Brexit, mining and CSR

All this recent news about Brexit has reminded me of this article in The Times (behind a paywall – apologies). It tells the story of one of the areas which voted for Brexit. As we now know, these were often rural areas which are relatively poor for whom foreign labour threatens wages, jobs and services. This article was one of many in the weeks following the vote where the London-centric media tried to figure out what the hell had just happened to them by dispatching unsuspecting correspondents to far flung corners of the nation (to which they never then returned, but it’s the thought that counts, right?). What stood out to me though was that this story was based in the formerly prosperous (and oddly famous) town of Grimethorpe, South Yorkshire. Prosperous that is, until the mines closed.

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The Grimethorpe Colliery Band

The story of mine closure leading to decline and poverty, as friend of the blog Dylan McFarlane tweeted recently, is a global one. Dylan was pointing to a recent article on The Conversation telling the story of mining towns in Guinea. These towns had seen limited prosperity and a great deal of inequality as the benefits of Bauxite extraction had not been widely shared.

So far, so familiar. Mine closure, it turns out, is one of the thorniest issues facing mining companies looking to improve their social and environmental impact. One answer I saw in Ghana is the creation of foundations which pay a percentage of company profits into a fund a proportion of which only pays out when the mine closes. Even these, I suspect, will only slightly soften a very sharp drop in economic prosperity.

In Europe, sudden drops in economic prosperity have historically been associated with a shift towards populist, nationalist leaders and rhetoric that we are currently witnessing. As surprising as Brexit was for London-based elites, its seeds were sown in the industrial and mining policy of the 1980s. This all raises the question of what difference might have well managed closures made? If today’s best practices had been adopted 30 years ago would things be different? Would Grimethorpe be prospering and actually in need of foreign labour? (My inner pessimist makes me think this is unlikely, CSR seems only to be able to do so much)

For those of us interested in mining and CSR, the Brexit vote should renew attention on the long term political consequences of mine closure. The effects of mine closure and decline are an important but under-researched area. The mining industry has just seen a marked global downturn as the decades-long commodities boom came crashing to a halt. Hundreds of thousands have been laid off and many mines closed. As a result, telling the story of Grimethorpes around the world is more pressing than ever.

Image from The Guardian.

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

Free working paper on mining, CSR and politics out now!

The Effective States and Inclusive Development Research Centre have just published a working paper by yours truly on ‘Corporate social responsibility and political settlements in the mining sector in Ghana, Zambia and Peru’. It’s really a first cut at some of the findings from my work in 2014 which I’m currently writing up into some papers and a book. The abstract reads thusly:

This paper explores and compares the political effects of corporate social responsibility in the mining sector in Zambia, Ghana and Peru. The paper adopts a political settlements approach to answer the question: How do the CSR practices of mining companies affect local and national political settlements? After setting out the main tenets of the political settlements approach, this is articulated with literature on the politics of natural resource extraction and CSR. The paper then sets the wider context of the international drivers of increased attention to CSR in the extractive sector and before exploring the impact of the CSR practices of mining companies on the political settlement in Ghana, Peru and Zambia at the national and local levels. The final sections offer a comparative discussion of what the findings mean for understanding CSR’s role in inclusive development and natural resource governance. The paper argues that recent increased CSR expenditure does not necessarily translate into development for those living near mining companies, particularly in contexts of exclusionary political settlements, of which all case studies exhibited characteristics. There are a great many institutional and contextual limitations placed on the ability of CSR to deliver development for affected communities. Across the case studies, the opportunities CSR programmes afford tended to aimed at those with the greatest capacity to disrupt operations rather than those with the greatest need. In concluding, I argue that, despite some obvious limitations, the political settlements approach can generate new insights through its focus on the politics of development, and, in particular, the politics of stability.

Available here – Go check it out! All feedback welcome.

Listen to the talk I gave in Edinburgh this week

I recorded the talk I gave to the Centre of African Studies at the University of Edinburgh this week and you can listen to it here:

I really enjoyed the opportunity to talk to such an interesting crowd and got some great questions (which aren’t included). I have high hopes we can get some future research collaborations with folks up there.

Mining industry says mining is good for development

Taking a leaf from the playbook of ‘Dogs Pro Walking’ and ‘Turkeys Against Christmas’, the ICMM has today launched the 3rd edition of its Role of Mining in National Economies report which highlights how “mining can be a major driver of sustainable development.”icmm-romine-cover
To be honest, this may well be a very good report, and I am sympathetic to the notion that mining has an important role to play in a countries development … if managed correctly. I’ve not looked at this report long enough to make a judgment as to its true strengths and weaknesses. What it does remind me of, however, is how I saw their report on the role of mining in Zambia ridiculed at a conference about mining while I was in Zambia in 2014. At that conference a respected Zambian academic told the audience that the best use of the report was as toilet paper. The comment was met with laughter, rueful nodding and zero contradiction. I know people at Oxford Policy Management who were involved in writing the report and am sure they worked hard and well. The simple fact of the origin of the report precluded it ever being taken seriously in Zambia.

So here’s my question, who is swayed by a report from the mining industry about how great the mining industry is? I would really love to know.

I’m presenting tomorrow at the #DSA2016 in Oxford

I’ll be presenting a paper on How does corporate social responsibility affect national politics? The case of mining in Ghana, Peru and Zambia at the annual Development Studies Association Conference in Oxford tomorrow. The abstract reads thusly:

This paper examines the national politics of mining and corporate social responsibility (CSR) in Zambia, Ghana and Peru. The paper draws on research conducted as part of 3-year British Academy Postdoctoral Fellowship looking at the role of international standards in mining company behaviour in developing countries. It begins by outlining political settlements theory, focussing on elite bargaining and the drivers of political stability. The paper then uses this conceptual framework to explore the ways in which CSR and the behaviour of mining companies affect national politics and natural resource governance in Ghana, Peru, and Zambia. Geographical and historical specificity are argued to be central to understanding the ways in which CSR affects political settlements in these countries, in particular the role of memory and the timing of resource booms. These are explored in each case study country to show the different meanings and functions CSR takes on in different regulatory contexts before examining how mining companies use CSR to attempt to minimise regulation and taxation burden, effectively aiming to produce enclave forms of extraction. Here, CSR is argued to be a useful window into the political activities of firms and an important part of how they engage in the national-level politics of host countries.

I’m in session P19 in 4-5.30pm Room 7 (Examination Schools). See you there!

I have a book contract!

I have, today, signed a contract for a book with Oxford University Press. This is great news. This book is provisionally entitled Risk and responsibility: The politics of mining, corporate social responsibility and development. Though, this may well change as one of the bits of feedback from the reviewers was that they didn’t like the title. (Perhaps I should steal less from Austen for the title. Dickens instead perhaps?).

Risk and responsibility draft cover

Almost certainly what the book won’t look like

 

Here is a brief synopsis from the proposal:

Mining is at a pivotal moment. The recent commodities supercycle, in which mining companies expanded across the globe and boosted their CSR investment and activities, has ended. This expansion created multiple struggles and tension and has increased pressure from investors, national governments, civil society and local communities on mining companies to improve their environmental and social impacts. Expectations of mining company behaviour have been raised and are unlikely to fall. This book examines the drivers and consequences of the recent growth of CSR in the extractive industries. Risk and responsibility brings together literatures in geography, development studies and politics to examine of the political and development impacts of CSR in the mining sector. The book draws on over 200 semi-structured confidential interviews conducted in Canada, Ghana, Peru, USA and Zambia between 2011–2014 focussed on 6 case-study companies, to examine the functions and meanings CSR takes on across different scales of action. At the international level, CSR aims to attract capital and reduce shareholder risk; at the national level, it is used to improve the image of mining companies and curry favour with populations and regulators; at the local level, CSR profoundly reconfigures local political institutions to produce stable operating environments. In the mining industry, strategic pressures have come to be understood through the rubric of risk, for which CSR has come to be seen as the strategic tool which can unite the responses required of companies towards a range of stakeholders. Over eight chapters, Risk and responsibility examines the interplay of risk and responsibility at the heart of the political life of corporations.

It’s a ways off yet. My current best guess would be that it comes out in 2018.