The tri-sector approach

Though mining is a large employment giver, GDP contributor and forex and revenue earner, it is associated with environmental and social costs. The key negatives associated with the industry are land access denial, environmental pollution and damage to community health, besides increasing mechanisation that reduces job opportunities.

Until the '90s, globally, most mining decisions were based on economic arguments and taken between government and industry. However, mineral companies are now faced with a 'new mineral development era', characterised by the growing assertion of the people's right on decisions affecting their neighbourhood, greater governmental concerns about environment, unprecedented global transparency enabled by the Internet and the rising role of NGOs.

Mining companies now have to address the needs of all stakeholders affected by the mining operations. Traditionally, communities have been the least regarded actor in mining decisions. But in recent years, local communities have joined mining development decisions as stakeholders.

Local communities confront various issues associated with mining, which include access to land, unequal sharing of mining benefits, social tensions, relief & rehabilitation, community empowerment, dispute resolution, health and safety, and human rights. These issues have become a part of mining companies' strategic thinking.

Mining companies worldwide have demonstrated increased commitment to addressing the needs of disadvantaged communities. A reason is that if in the past companies obtained a licence to operate from government, today they need to also obtain a 'social licence to operate' from communities and their neighbourhood. Anyway, mining companies are making a significant contribution to community development via infrastructure improvements, community health initiatives, community foundations and support to small local businesses and sustainable livelihood projects.

However, the biggest roadblock to building the desired social capital is the lack of transparency over revenue flows to mining communities and the proportion spent on corporate community initiatives. This information is necessary to base community development objectives.

The Extractive Industries Transparency Initiative (EITI) has been developed to address this. Its aim is to strengthen governance by improving transparency and accountability in the extractive sector by verifying and publishing company payments and government revenues from oil, gas and mining.

However, this may not prove to be fruitful for two reasons. Firstly, only a few mining companies agreed to support this initiative. Secondly, the initiative is one-sided; it makes no reference to how governments disburse their receipt from all sources.

Government continues to play a critical role in sustainable development, which requires net and equitable benefits and the building of social capacity for the affected communities that goes beyond the closure of the mine. Government is expected to take responsibility for regional development considering community needs. So it is imperative to get detailed accounts of the government's fiscal receipts and outgoings.

It is, however, not always easy for government and industry to take up sustainable development on their own. Governments, especially in India, lack the capacity to undertake effective community/regional development initiatives. Similarly, mining companies lack expertise in deciding what's best for the community, what will build social capital and what will deliver long-term sustainable development. So, effective community development could be achieved through tri-sector partnership, which suggests co-operation among the three main groups-community, mining companies and government. This approach places clear obligations on government, industry partners and communities to improve socio-economic outcomes.

Tags: tri-sector partnership, mining, mineral development, environmental consequences