WA Based charity Hearts of Gold alerted us to the following article from Nick Holland (Gold Fields Head) on how mining companies and communities interact today- https://ecdpm.org/great-insights/sharing-benefits-gold-mining/

Gold mining and shared value: Contributing to development and communities. GREAT insights Magazine, Volume 3, Issue 7. July/August 2014.

The article has some good core facts such as:

-“World Gold Council found that gold mining contributed some US$78 billion in gross economic value added and 530,000 direct jobs in the 15 leading gold producing countries.”

-“In Ghana, one mining position supports an estimated 28 other jobs and livelihoods in the country and in Peru about 19 jobs. In South Africa, mining supports about 1.4 million direct, indirect and induced jobs, and each of these supports on average around nine dependents.”

But rather than just list of the normal platitudes Holland makes some interesting points about the realities of community relations, right now, in 2014. While it is counter intuitive to feel sorry for mining companies they represent a serious cornerstone for long-term economic development in ‘developing’ regions and their existence all really comes down to other peoples money. Holland sites the fact gold companies are running out of that precious commodity fast as the low gold price has bit hard into the industry (Gold Fields itself effect transforming from an operator of macro-beast mines in South Africa to smaller operations in politically stable regions such as Australia- seen acquisition by them of the Barrick suite in Western Australia).

The problem is that mines by their very nature mines are long-term investments and the real issue for creating sustainable mining across continents like Africa is that the money is shying away from the idea. Safety of massive capital investments is being questioned in developing regions as the mining industry struggles to form lasting cooperative relationship in regions.  Holland sights the following issue for obtaining the type of security needed for, say, a US$1.5bn investment:

“All too often a mine finds it tough to improve the quality of life of surrounding communities because of the lack of local government partners capable of using revenues well. It is essential therefore that we work with local governments in jointly developing and implementing projects that utilise the revenues generated by mining.”

This quote follows a theme CSR21 has written about recently (see Barrick CSR report) on how to ensure revenues/royalty sharing schemes trickle down to local communities (or indeed any communities). Resources investors see CSR as an investment in stability so, if the tax dollars cannot be seen to keep all the capital investment safe, the financial risk substantially increases in the equity. Equally the temptation for Governments to wholly foist off core services to private sector companies should be avoided. It undermines in-country governmental systems, preventing development of a strong and effective civil service structure, and runs huge national stability risks (like if one region with mines gets all the $ or indeed if a Major pulls out of a region all the infrastructure dissapears). 

Its very Zen-boring but a balance needs to be struck between private and public sector at all levels when it come to social investment.  At present the lack of investor appetite for perceived high-risk regions needs to be combated by changing the perception of the mining industry an a continual war with the forces of exploitation on one side and rampant ill thought out nationalism on the other. It would also be worth the private sector working with civil service systems to help improve the skills of those they have to work with on a daily basis. Too often all the best civil servants are pinched by high salary paying private sector companies leaving the abilities of key governmental structures diminished. Perhaps some new approaches are needed working with host, and also ‘home’ western governments, to create systems of land ownership that last more than five years.