Getting a social licence: not easy, but necessary

When more than 30,000 miners, investors and mining executives gathered at the Prospectors & Developers Association of Canada (PDAC) convention in Toronto earlier this month, there was lots of talk about the tough time they now have in raising funds.

But funding woes are cyclical. The mining sector faces an even bigger, longer-term crisis — companies need to focus more on getting and keeping their social licence to do their work.

Social licence is the permission that companies need to obtain — through public opinion and engagement — to come into communities and develop properties efficiently, profitably and safely.

It’s sometimes couched in other terms like “corporate social responsibility” or “sustainability,” but when it comes down to it, it really is about obtaining a licence, formal or otherwise, to work harmoniously and productively with the people who live near — and may rely on — mines.

Three quarters of the world’s mining companies are domiciled in Canada. The issue shows up here when projects and claims involve environmentally sensitive areas or First Nations’ territory.

Engaging the people who have concerns can mean the difference between approval and defeat.

Some companies find that they acquire properties that were mishandled by previous owners, and as successors it’s up to them to try to make it right.

Many mining companies have understood these challenges for years, yet it was clear at the conference that the sector knows it has a bad name. It’s time to fix this.

It’s also clear that industry leaders understand now that they need new, more robust ways of approaching the people and communities they need to work with.

“The perception of mining starts from the moment the first boot hits the ground. You have to get it right from the very beginning,” said Andrew Cheatle, CEO of Unigold, as part of a panel at the PDAC convention that included five CEOs from major mining firms.

Barrick Gold CEO Jamie Sokalsky said during the panel session that “we all recognize the benefits of mining, and communicate them regularly to governments and communities. But many of the risks and costs associated with our business are less understood, and I think we need to do more to educate our stakeholders about these issues, and how we are managing them.”

The problem for the mining sector — and more savvy CEOs and executives know this — is that the industry has only begun to address a problem that could bring it to its knees.

“There is no more low profile in mining,” Diego Ortega, vice-president of sustainability and corporate affairs for Goldcorp (Australia), said. He noted that many large mining companies have global operations, and in the past their difficulties in some parts of the world would attract little notice in others where they had better records.

However, the Internet and social media have changed that, Ortega said. “We can’t work in an isolated way anymore, and mining companies have left a huge gap between the company and peoples’ perception. We need to fill that gap with information.”

The problem is that this is easier said than done.

The smart mining companies know that they are only one tweet away from a bad rumour tipping over their stock price and terrifying the funders, regulators and institutional investors they rely on.

What to do? There are three steps mining companies can take to get started.

1. Tell the truth. Many in the mining sector are wary of this, but mining brings jobs and infrastructure such as schools, hospitals and roads to communities, and companies can do a better job conveying this. It means being transparent.

2. Engage your critics. There is no point braying about “radical environmentalists,” as some of our less-than-clever politicians are doing now. The people who oppose you or are concerned about you want facts, and they want to hear from you. If you don’t tell your story, they will.

3. Find the narrative. When mining companies get embroiled in a problem, they need to show a clear path to the end of the story. What’s the problem? How do you fix it? Who will do it? When will it be done?

As clever executives know, the best way to get a licence is to pass the test.

— David Israelson, Brendan Howley and Jeff Silverstein are seasoned investigative journalists and advisors with global experience in resource and sustainability issues management. Their company RADIUS is a Toronto-based intelligence and communications consultancy for the mining sector. They can be reached at president@radiuscommunications.com and www.radiuscommunications.com.