The mining industry impacts significantly on local communities economically, socially and environmentally. A social licence to operate should ensure these impacts are positive, and clearly understood by the communities. With that in mind, let's take a look at some of the ways in which mining activities can impact on local communities.Mining activities are a good source of jobs for local workers, albeit possibly short-term ones.
One of the most obvious ways in which a mining company benefits local communities is through the creation of local jobs. It's also been found that even as jobs in mines are automated or increasingly require technological expertise that may be beyond the scope of local communities to provide, the number of local people employed either directly or indirectly by mining companies remains significant.*
The Canadian mining industry, with its large number of overseas projects, predominantly employs local workers in many of these operations. The AngloGold Ashanti owned Obuasi mine located in Ghana for instance employed nearly 6,000 people during its heyday (~98% of those were from the local community). It also employed over 700 contractors and the local community was almost entirely dependent on the mine.* Which brings us to another point….
Mining companies can hold the future of entire local economies in the palm of their hand, particularly in overseas operations where the majority of staff are locals. Furthermore, as many of these sites are in developing countries, the situation can be particularly dire for local economies and communities should/when mining activities cease.
Obuasi's plight when AGA closed down major mining operations at the mine in 2014 highlights the need for local communities to factor in the fact that employment in mining is typically cyclical, subject to booms and busts, and dependent on the sustainable economic life of the mine. When an economy is predominantly reliant on a single source of income like Obuasi was, the consequences of either a downturn in the industry or a mining company walking away from a project for various reasons can be disastrous. It creates massive challenges for the locals who are employed in the mining and exploration activities, and for businesses that rely on the revenue flowing in from those activities. Today Obuasi is a shadow of its former booming self with locals engaging in dangerous and illicit mining activities to try and eke out a living. Hopefully with the mine set to reopen things will pick up for the community again.
But on a more positive note….
Figures from the Australian mining industry indicate that regions with mining operations typically enjoy higher than average incomes than those without. Furthermore, this trend has continued even post-boom with the benefits flowing on to local communities expected to continue for some years to come. Overseas it's also been found that mining companies typically pay higher wages than local businesses, with many paying above the average industry rate for that country too**. Employment in mining is also seen as a way to get better fringe benefits such as housing, health care and education.*
Mining creates an indirect demand for jobs within the community that also require training.
Mines in remote or regional locations require a whole support infrastructure. Meals, accommodation, transport services and construction are just a few of the local industries that benefit from having a mining operation in the locality. With increased demand for support services comes more employment opportunities, which also increases the demand for vocational training. More jobs creates more spending power within the community, which further increases demand.
Studies throughout the 2000's boom that looked at the job creation effects of mining activities in local communities found that there were far more indirect jobs than direct jobs created. At the Yanacocha mine in Peru, a report by the World Bank in 2002** suggested there were 14 times more indirect than direct jobs created for locals. These findings have been supported by subsequent studies like the 2007 ICMM investigation*** into job creation by the Antamina mine, also in Peru (below).
These benefits however may be a double-edged sword because demand also drives up prices.
Mining booms create a demand for labour and skills, which often ends up exceeding local supply. This creates a situation where companies find themselves having to pay more to get the more experienced workers. Higher wages and better employment opportunities attract workers from other areas, which helps ease the skills shortage but places more strain on existing services and infrastructure. As demand increases for commodities like food and housing, the prices of those goes up. Increased demand for public services like health and education may cause shortfalls in supply, which can then lead to community disharmony and social tension****.
Other effects of mining on communities in developing countries:
Reports like the Institutional challenges for mining and sustainability in Peru found that developing countries often face a set of unique challenges when a mining company moves in. In many cases these countries do not, or did not, have the legal or government infrastructure in place to adequately oversee mining projects. In the past this has led to significant social unrest within local communities affected by mining activities because
a) They were rarely consulted about or involved in decisions that directly affected them, their health and their livelihoods.
b) There were few if any environmental and legal controls in place to ensure mining companies exercised duty of care with respect to the environment and local communities (so some companies didn't!)
c) It encouraged existing government departments to put foreign investment that would provide economic growth ahead of the well-being of their citizens
d) It allowed those with political clout to encourage mining activities that directly benefited them financially and politically.
Peru for example did not have a government body overseeing environmental issues until 2008! The environmentally sensitive issues and considerations that should have been the responsibility of an independent environmental authority were instead under the control of the country's Ministry of Energy and Mines. You can clearly see how this could create a conflict of interest! For example, significant mining concessions have been granted over large parts of the country's watershed areas. These are the catchment areas that supply Peru's towns, cities and coastal agricultural areas with most of their water. Combined with dropping rainfall, a significant decline in the glacial systems that have historically contributed to coastal water supplies, and rising pollution in the rivers, it posed a severe threat to the country's urban and coastal agricultural water supplies. And not just in terms of quantity either. The mining industry generally has a notorious record for contaminating water supplies!
Ill-advised mining concessions have also significantly altered the way many of the communities in affected areas manage their livestock, an important livelihood for many rural communities. For example, traditional grazing of livestock herds was spread out seasonally between high and low country grazing ranges. This allowed sustainable management of those grazing ranges, which in turn reduced feeding costs – there was always plenty of available natural forage. However, many of those high country grazing areas are now controlled by mining companies and locals are not able to use them. This has forced farmers to keep their animals grazing the low country areas with a resultant deterioration in forage quantity and quality. It's also forced many to plant fodder crops to make up for the feed shortfall, which further reduces the amount of available grazing land and increases the cost of keeping the livestock. It also adds to the deterioration of the land itself because it reduces fallow or resting time.***** As much of this livestock is part of the human food chain (meat, dairy etc), the implication and flow on effects on local communities and beyond begin to add up!
Peru and other South American countries are not alone in this either. Similar situations have happened in Africa as well around lack of consultation with indigenous peoples about what is planned for their land, mining interests put ahead of local community interests, lack of regulation over mining companies and their activities and so on******. This is despite many of these countries being signatories to International Labor Organization Convention 169!
Over the past decade though many of these countries who didn't previously have infrastructure to deal adequately with a growing mining industry have put this infrastructure in place. Mining companies themselves have also begun to toe the line with respect to environment concerns and are, in most cases, making a concerted effort to clean up their act (literally and figuratively). Most also now recognise the importance of obtaining social licence to operate but in some cases it has come at the expense of lives and a lot of angry local communities!
*International Council on Mining & Metals, UNCTAD, and World Bank, Synthesis of four Country Case Studies, in The Challenge of Mineral Wealth: using resource endowments to foster sustainable development 2006, International Council on Mining & Metals [ICCM].
**World Bank and International Finance Corporation, Large Mines and Local Communities: Forging Partnerships, Building Sustainability, World Bank Group's Mining Department, Editor 2002, International Finance Corporation.
***International Council on Mining & Metals [ICMM], Peru: Country Case Study, in The Challenge of Mineral Wealth: Using resource endowments to foster sustainable development 2007.
****Mining, Minerals, and Sustainable Development Project [MMSD], 9. Local Communities and Mines, in Breaking New Ground: The Report of the Mining, Minerals, and Sustainable Development Project 2002, Earthscan for IIED and WBCSD.
*****Institutional challenges for mining and sustainability in Peru - Anthony J. Bebbington, and Jeffrey T. Bury.
******Campbell B (2008) Reform Processes in Africa: Issues and Trends. Presentation to the
2nd International Study Group Meeting, Economic Commission for Africa, 19–21st
May, 2008, Addis Ababa