

1. Sustaining the Social License Enduring Challenges, Evolving Solutions John Strongman Former World Bank Mining Advisor Mineral Council of Australia 2009 Sustainable Development Conference Adelaide, Australia October 28, 2009 Post conference - Shorter version MCA Conference October 2009 Post Conference Shorter Version

2. The Presentation • Focuses on • Achieving improved development outcomes regarding social aspects of mining development in remote areas of developing countries • 2 Main Parts • Enduring Challenges and Present Solutions • Unresolved Challenges and Evolving Solutions MCA Conference October 2009 Post Conference Shorter Version

3. Enduring Challenges 1. Extractive Industries Review Findings – Risks for Communities: “ Extractive industries can also lead to social disruption and cause conflict among communities. Existing communities may be displaced to make way for new industry activity. Even when that does not happen, new activity often brings a large influx of people to a region, disrupting the local community. Communities may see an increase in such social problems as alcoholism, gambling, prostitution, and violence against women. People’s health can suffer due to the influx of new people or pollution from the site. The existence of new winners and losers. from a project may cause rifts in communities. Women are often particularly at risk from the social disruption caused by new projects. Communities may become dependent on the benefits from an extractive industries project, and they can turn into ghost towns. if they have no alternative source of income when a project closes. Continues on next slide MCA Conference October 2009 Post Conference Shorter Version

4. Enduring Challenges 2. Extractive Industries ReviewFindings – Winners and Losers: There is a risk that benefits and costs arising from extractive industries are shared unevenly. Although local communities bear the negative social and environmental impacts of extractive industry activities, they may not receive much of the revenues. And they may not be given the opportunity to participate in discussions on proposed projects. Indigenous peoples and local communities may depend on their environment for subsistence, through agriculture or fishing, and therefore be particularly vulnerable to environmental damage. Again, women often bear the brunt of the burden, for instance through having to walk further to get clean water. The poor, lacking the necessary skills and education, often fail to benefit from jobs created in the extractive industries; in many cases, employees are brought in from outside of the area. Often these negative impacts from a project occur before it even starts to generate revenues.” Extractive Industries Review Final Report (2003) MCA Conference October 2009 Post Conference Shorter Version

5. Enduring Challenges MCA Conference October 2009 Post Conference Shorter Version

6. Present Solutions 1. World Bank/IFC Response“The purpose of community engagement is to build and maintain over time a constructive relationship with communities. Community engagement will be conducted on the basis of timely, relevant, understandable and accessible information. It leads to incorporating the views of the affected communities into project decision-making process especially regarding issues that affect directly affect the community such as - proposed risk mitigation measures, - the sharing of development benefits and opportunities, and - implementation issues. It Is well documented including measures taken to avoid or minimize risks to and adverse impacts on the affected communities.”World Bank Group Management Response to the Extractive Industries Report September 2004 MCA Conference October 2009 Post Conference Shorter Version

7. Social Labor & working conditions Community, heath, safety and security Land acquisition & involuntary resettlement Indigenous Peoples Environmental Pollution control and abatement Biodiversity Conservation and Sustainable Natural Resource Management Cultural Heritage Present Solutions2. IFC Performance StandardsApril 2006- Social and Environmental Assessment and Management SystemIFC Guidelines provide more detailed implementation guidelines IFC has also published reports on key practices such as - Stakeholder Engagement - Grievance mechanisms- In Migration MCA Conference October 2009 Post Conference Shorter Version

8. Present Solutions 3. Other Sources Other key sources of good practice include Equator Principles – adopted by Banks ICMM – for example their Community Development Toolkit and recent publication on grievance mechanisms CASM – for Artisanal and Small-scale mining. The World Bank is host to the Communities and Small-scale Mining secretariat who have produced an excellent report entitled “Mining Together” which addresses the co-existence of Small scale mining and large scale mining EITI – for transparency regarding payments to governments and receipts by governments MCA Conference October 2009 Post Conference Shorter Version

9. Present Solutions 4. Planning and Financial Valuation Model for Sustainability Investments Sustainability as a Driver of Increased Profitability for a Project • Direct Value (Creation) results from direct costs/benefits e.g. substitution of local hires for expatriates • Indirect Value (Protection) is the estimated value of risk mitigation e.g. value of avoidance of possible disruption; value of reputation www.commdev.org MCA Conference October 2009 Post Conference Shorter Version

10. Present Solutions MCA Conference October 2009 Post Conference Shorter Version

11. Different Points of View (i) HSBC has a series of advertisements in the walkways to the planes at airports that I always find striking A different point of view is simply the view from a place where you’re not Source HSBC. MCA Conference October 2009 Post Conference Shorter Version

12. Different Points of View (ii) Everyone looks at the world from a different point of view Source HSBC. MCA Conference October 2009 Post Conference Shorter Version

13. Different Points of View (iii) Sometimes another point of view can open up a whole new world Source HSBC MCA Conference October 2009 Post Conference Shorter Version

14. Different Points of View (iv) The mining company sees a rich ore body it has found and wants to develop The elite and the community men see prospects for employment and income The most vulnerable and the community women see impending disruption, dislocation and loss of the land needed to grow food Desirable Not desirable Not desirable Desirable MCA Conference October 2009 Post Conference Shorter Version

15. Working with the End in Mind • (i) Community Dependency on the Mine • Working with the End in Mindis a common practice for mine design, • but is rarely found for community engagement • From the “Social License to Operate” now and over the life of the project • leading to the “Ticket to Exit” with reputation intact • Mining development that leaves all groups in a community better off after the mine closes than if mining had not taken place • For operations in remote sites, where broader development is lacking • How much compensation do you provide as livelihoods rather than cash? • How much do you engage with the community as a partner not an opponent? • How much do you engage instead of ignore local government? MCA Conference October 2009 Post Conference Shorter Version

16. Working with the End in Mind • (ii) Winners and Losers • Women and The Most Vulnerable May Not Be Better Off • One of the most fundamental barriers to improved • development outcomes for communities is a Gender Bias • Mining benefits go predominantly to men and the elite • Men get the bulk of mining related employment • Men have control over family and community income and programs • Most risks fall on women and the families they care for • Loss of land for women’s subsistence agriculture • Increased distance to reach pastures, collect water and herbal remedies • Contamination of water supplies • Increased domestic and gender based violence • Prostitution, linked to migrant workers and to increased income • An unintended consequence of mining development is that community women’s lives often become worse off, not better off MCA Conference October 2009 Post Conference Shorter Version

17. Working with the End in Mind MCA Conference October 2009 Post Conference Shorter Version

18. Working with the End in Mind (iii) (iii) The Effectiveness (or not) of Community Programs From our World Bank Mining Research in Peru – Community Programs “Our company has invested millions of dollars in social programs in our neighbouring communities, however the indicators for child malnutrition and maternal health have seen no noticeable improvement” “The men came presenting projects of road construction – but the women wanted to tackle their health and nutritional priorities. Five years later after pouring money into the area of infrastructure we are seeing the same levels of unhappiness in the home: perhaps the women were right” “Lots of work was undertaken in Tambogrande on economic development – and whereas the men sought infrastructure, the women often sought training workshops”. Peru Report - Interviews with mining companies in Peru MCA Conference October 2009 Post Conference Shorter Version

19. Unresolved Challenges and Evolving Solutions • An unintended consequence of supply chain initiatives that are not matched by non-mining economic development initiatives can be to increase the economic distress when the mine closes • Present Good Practice – (i) Benefit Sharing • EVOLVING SOLUTIONS – (i) REDUCING DEPENDENCY • Mining workforce training • PROVIDE SMALL BUSINESS AND VOCATIONAL TRAINING TO THE COMMUNITY THAT IS NOT DIRECTLY RELATED TO MINING • Mining supply chain initiatives • HELP FACILITATE AND CREATE NON-MINING-RELATED EMPLOYMENT • Company funded community programs • HELP BUILD COMMUNITY INSTITUTIONAL CAPACITY • Government funded social programs (using mining income) • HELP BUILD LOCAL GOVERNMENT CAPACITY MCA Conference October 2009 Post Conference Shorter Version

20. Unresolved Challenges and Evolving Solutions • “If women’s opinions were taken into account from the beginning, perhaps both • time and money could be saved in these [mining] projects”Peru report • Present Good Practice – (ii) Community Consultation • EVOLVING SOLUTIONS – (ii) CONSULTATION WITH WOMEN’S GROUPS • Providing communities with timely, relevant, understandable information • PROVIDE WOMEN THE INFORMATION THEY WANT AND HOLD SEPARATE CONSULTATIONS • Community consultations that are well structured, meaningful and responsive • DISCOVER WHAT ARE THE WOMEN’S VIEWS – NOT WHAT YOU THINK THEY ARE • MITIGATING RISKS for example • REPLACEMENT DWELLINGS AND LIVELIHOODS • PROTECTING LOCAL WATER SUPPLIES AND FOOD SECURITY • REDUCING CRIME GENDER-BASED BASED VIOLENCE • Respond to the findings of the community consultations • RESPOND TO THE FINDINGS OF THE WOMEN’S CONSULTATIONS • One major company, Rio Tinto has prepared its own Community Gender Guide MCA Conference October 2009 Post Conference Shorter Version

21. Unresolved Challenges and Evolving Solutions • The capacity of women to understand and address the issues more subtly, through persuasion, may become the guide for a new approach to mining,” • Peru report • Present Good Practice – (iii) Company Funded Community Programs • EVOLVING SOLUTIONS – (iii) WOMEN’S ECONOMIC & SOCIALEMPOWERMENT • Maximizing local employment and income including linkages and spin-off businesses • FIND WAYS TO INCREASE WOMEN’S DIRECT, INDIRECT AND NON-MINING EMPLOYMENT • Providing high quality company health facilities • USE WOMEN’S PROPOSALS FOR COMPANY COMMUNITY PROJECTS • Providing local infrastructure • PARTNER WITH LOCAL GOVERNMENT SO THAT COMMUNITY WOMEN HAVE A STRONGER VOICE IN SELECTING GOVERNMENT PROGRAMS MCA Conference October 2009 Post Conference Shorter Version

22. Unresolved Challenges and Evolving Solutions • “The unequal distribution of power between men and women…in multiple areas of public and private life…lies at the heart of gender • Gender-responsive social analysis: The World Bank, June 2005 • Present Good Practice – (iv) the Power Structure in the Workplace • EVOLVING SOLUTIONS – (iv) THE COMMUNITY POWER STRUCTURE • Meeting the needs of women in the workforce • APPOINT BOTH A SENIOR CHAMPION AND WOMEN’S OFFICERS FOR GENDER INITIATIVES • Having a strong relationship with the community • ENSURE WOMEN ARE WELL REPRESENTED IN ALL COMPANY COMMUNITY MEETINGS • SUPPORT CAPACITY BUILDING OF WOMEN’S ASSOCIATIONS • Monitoring environmental data and social indicators • COLLECT DATA DISAGGREGATED BY GENDER WHERE FEASIBLE • “In workshops the women often sit on the floor and the men on seats – • when the issue is mentioned everyone just laughs”. • Peru Mining Report MCA Conference October 2009 Post Conference Shorter Version

23. Unresolved Challenges and Evolving Solutions • Evolving Solutions - (v) What Mining Companies are Doing in Papua New Guinea • Gender desks established/gender officers appointed • Women are represented in mine / community meetings • Surrounding villages supported by health workers and supplies • Women’s projects financed by community development funds • Training provided for women’s businesses • Transport provided to get women’s agriculture goods to the weekly market • Women’s adult literacy programs funded • Women’s agricultural productivity programs provided • The formation of Women’s Associations supported • Leadership workshops for women’s groups provided • Community leaders encouraged to give more of a role to women • Local government encouragedto support women’s interests and concerns MCA Conference October 2009 Post Conference Shorter Version

24. Unresolved Challenges and Evolving Solutions MCA Conference October 2009 Post Conference Shorter Version

25. Development Case: Engaging with women’s groups can Improve development outcomes Reduce conflict/ increase conciliation Result in a less dependant community Position the community to better survive after mine closure Business Case: Engaging with women’s groups can Improve the outcomes from community programs Enhance the company’s reputation Improve the prospects for a successful “ticket to exit” Improve the bottom line through a more supportive workforce, less risk of interruptions and savings in costs and management time The Development Case and the Business CaseMining development that leaves all groups in a community better off after the mine closes that if mining had not taken placenot justbut alsothe elite and men better off the most vulnerable and women better off MCA Conference October 2009 Post Conference Shorter Version

26. In Conclusion – With the End in Mind “For each year of education a woman receives, the mortality rate of her under 5-year old children is reduced by between 5% and10%” United Nations Population Report 2005 CARE puts working with women this way “We work with women because it makes good investment sense. Women, more than men, tend to parlay improvements in their own lives into the lives of their children and communities. Increases in income typically translate into greater investment in children’s education and health care. Education for girls and women plays a strong role in the next generation’s health and well-being” Women’s Empowerment, Care International If the community women consider their lives are better, not worse off, because of the mine being there, then you are doing a lot of things right Thank You MCA Conference October 2009 Post Conference Shorter Version