June/July 2011

Making it right when things go wrong

Grievance mechanism key to building good mine-community relations

By Virginia Heffernan

Paul Warner listens to villagers’ concerns at a community meeting in northern Liberia | Photo courtesy of Paul Warner

While contractors were building the road to the giant Antamina copper-zinc mine in Peru a decade ago, they accidentally broke one of the irrigation canals that local farmers relied on for their crops, and then failed to follow through on their promise to repair it. With the dry season coming on, and their livelihoods in danger, villagers from nearby Aquia set up a blockade on the mine road. Because there was no protocol to deal with the escalating protest, the mine’s consortium of owners, including Canada’s Teck Resources and the now defunct Noranda, were uncertain on how to proceed.

They sent one of their senior managers, Paul Warner, to the frontlines. Warner told the protestors they did not need to block a road to get the owners’ attention and handed out his direct phone number to anyone who would take it.

“Nobody called, but the blockages stopped,” Warner told a diverse crowd of social activists, academics and mining company representatives at a recent seminar at Ryerson University in Toronto organized by the federal government’s Office of the Extractive Sector Corporate Social Responsibility (CSR) Counsellor.

Although nobody recognized it at the time, Warner’s instinct to be fully accessible and forge personal relationships in the community would become a cornerstone of the grievance mechanisms that mining companies are currently adopting to nip complaints in the bud, before they become full-blown protests.

Using the proper tool

“For a company to take a bet on winning lawsuits or successfully countering hostile campaigns is, at best, optimistic risk management,” wrote John Ruggie, the Special Representative of the United Nations Secretary-General for business and human rights and a leader in the field, in a 2008 report.

In fact, escalated complaints are a sure sign that a company does not have an effective grievance mechanism in place, says Warner, who now works with both mining companies and communities – through his company Both Sides Now Consulting – to try to find better ways to engage with each other.

Several organizations, ranging from the Prospectors and Developers Association of Canada to the International Council on Mining and Metals, have published guidelines that mining companies can use to implement their own, project-specific grievance mechanisms; these guidelines will continue to evolve based on real-life experiences at mining operations. Even Oxfam Australia, traditionally regarded as anti-mining, is working with the mining industry to ensure that complaints are heard and dealt with before they lead to protests.

Warner says if he could use just one reference, it would be the guidelines published by the Corporate Social Responsibility Initiative at Harvard University’s John F. Kennedy School of Government called “Rights-Compatible Grievance Mechanisms, a Guidance Tool for Companies and Their Stakeholders.” Ruggie is a professor of human rights and international affairs at the Kennedy School and the driving force behind the guidelines.

They call for a legitimate and trusted mechanism that is publicized, transparent and accessible. The basis for the mechanism would be engagement and dialogue between the company and the community, and the end result would be predictable, fair and empowering. Finally, the mechanism would be a source of continuous learning to evaluate what works and what does not.

The guide will be revised and expanded later this year based on four pilot projects, one a coal mining operation in northern Columbia called Cerrejón, owned in equal parts by subsidiaries of BHP Billiton, Anglo American and Xstrata.

Building relationships and communities

In 2007, Cerrejón’s owners commissioned an independent review of the mine’s social engagement by a panel of internationally recognized experts in the area of social development. The resulting report identified a number of concerns and grievances, mostly related to the resettlement of the Tabaco community to make way for a mine expansion in 2001, when police evicted residents by force.

Following the panel’s recommendations, Cerrejón agreed to buy a piece of land where Tabaco could be reconstructed, build a community centre, provide the initial engineering works to build the new village, fund socio-economic projects and to compensate community members.

But there are ongoing concerns from the 200-plus communities that line the 150-kilometre railway that serves the mine, including access to water, electricity and education, employment opportunities and the loss of livestock near the railway. The railroad is subject to periodic blockages by community members, who use this technique to protest everything from local power outages to recent plans to change the country’s distribution of royalties from commodities.

So Cerrejón set out to develop a larger, more comprehensive complaints mechanism following Ruggie’s guidelines and adding the input of employees, contractors and community members. “Implementing the Ruggie guidelines to manage grievances has helped us internalize better international social standards and provided communities improved tools to interact with Cerrejón,” said León Teicher, president and CEO of Cerrejón, in a recent progress report on the company’s commitments. “The success of the mechanism will depend on both the company’s ability to respond timely, fairly and consistently, and on the transparency of employees and communities.”

Lack of planning courts disaster

Cases in which companies have failed to respond in a fair and timely manner are just as instructive as the success stories. When UK-based Monterrico Metals proposed building a large copper mine in a remote area of northern Peru in 2005, for example, residents protested. The dissent ended when allegations surfaced that several protestors were detained and beaten by Peruvian police.

The company continued with its development plans and the Rio Blanco Mine was expected to begin commercial production this year, but when residents held an informal referendum in 2007, the vast majority voted against the mine. The company offered them millions of dollars in compensation, but by then there was too much bad blood. In 2009 a civil lawsuit was brought against Monterrico (now owned by Zijin Mining Group) in the United Kingdom by the victims of alleged human rights abuses during the 2005 protest and £5 million ($8 million) of the company’s assets were frozen by the UK courts.

Rio Blanco may be an extreme case of a mining company-community conflict turning ugly, but it underlines the urgent need for effective grievance mechanisms. Implementation is finally gathering momentum, says Warner, and companies ignore the new guidelines at their peril. “For years I felt like I was pushing a wall, and then I turned around and the wall was pushing me,” he says.

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