IN MY OPINION
BRIAN GANSON: Time for mining companies to take responsibility
Until Rio Tinto and other mining companies acknowledge their role in the sociopolitical conflict around them, solutions are unlikely to be found
Faced with escalating violence in communities around Richard Bay Minerals (RBM), Rio Tinto recently halted production and put its expansion plans on hold, with knock-on effects for its smelter operations and another black eye for SA’s mining industry.
Until Rio Tinto and other mining companies acknowledge their role in the sociopolitical conflict around them, solutions are unlikely to be found.
The role of mining in altering the communities in which it operates is widely documented. Major projects are typically accompanied by significant urbanisation, with pressures on land, water, housing and public services. This is rarely accompanied by sufficient governance capacity or public service provision. In Richards Bay, a 2005 World Bank report noted how the port and consequent developments had pushed the annual population growth rate to 27.3% in 1980. Studies have shown that such unmanaged growth is a direct contributor to conflict and violence.
The same World Bank study noted that, while the economy of Richards Bay is booming, capital-intensive companies dominate the local economy but provide few employment opportunities. Economic development strategy ensures economic growth but with few direct benefits for the poor. There are also "few meaningful linkages" between major industry and development of local businesses. The report also documented "limited, if any, community consultation and participation" in the planning of initiatives. A 2014 report on uMhlathuze by the SA Cities Network suggests little changed in the ensuing decade.
This approach to growth leaves uMhlathuze with a youth unemployment rate higher than the SA average, while human development indicators such as domestic water provision and Internet access lag behind, and criminality and corruption increase. A situation in which minerals and profits are sent abroad, while relatively few local people have good jobs and the majority see no prospect for their own or their children’s advancement, is a recipe for disaster.
Rio Tinto’s response is to call on government to solve the problem. It makes no mention of its own role in contributing to long-standing challenges or its responsibilities for generating and implementing solutions.
Yet Rio Tinto tells us in communications that it is a good corporate citizen, attentive to the guiding principles on business and human rights; the performance standards of the International Finance Corp; industry standards such as those of the International Council on Mining & Metals; and the UN Global Compact, of which it is a founding member.
Perhaps Rio Tinto board members and senior leaders need to review these documents and the obligations they set out. They make clear that a mining company is responsible for the direct, indirect and cumulative impact of its presence and operations.
They state that issues such as migration to mining areas and the development of sufficient local capacity to address heightened social and political problems are a shared responsibility between government and the company. They insist on full participation of local communities in company planning and decision-making.
It is not enough for the company to "do something". Its responsibilities continue until the problems of which it is part are effectively solved.
Bold Baatar, CEO of Rio Tinto’s energy & minerals unit, says: "Our goal is to return RBM to normal operations in a safe and sustainable way."
Given the company’s numerous commitments, we can assume that he means operations that are not only safe and sustainable for the company, but also safe and sustainable for the broader community around it.
Should RBM be sincere, it can draw from voluminous studies of the ways in which companies can be catalysts for peaceful development. What these studies have in common is an emphasis on the always difficult, often frustrating, and sometimes tedious work of helping diverse stakeholders come together. Companies, labour, communities and government need to assess together, analyse together, plan together and act with common purpose.
Mining companies are well positioned to support such endeavours. They can use their privileged position to extract value for themselves — or, preferably, to ensure the free flow of information, facilitate more trusting relationships, and support forums in which parties can hold each other to account.
It is natural for company management facing a significant financial and operational crisis to place blame elsewhere, particularly when there is plenty to pass around. But Rio Tinto’s investors, project finance lenders, board members and other stakeholders should not be distracted from the obligations for RBM to do better. That’s what leadership is about.
• Ganson is head of the Africa Centre for Dispute Settlement at the University of Stellenbosch Business School