The modern way to regulate the mining industry

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This recent story about Miningwatch Canada attempting to sue the Mount Polley Mining Corporation and the British Columbia Government, has caught my attention. Their claim is that “it has now been over two and a half years since the Mount Polley disaster happened and yet, despite clear evidence of violations of Canadian laws, no charges have been brought forward by any level of government.” Indeed, last year the company has been allowed to resume operations at the site. Effectively, Miningwatch are using a private prosecution to goad the state into action – and the state is responding by trying to get the case stopped.

There are a few things about this that are interesting. The first is that for many actors in the field, the best way to increase pressure on mining companies to improve their practices is through the courts. There is a steady drip drip of stories of mining companies headquartered in the developed world being sued for the behaviour of legally separate (but often wholly owned) subsidiaries in developing countries. This is obviously not the case for Mt Polley – a Canadian mine being sued in Canadian courts – but this shift to the courts is telling. Acacia and Vedanta are being sued in UK courts (and as I pointed out on twitter, UK lawyers meeting their clients in Zambia in the Vedanta case was last week were subject to some pretty serious hassling) and Hudbay is being sued in Ontario courts. Monterrico Metals settled out of court before a verdict was reached in 2011. My own research shows that these cases are being “very attentively watched” by the industry.

One particularly interesting (for me, at least) finding from my research was that these cases often draw on the voluntary standards mining companies have adopted. Unlike the Miningwatch Canada/Mt Polley case above, these are often civil suits based on the tort of negligence. In essence, those suing the mining companies are accusing the companies of being negligent in their behavioiur. In order to establish what is negligent, the cases need to establish a ‘standard of care’ – a standard against which the mining companies can be said to have been negligent. In the past, this was often done using internal company policies. Now, however, with many companies signing up to international voluntary standards it’s these standards that are being used to establish standards of care. If mining companies have signed up to standards, and the courts establish that following these standards would have avoided the human rights abuses companies are being sued for, then the companies will have been negligent. The financial penalties of this can be enormous – just look at BP. BHP Billiton is hoping to sign a $1.55bn agreement with the Brazillian federal prosecutors to avoid $47.5 billion civil suit following the Sanmarco tailings disaster, having already settled with federal and state governments. All of a sudden, the vague sounding pledges of voluntary CSR and environmental standards have teeth.

In my own research, these cases, amongst a range of other pressures, are creating a new regulatory landscape for mining companies. Courts, bringing together hard and soft regulation, increasingly appear to be a modern way to regulate the mining industry.

Photo of Mt Polley disaster from Al Jazeera

Listen to my talk on politics, CSR and development

Following the success of my last podcast I’ve decided to record my talks and stick them on this blog. So, here is the audio for my talk ‘Talking about politics: corporate social responsibility and development in Ghana, Perú and Zambia’ at Mining and Communities Solutions 2016, University of British Columbia, 5-8 June 2016.

Despite this being my first talk at a mining industry conference, it went down really well and provoked quite a bit of discussion. Listening again I hear it mainly as a masterclass in saying ‘erm’ a lot (I was rather nervous) but I did get my main points across quite well. I had little reason to be nervous it seems as my message – that we need to talk about CSR as a political intervention into host countries and communities – was broadly well received. This conference was a gathering of people who really do what to improve the impacts and benefits of mining for local communities and therefore very encouraging. I’ll be posting about my ‘take homes’ in the coming days.

Do let me know what you think.

Presenting in Vancouver next week

Next week I’ll be presenting at the Mines and Communities conference at UBC in Vancouver. I have the much coveted last presentation of the day slot. My abstract reads thusly:

In this paper I argue for a more political understanding of the intentions and impacts of corporate social responsibility (CSR) spending in the mining sector in developing countries. These arguments are the result of a 3-year research project examining the drivers and impacts of international voluntary standards in the metals mining sector. This research has examined the decision making and development impacts of mining companies in Ghana, Perú and Zambia headquartered overseas. Data was gathered through over 180 confidential interviews, mainly with metals mining company employees at all levels, but also local communities, consultants, lobbyists, academics and government regulators. These interviews examined business strategy, regulation, CSR decision making and the impacts of CSR programmes and were supplemented by analyses of corporate plans, reports, policy briefs and the grey and academic literature. I begin by briefly elaborating the drivers of international voluntary standards in the sector before focussing on their impacts. Examining CSR projects and spending reveals four main ‘types’: public relations, instrumental, developmental and political. Each of these has different motivations, intended effects and development impacts. Importantly, each of these has political effects, interacting with local and national politics in different ways, with some having a profound impact. Yet, the current debate ignores or plays down the political effects of CSR. I argue that this is a mistake. If we are to understand and improve the development impact of CSR we must understand both the implicit and explicit political motivations of CSR spending, and engage in a clearer political analysis of the societies within which mining companies operate. Only with these clearly mapped can we understand the development potential of CSR spending. I conclude by pointing some ways to move towards a more ‘politically literate’ debate on CSR.

If you are around, do come along. I’ll try and record it so I can post here afterwards. I’ll also blog what I learned after the conference.

This is my first dalliance in attempting to talk the mining industry about the politics of CSR. I think this is really important for both understanding CSR working towards a more ‘developmentally effective’ set of programmes and approaches. We shall see how it goes.

I have a podcast!

A first! A few weeks back I gave the departmental seminar in my department as I’m coming to the end of my current research project (though the writing will continue for some time) and they recorded it and put it on Soundcloud. So, should you wish to hear my recent thoughts on mining and CSR, do have a listen. Should you wish to hear them again, you can download the podcast for your repeated listening pleasure. It has received some favourable mentions on the Twitter already. From people I have no idea who are, which is nice.

 

 

The irony is that seen as this was my first recorded talk to be distributed online it is also one of my least well prepared (It was recorded very shortly after my recent job interview). Which, I think, means that I come across much more black and white and critical than I would have intended. Ah well. Here’s hoping I have more time to get my message straight before it’s recorded for posterity next time. This has inspired me to record the talks I’ll be giving over the summer and upload them.

Mt. Polley triggers Canadian soul-searching on how to regulate the mining industry

Dead in the water?

The Mount Polley catastrophic tailings spill of last summer in western Canada has led to a new round of news stories, discussion and debate in Canada about how to regulate their mining industry.

The Mount Polley spill was one of the worst mining spills in the history of Canadian mining and raises questions of whether the current ‘light touch’ regulatory regime really works. Search warrants for Imperial Metals were carried out last week following the report from an independent panel which found evidence of design flaws but said it could not conclude anything about management culpability.

Particularly damaging for advocates of self regulation, the Mining Association of Canada refuses to release details of the self-assessment the Imperial Metals gave itself before the spill, no doubt because it shows they gave themselves a clean bill of health. The report was effectively just about the paperwork and not whether the plans were actually being followed and not checked by independent parties.

The consequences of this investigation could be very wide ranging and affect mining worldwide with increased requirements for third-party verification and more stringent tailing management in coming years. Industry commentators in Canada are already working hard to argue that regulators should not overreact.

One take home from all of this: CSR in the extractive sector starts with effective environmental management. Without this, CSR is dead in the water.

Image from CBC.

Upcoming conference on mining in Africa

In late April I’ll be presenting some of my work on CSR and global standards in the mining industry at a conference at Edinburgh University on ‘Mining and Political Transformations in Africa’. Do come along! The deadline for abstracts has passed but you can still register to attend and, from what I’ve seen of the line up, it looks to be a very interesting conference with representatives from both industry and academia.

Is the Canadian experiment failing?

News last week of another failed mediation for Canada’s Corporate Social Responsibility Counsellor for the Extractive Sector raises questions of whether this mechanism can ever really work in its current form.

Seen as a possible model for what other countries could do in this field it represents an interesting compromise between entirely self regulated CSR and law-based government regulation and is being watched around the world. This ‘Counsellor’ model was a watered down version of a previous recommendation for an independent ombudsman which had powers of independent investigation and reporting and could publish findings. The CSR Counsellor as constituted was primarily pitched as a mediation mechanism – if either party decided against being a part of the process, the CSR Counsellor could not proceed with the case. Which is what happened last week. Again.

The CSR Counsellor has become a compromise that pleases nobody.

On the surface, its harder to think of a better argument against voluntary CSR. Here is a pretty toothless mechanism for dealing with CSR issues arising from a nation’s mining companies overseas being repeatedly ignored or boycotted by mining companies. The mechanism awards veto power to either party and they use it. Mining companies eschew even modest oversight and accountability. MiningWatch Canada is calling for the counsellor to step down and replace the entire mechanism with something less fundamentally flawed.

There’s clearly something to be said for this but perhaps Canadian mining companies have reason to be skeptical. For a start, mining companies I have spoken to think the Counsellor will always side with the local community against the mining company with one executive saying that Marketa Evans (the Counsellor) had said as much in a meeting with mining companies. Whether or not this is true, it clearly reveals the deep suspicion with which mining companies treat the mechanism. Believing this to be true, no mining company in their right mind would enter into this process if they could possibly avoid it. It is pure liability and only likely to end in further antagonising community relations, bad press and their share price taking a hammering. We’re missing Silver Standard Resources’ explanation on why they backed out of the process, and they apparently see no need to mention it on their website, so we really don’t know what’s happened in this most recent case.

Maybe we do need a new CSR Counsellor who better commands the trust of the Canadian extractive sector but I don’t think we can pin the blame for the failure of the CSR Counsellor on Marketa Evans personally, as both sides seem keen to do. The problem is that the divisions in the mining companies/CSR debate are often so deep and bitter in Canada it is near impossible to imagine any person or institution which could satisfy all parties. Marketa Evans was clearly a choice aimed at assuaging the worries of the mining sector, with a background in banking and the Munk School of Global Affairs (funded by Barrick Gold Chair, Peter Munk). This was not enough to encourage mining companies to use the process. Anyone even more obviously sympathetic to the mining industry would likely face a barrage of criticism before they even began (as Marketa did) and do nothing to restore wider legitimacy to the mechanism.

Personally, I’m dismayed at this state of affairs. By most standards, the CSR Counsellor has failed in it’s mandate. No one will trust mining company accounts of conflicts, or their CSR reports and efforts, until they are subject to unbiased scrutiny. Mining companies running away at the first attempt at this in Canada just looks bad. This lack of engagement in the mechanism and no obvious improvement on the horizon really shows that more must be done to foster mining company engagement in the mechanism. Maybe a new hand at the wheel would help do that and help reshape the office into something more useful for all involved. I suspect however that what’s required is some real government backing to bring people to the table. That, and some teeth. If mining companies felt they had some real stake in how this mechanism operated, I suspect it would begin to look a lot more useful than it does now.