You get back what you put in

When tropical cyclone Evan slammed into the Fiji islands a week before Christmas, 2012, it was the strongest such storm in more than 30 years. Packing sustained winds of up to 195km, the eye of the storm careened down the western coast of Fiji and along the length of the Yasawa and Mamanuca Islands popular with tourists. Ahead of the cyclone, government ordered tourists and others to be evacuated from the islands and low-lying areas. When the cyclone hit, roofs were ripped off houses, hotels, schools and commercial buildings. Trees were stripped of their leaves and crops destroyed.  Perhaps the biggest economic impact was on the tourist resorts on the offshore islands. All were affected; some so heavily damaged that they will be closed for months for repairs and at least one may never open again.

At Octopus Resort on Waya Island, the wind and tidal surge pushed sand up from the beach inundating buildings, filling the swimming pool, smothering the gardens and blasting paint off exposed surfaces. Roofs were ripped off by the wind and some accommodation rendered uninhabitable by rain and salt water.

The resort was left in tatters. Fortunately no one was hurt.

Remarkably, as soon as the wind died down, almost the entire population of Nalauwaki village, men women and children, walked over the hill and set-to to restore Octopus Resort to fully functioning as soon as possible. In three days of almost continuous effort, sand was removed, roofs repaired, rooms restored to livability and paint applied. The resort re-opened in time for Christmas.  

Arguably, this effort by the local people could reflect the importance of the resort as a source of employment and income for the community. A closer examination shows that there is more to the relationship than jobs and money. The broad involvement of Nalauwaki community members in the cleanup and the language used when describing the resort, its owners and management all speak to the highest level of Social Licence, psychological self-identification or, more simply, feelings of co-ownership – it’s our resort! 

Similar social dynamics can be found in mining projects around the world. They are not common, but when present reflect a similar high-quality Social Licence to Operate. This quality of relationship is worth having. For example, in Bolivia it can be the difference between operating a viable project and losing everything.

Since Evo Morales became president in 2005, Bolivia has acquired a problematic reputation among international investors as a place where government nationalises private sector operations and there are insurmountably complex social issues to deal with. Indeed, 2012 saw the nationalisation of South American Silver’s Malku Khota mineral exploration project, the Colquiri Mine ‘taken’ by co-operative miners, and the nationalisation of Spanish-owned electrical energy companies. 

On the other hand, a small group of mining operations appears to be most unlikely to experience nationalisation or show-stopping social conflict. At the Porco Mine, operated by Glencore subsidiary Sinchi Wyra, and Sumitomo’s San Cristobal Mine, the local populations are vocal in their support. Residents of Porco have marched to La Paz on several occasions to demand that government back off on any idea of nationalisation. When Morales visited the San Cristobal Mine he was given the same message by the local communities. At these mines the strong support is based on positive community relations in which there is mutual respect, interdependence, a shared vision of the future and a belief among the local population that it’s our mine!

Evo’s response has been to make several public statements on the importance to the country of mining companies that respect Bolivian values and bring skills and technologies that are not present in the country. You can join the dots.

At the San Bartolomé Mine owned by Coeur d’Alene Mines the situation is similar, but also different.  Here the mine is a joint venture with both local co-operative miners who strongly support the company, and state-owned COMIBOL. A positive relationship with the host city of Potosi is further evidence of a genuine Social Licence to Operate, which is a socio-political reality that Morales is unlikely to move against.

At the San Vicente Mine operated by Pan American Silver, the relationship with the local population is relatively young and still evolving as the company works to build the best possible relationship. For a few days last year the mine appeared vulnerable to a taking by co-operative miners, which could then provoke nationalisation. However, strong voices from the local community pushed back against both threats, indicating that the company’s social investment is paying off; the project looks increasingly resistant to socio-political risk.

These examples show that investing in social relationships pays big dividends for companies. In Fiji a resort was back in business in days due to the unconditional support of its local community. In Bolivia, having a high-quality Social Licence renders private-sector projects effectively immune to the risk of nationalisation or takeover by dissident elements.

To gain this higher quality of Social Licence, operators move beyond the transactional relationship typical of most company-community interactions to one based on collaboration, and work diligently to maintain it. Practitioners will assure you that quality is not related to the amount of money involved, but rather how it is applied. So in purely material terms, the return on well-managed social relations can be many times what was put in.

By Ian Thomson

Ian Thomson is a principal and co-founder of On Common Ground Consultants Inc., an international consultancy specialising in enhancing social performance and socially sustainable outcomes for the global resource sector.

[email protected]

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