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sharing in governance of extractive industries

New Report on The Role of Host Governments in Enabling or Preventing Conflict Associated with Mining

By Sarah Daitch & Tony Andrews

In some regions in the Global South, mining is seen as an important vehicle for generating wealth and improving local development. Yet, if managed poorly, mining can also lead to environmental degradation, displaced populations, increased inequality and social conflict. Experts and governments expect natural resources to become key drivers in a growing number of disputes, with potentially significant consequences for international and national peace and security. Research on the frequency of reported conflicts between mining companies and communities shows a progressive increase since 2002. Over the past 20 years, while the mining industry has sought improved performance in the areas of ethical practice, social responsibility and environmental stewardship, evidence shows that conflict has still risen dramatically in frequency and intensity (see Figure 1). It is clear that depending on improvements in industry practices alone is only a partial solution.

What is driving this alarming trend and what is it about conflict that we don’t yet understand? During the past four years, the Center for Responsible Mineral Development (RMD), Canadian International Resources and Development Institute (CIRDI) and the United Nations Development Program (UNDP), have been working to provide answers to these questions through two phases of research. Phase 1 of the global study examined conflict as a process involving the interplay of key actors, including government agencies, mining companies and local communities, all of whom contribute to conflict situations in different ways; this work examined four field case studies, investigating specific conflicts at mine sites Tanzania, Madagascar, Peru, and Bolivia.

The second phase of research, which has recently been launched and published in policy focused abridged and full-length versions, consisted of three components. First, a literature review of over 300 publications relevant to the role of government in conflict linked to mining; second, a quantitative analysis of 334 recorded conflict incidents between 2002 and 2013; and third, building on the Phase 1 field studies, the report discussed five case studies conducted in Latin America and Africa. For this work, we defined conflict as The interaction of two or more parties with perceived incompatible goals, who engage each other through a range of practices including dialogue, persuasion, negotiation, arbitration, legal action, protest, intimidation and physical violence.

The purpose of the Phase 2 reports is to better understand the role of host governments in conflict creation or prevention, and on this basis to provide possible actions for governments to consider conflict transformation, mitigation and prevention. Using a conflict pathway analytical framework, this publication offers policy implications of interest to host governments in mineral producing countries. The following six lessons summarize what we have learned about how future conflict can be better navigated in the extractive sector:

(1) The nature of conflicts is multi-dimensional and dynamic. Most projects face social challenges that can lead to conflict escalation with negative consequences, and potentially violence. For example, social and environmental drivers of conflict are interrelated, often situated at the interface of environmental issues and human rights concerns. Conflict can be understood as a process with a history and a pathway prior to conflict outbreak, and the result of the interplay of identifiable actors.

(2)There is a need for better planning, earlier on through a strategic approach to mineral development: Projects typically face more conflicts in the early phases. When governments and other actors engage in long-term, transparent planning, it can help local communities develop sustainably, reduce conflict risk and help rural communities prepare. Meaningful engagement helps to put conditions in place for the local community to benefit when projects proceed, as part of a broader development plan. This requires governance capacity building at the local level, as well as planning for co-existence of Artisanal Small Scale Mining (ASM) and Large Scale Mining (LSM) sectors.

                                     Photo - Cakchiquel family, Peru: UN photo/F. Charton

(3) There is a lack of government capacity to contain conflicts: 

Many remote resource-rich regions have very little government presence at the local level. This fosters mistrust and contributes to rural people’s concerns about contamination of land and water. Enhancing institutional capacity to govern natural resources, and thus social conflict, should be a top priority for all levels of government. In particular, resolving land ownership, acquisition and livelihood issues can contribute to reducing the risk of conflict escalating.

(4) The need for fair distribution of benefits: Benefits are often not shared equitably in projects affected areas. Ensuring that the benefit distribution system allocates benefits fairly, and that capacity is developed to implement this system helps to avoid conflict.

                                                                                                                                                                                                                       (5) Build Capacity for Implementing Environmental regulations among all actors - Environmental degradation, and pollution on the lands and livelihoods of communities consistently drive social conflicts to escalate. Companies and governments adhering to a higher quality of Environmental Impact Assessment than required, combined with monitoring that  engages communities, can help to mitigate extractive conflicts.                       

The Phase 2 study demonstrated an important role played by host governments in establishing the appropriate governance and management regimes to achieve sustainable mineral development and prevent negative outcomes of destructive conflict. This lies at the heart of the challenge and also the solution. When host governments take a strategic approach to mineral development, including incremental steps to attract the LSM sector to match current governance capacity, alongside strengthening local governance institutions, the risk of destructive conflict decreases. Other useful measures include preparing rural communities for the arrival of the large-scale mining industry, reconciling the ASM and LSM sectors, and maintaining strong regulatory compliance and social development presence in producing districts. These approaches open up a path towards sustainable mineral development. Good management of natural resources can contribute to raising emerging producer countries out of poverty.

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Comment by Lisa C on February 14, 2019 at 6:02

Hi Luke, appreciate your comments and insights.

I wonder whether the recent guidance developed by ICMM and International Alert would be of interest or use to you: https://www.international-alert.org/news/toolkit-help-companies-imp... 

Comment by Luke Stephens on January 31, 2019 at 0:33

Thanks or the reply Sarah,

I'm working through the abridged version now and am positive I'll agree with many of the conclusions. In fact, I agree with the conclusion that depending on improvements within the industry is only part of the solution.

My background is ten years in international humanitarian response followed by ten years in mining. That experience leads me to conclude that very few, if any, mining companies have actually implemented social and environmental approaches to the extent needed to reduce and prevent conflict irrespective of government regulation or capacity. I recognize that many companies are trying but I believe we need to move beyond social performance, or corporate social responsibility, to a place where we are discussing and embracing shared purpose. That definitively will involve governments, local communities, NGOs and the mining companies working together.

I do find the reports of interest and think that the research is highly valuable. I would just hate for a junior, or indeed a major, to say, 'ah ha, we've tried, it didn't work, so it must be the government's role.' I realize that is not at all the intent of your work!

Comment by Sarah Daitch on January 30, 2019 at 23:59

Hi Luke,

thanks for reading the blog post and taking the time to comment. It could help to understand the scope we used for this Phase of the research to take a look at the abridged version of the Phase 2 research. Here it explains that this is the second phase of an ongoing research project, and focuses only on the policy tools available to host government in their role, and does not focus on other important aspects including companies’ role, the influence of political factors, and the important role of home governments where companies are headquartered. 

You will find a greater focus in Phase 1 of the research which was carried out by CIRDI prior to UNDP’s involvement, looking at the company-community interface and highlighting some of the issues you refer to in your post. 

If you look at page 60 in the conclusion of the abridged version, you will see a bit more context of the segment of the blog you quoted from in your comment. The sentence you quote from the blog is meant to indicate that while some companies (noted in the Phase 1 research and Phase 2 lit review section, such as larger multi-nationals who subscribe to international performance standards) have put some emphasis on social and environmental performance, the data shows this has not resulted in a reduction in conflict incidences. So while several reasons behind this are as you point out, up to companies more substantively and consistently integrate social, environmental and governance performance into core business, the Phase 2 study decided to focus just on the role of host governments and how this influences conflict linked to mining. We consider this research overall to be ongoing, and hope to do a 3rd phase that would look at other factors in conflict associated with mining. 

Our message is not to suggest that industry has no responsibility and it all lies with government. The message is that achieving sustainable mineral development depends upon collaboration by the key stakeholders including industry, government, communities and civil society and all delivering effectively on their respective roles. Our research demonstrates an important role host governments plays in setting the enabling environment for either conflict prevention or sustained conflict. No matter how good a company's Environmental, Social and Governance practices and programs are, if government is not delivering for its part on effective governance, we have observed that the efforts of the company have limited impact.

Hope you find the reports of some interest. Thanks!

Comment by Luke Stephens on January 29, 2019 at 20:01

I've just read the brief summary above and look forward to reading more of the study.

My instinctive reaction is that this report focuses too much on government's role and too little on mining companies' responsibility. Good regulation is important, ethical and sustainable business performance is far more important.

This stands out to me " Over the past 20 years, while the mining industry has sought improved performance in the areas of ethical practice, social responsibility and environmental stewardship, evidence shows that conflict has still risen dramatically in frequency and intensity."

I heartily disagree with the premise. In my direct and indirect experience of ten years in humanitarian work and ten years in mining, social responsibility and environmental stewardship are not core business for mining companies and only get adequate attention during and immediately after conflict. I have yet to see them consistently and strategically implemented in a way that would prevent conflict.

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