The Changing Resource Development            ParadigmMaximizing Sustainable Local Benefits    from Resource Development   ...
Table of ContentsExecutive Summary ..........................................................................................
-i-                                                    The report is organized into seven sections.EXECUTIVE SUMMARY      ...
- ii -•   Regulatory           frameworks              and       •   Global Mining Initiative    licensing/permitting proc...
- iii -•      Stakeholder leadership – while different                    •   Interactions       examples demonstrated lea...
- iv -development         paradigm     is      changing.Corporate Social Responsibility (CSR) andsustainable   development...
-1-                                                      strategically address the long-term capacity1     INTRODUCTION   ...
-2-communities, stakeholders are discovering            paradigm      and    suggests      strategies   forthat through co...
-3-                                                   financial performance 2.         Everywhere that                    ...
-4-Global democratization – Democratization              Organization (WTO) meetings in Seattle.and the ability of citizen...
-5-                                                      institutions are recognizing the importanceFigure 2-1 Growth of I...
-6-subject to immediate inspection and reaction   Reputational Capital – For many firms, theby virtual networks of consume...
-7-Regulatory               frameworks                 and      initiatives include United Nations’ Secretarylicensing/per...
-8-promulgated        by        various         multi-lateral   undermining        their     long-term    financialagencie...
-9-A recent Burson-Marsteller/Business Leaders Forum survey demonstrates that the corporatesocial responsibility agenda is...
- 10 -corporate      involvement         in     community          with    the    overall      result        of     sustai...
- 11 -The Canadian Council for Aboriginal                          performance benchmarks in companies thatBusiness (CCAB)...
- 12 -distributed    amongst    stakeholders     more        consensus and identify the reasons forequitably?”            ...
- 13 -recent workshop identified a number of                        retention of revenues generated by non-important theme...
- 14 -(CSR) as a critical aspect of their work and            The above, combined with the four multi-have organized five ...
- 15 -3     INTERNATIONAL MULTI-                                                           The     Natural     resources  ...
- 16 -    maximize learning and dissemination of              In order to maximize learning from BPD,    knowledge.       ...
- 17 -Development Project (MMSD). This project          •      More active engagement between theis an independent process...
- 18 -internationally that benefit business and             •   Helps       to     create        an     enablingsociety, a...
- 19 -social development and human rights was                    experience reaches         across cultures,seen as rather...
- 20 -the Environment was launched in 1992 with             the Statement outlines the principles of thethe intent to enga...
- 21 -                                             4     EXAMPLES OF EFFECTIVE                                            ...
- 22 -lives in small settlements and villages under         participating in trapping, hunting and otherprovincial jurisdi...
- 23 -employment, science program sponsorships,school site tours, school-based athletic                                   ...
- 24 -representing the northern Dene, Woodland                      The efforts of Cameco and other northernCree    and   ...
- 25 -highland province of Enga in Papua New                       capital cost exceeding one billion dollarsGuinea (PNG)....
- 26 -boundaries had been the cause of clan                     relocated families in addition to outliningdisputes     re...
- 27 -ensuring the opportunity to resolve issues                  royalties and taxation would be distributed.and disputes...
- 28 -fundamental and key elements in the success               community. Compensation, local businessof the project beca...
- 29 -support of the community to build and               benefits of taxation being reinvested intooperate the project an...
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
The Changing Resource Development Paradigm:   Maximizing Sustainable Local Benefits from Resource Development
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The Changing Resource Development Paradigm: Maximizing Sustainable Local Benefits from Resource Development

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This report, which was commissioned by the Government of British Columbia, looks at global forces and issues that are changing the relationship between resource developers and local communities, including Indigenous Peoples. The report examines emerging trends and evolving global experiences and suggests ways that British Columbia can facilitate and enable communities to benefit more effectively from local resource development.

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The Changing Resource Development Paradigm: Maximizing Sustainable Local Benefits from Resource Development

  1. 1. The Changing Resource Development ParadigmMaximizing Sustainable Local Benefits from Resource Development Prepared for Government of British Columbia Ministry of Community Development Cooperatives and Volunteers January 2001 2457 Bakerview Road Mill Bay, BC CANADA V0R2P0 Tel: +1-250-743-7619 Fax: +1-250-74307659 info@waynedunn.com www.waynedunn.com
  2. 2. Table of ContentsExecutive Summary ........................................................................................................... i1 Introduction ........................................................................................................... 12 The Growing Importance of Corporate Responsibility and Sustainable Development ................................................................................................................................. 33 International Multi-Stakeholder Initiatives ..................................................... 15 3.1 Business Partners for Development ................................................................ 15 3.2 Global Mining Initiative .................................................................................. 16 3.3 Prince of Wales Business Leaders Forum ...................................................... 17 3.4 UNEP Annual Round Table with the Finance Industry............................... 194 Examples of Effective Corporate Social Responsibility .................................. 21 4.1 Cameco in Northern Saskatchewan................................................................ 21 4.2 The Porgera Project, Papua New Guinea ...................................................... 24 4.3 Weyerhaeuser and Clayoquot Sound – A Region In Transformation ............... 34 4.4 Mitigating the Impact of Downsizing – Placer Dome in South Africa ........ 39 4.5 NorSask Forest Products/MLTC .................................................................... 45 4.6 Common Themes .............................................................................................. 495 A Framework for Understanding and Developing Effective Corporate / Community Relations............................................................................................................... 51 5.1 Traditional Corporate Approaches to Community Relations Management51 5.2 Elements of a Systematic Approach ............................................................... 536 Changing the Paradigm...................................................................................... 58 6.1 The Business Case for Government Support of CSR ................................... 58 6.2 Government Tools for Supporting CSR ........................................................ 59 6.3 Stakeholder Actions ......................................................................................... 617 Conclusion ........................................................................................................... 64List of Tables, Charts and FiguresTable 4-1: Clayoquot Economic Comparison (Pre/Post)................................................. 38Chart 4-1 Cameco Northern/Aboriginal Purchases .......................................................... 23Figure 2-1 Growth of International NGOs......................................................................... 5Figure 5-1 Ad-hoc Community Relations........................................................................ 52Figure 5-2 Interaction Continuum ................................................................................... 55The Changing Resource Development Paradigm
  3. 3. -i- The report is organized into seven sections.EXECUTIVE SUMMARY Section 1 identifies and discusses pertinent introductory issues. Section 2 examines the “In a transparent, globalized world, economic performance, environmental changing paradigm of resource performance and social performance hang development, illustrating some of the global together. Business is realizing that it has become an integral part of society and now trends that have pushed corporate social has wide-ranging responsibilities… shareholder value and social responsibility responsibility and sustainable development 1 support each other” into the mainstream, making it a critical Göran Lindahl, President and CEO, bottom-line issue for many corporations and Asea Brown Boveri (ABB) industries. A number of factors are discussed in terms of their impact on theThe discovery and harvesting of primary overall resource development environment.resources such as, furs, fish, forestry, natural These include:gas, minerals and now possibly oil, has been • Global democratization;the economic backbone of British Columbia • Growth of NGOs;since the first Europeans arrived. Even withthe growth of a knowledge-based economy, • Growth of the global media;natural resources are still critical to the • Rise of ethical investment funds;economic future of many BC communities • Internet and other communicationsand residents. The Ministry of Community innovations;Development, Cooperatives and Volunteers • Globalization;has commissioned this report to review • Increased permeability of institutionalresource development from a global and organizational boundaries;perspective, exploring what is and what canbe done to improve the way in which • Growing value and importance ofresource development impacts the social and reputational capital;economic well-being of local communities 1and residents. Many firms refer to their community relations work as Sustainable Development and/or Sustainability. For the purpose of this report, we will use the terms interchangeably.The Changing Resource Development Paradigm
  4. 4. - ii -• Regulatory frameworks and • Global Mining Initiative licensing/permitting procedures; and • Price of Wales Business Leaders Forum• Growing number of international • United Nations Environment Program standards, directives and codes of Annual Round Table with the Finance conduct. IndustrySection three examines a number of global, In Section 4, five best practice examples ofnational and local initiatives aimed at corporate social responsibility in naturalfostering dialogue and improved resource development are reviewed tocollaboration between industry, illustrate the potential for increasedcommunities, governments and other industry-community collaboration. Thesestakeholders, (e.g., the Conference Board of examples, drawn from mining and forestryCanada’s Canadian Centre for Business in projects in Canada, Africa and Asia,the Community, Business at the Summit, demonstrate that effective application ofCanadian Council for Aboriginal Business’ sustainable development principles can leadProgressive Aboriginal Relations initiative, to profitability and meaningful benefits forUniversity of Warwick’s Mining and Energy all stakeholders. An analysis of the caseResearch Initiative, National Round Table studies identifies five commonon Environment and Economy’s Aboriginal characteristics:Communities and Non-Renewable ResourceDevelopment, and the World Business • A desire to develop mutually beneficial,Council on Sustainable Development’s action-oriented, collaborative multi-forestry project.). The report also identifies party approaches to addressingand examines four international multi- community and local development;stakeholder initiatives that directly relate to • Appropriate support from governmentsthe community component of sustainable and external stakeholders;development. The initiatives are:• Business Partners for Development • Long-term stakeholder commitment;The Changing Resource Development Paradigm
  5. 5. - iii -• Stakeholder leadership – while different • Interactions examples demonstrated leadership by • Measuring, Monitoring and Reporting different stakeholders, all of them exhibited strong leadership (in a Section 6 focuses on specific actions and collaborative manner); and strategies that government and other• A long-term approach to capacity stakeholders can utilized to facilitate more development (no quick fixes). effective relationships between key stakeholders in the resource developmentSection 5 discusses a framework that can be process. The business case for sustainableutilized by all stakeholders to facilitate more development is examined from asystematic integration of sustainability government perspective and six reasons areprinciples and priorities into resource put forth for investing public funds toprojects and to assist with the development encourage and support corporate socialof common understanding and a map of responsibility and sustainable development.specific relationship opportunities. Theframework is designed to assist stakeholders Section 6 concludes with a discussion ofto move beyond a beads and trinkets stakeholder opportunities for action andinteraction model to embrace more leadership on sustainable development. Tosustainable, results oriented relationships. illustrate, thirteen specific actions that couldIt identifies six critical elements for be initiated by government, industry andsuccessful relationships between communities are presented and stakeholderscorporations and local communities. They are encouraged to begin dialogue andare: discussions aimed at identifying and implementing concrete activities in support• Organizational ethos of their collective interests.• Communications and consultations• Capacity development The concluding section, Section 7, notes• Leveraging other relationships that, throughout the planet, the resourceThe Changing Resource Development Paradigm
  6. 6. - iv -development paradigm is changing.Corporate Social Responsibility (CSR) andsustainable development have becomebusiness imperatives. Successful projectsrequire stakeholder collaboration andparticipation and, increasingly, a focus onhow resource development can support thelong-term social and economic objectives ofall stakeholders.Successful CSR therefore requirescommitment and leadership from allstakeholders (including governments), eachwith particular roles to play and support toprovide. Therefore Government of BritishColumbia can, and should, supportcommunities and industry to develop andmaintain mutually beneficial relationshipsthat will support their respective social andeconomic goals.The Changing Resource Development Paradigm
  7. 7. -1- strategically address the long-term capacity1 INTRODUCTION and sustainability of local communities, often leaving them with little economic “Social responsibility is a The diversification and vulnerable to industry matter of hard-headed dis downturns. The resultant impact on business logic... Its about cov communities was frequently disastrous as performance and profits” ery industries often simply closed down, and Sir John Browne, creating economic havoc. Local citizens CEO BP-Amoco har and businesses risked losing everything. ves After investing in roads, schools and otherting of primary resources, forestry, mining, public infrastructure, governments often hadnatural gas and now possibly oil, has long to step in and try to cushion the impact thatbeen a mainstay of the British Columbia closure had on families and local businesses.(BC) economy. Although there is currently Unfortunately, there is often little that can bea transition to a more knowledge based done after the fact.economy, resources still have, and willcontinue to have, a major impact on the Recently however, a strong trend iseconomic lifeblood of BC communities. emerging whereby resource companies work with communities and the public sector toThe 1990s have seen a major shift in the organize business activities so theyresource development process. Previously maximize value for a broader range ofthe regulatory approval procedure was stakeholders. Planning for and addressingprimarily an interaction between the issues of social acceptability, local culturalapplicant-business and relevant government awareness and the long-term sustainableauthorities. Communities and third party economic development of the region areinterests had limited influence and minimal becoming as important as ensuringconsideration was given for the long-term, responsible environmental stewardship.sustainable impact on local people and While nothing can ever guarantee thecommunities. Little was done to sustainability of resource dependentThe Changing Resource Development Paradigm
  8. 8. -2-communities, stakeholders are discovering paradigm and suggests strategies forthat through collaborative activities, much ensuring that resource development makes acan be done to create additional value and long-term, sustainable contribution to themitigate downside risk. social and economic well being of BC communities. It also addresses the businessThe Government of British Columbia, case for sustainable development – the,through the Ministry of Community what’s in it for me? – from the perspectiveDevelopment, Cooperatives and Volunteers of industry, communities and government.(MCDCCV) has recently released a It concludes with an examination ofDiscussion Paper, Toward Revitalized, mutually beneficial, strategic approachesResilient and Sustainable Communities that could be initiated by variousAcross British Columbia. The paper stakeholders to maximize the long-term,outlines a potential policy and legislative sustainable benefits that communitiesframework that would provide new methods receive from existing and future resourcefor the Government to partner with local harvesting projects.communities to enhance sustainable socialand economic development.The Ministry of Community Development,Cooperatives and Volunteers is tasked tosupport communities in their efforts toacquire meaningful and sustainable benefitsfrom the development and harvesting oflocal resources. As part of their ongoingefforts the Ministry contracted Wayne Dunn& Associates Ltd. to prepare this report.This report explores global changes that areoccurring in the resource developmentThe Changing Resource Development Paradigm
  9. 9. -3- financial performance 2. Everywhere that resources are harvested, local communities2 THE GROWING IMPORTANCE OF and a business’s ability to work with them CORPORATE RESPONSIBILITY effectively has direct and significant bottom AND SUSTAINABLE line impacts. BC is no exception. DEVELOPMENT What has happened to push social issuesNote: To illustrate that corporate onto the corporate agenda? And, will this responsibility and sustainable trend last? These are two questions that development are more than local must be addressed to understand how to phenomenon, the following encourage corporate social responsibility. discussion is based on a global perspective. While no single factor can be credited with pushing social issues onto the corporateIn Canada and throughout the world, agen Triple Bottom Line da,resource companies are recognizing that Many companies are moving beyondthere is a direct link between their ability to simply measuring financial we performance to embrace some form canmeet society’s needs and their own long- of triple bottom line, where theyterm sustainability. Firms everywhere are strive for performance along ident financial, social and environmental ify aembracing triple bottom line concepts and dimensions. Some, such as BCmany are producing social, environmental Hydro, even produce annual Triple num Bottom Line Reports. berand sustainable development reports. Thisis not the work of ‘do-gooders’ – a June of2000 survey of 100 business leaders noted events and trends that, together, are drivingthat 42% saw corporate responsibility as the process. Some of these are listed below.having a direct impact on share price and 2 Survey conducted by Burson-Marsteller, the world’s largest communications agency for the United Kingdom based Prince of Wales Business Leaders ForumThe Changing Resource Development Paradigm
  10. 10. -4-Global democratization – Democratization Organization (WTO) meetings in Seattle.and the ability of citizens and communities NGOs have the ability to disrupt corporateto influence their governments is increasing. operations, alienate markets and directlyAlthough in many cases it is far from impact financing when they deemperfect, the last decade has seen many corporations are not meeting social andcountries move to democratic elections and environmental responsibilities. BC hasmore responsible and responsive witnessed this first hand, as many NGOsgovernments, (e.g., the toppling of the have been instrumental in influencinggovernment of Slobodan Milosevic in Serbia market perceptions of BC forest productsand the reversal of ‘officially’ announced and ultimately, influencing operationalelection results in Cote d’Ivoire are recent strategies and decisions for the BC forestexamples). Governments and corporations industry. For example, according to theeverywhere must pay more attention to the Aug. 25, 2000 Globe and Mail, ‘Seven of thewill of the people and how resource projects top tenimpact local people and communities. U.S. “NGOs distribute more home aid than World Bank improve and, if viewed as aNon-Governmental Organizations nation, would rank 8th(NGOs) – Throughout the world there has ment in economic power...been an exponential growth of well- retailers, Key roles in trade, environment, corporateorganized and financed NGOs includin decision making”(non-governmental organizations), most g Home Washington (AP)with social and environmental agendas and Depot,the ability to influence publics and markets. have issued restrictive lumber buyingAmong other things, NGOs have been policies in the wake of an aggressivelargely responsible for; the Anti-Landmine campaign by environmentalists Whilemovement and its subsequent Nobel Peace industry is still sorting exactly what thisPrize, Shell’s loss of business following means, there is no doubt that it threatens aBrent Spar and problems in Nigeria, and the significant share of the traditional marketshutting down the World Trade for BC forest products’.The Changing Resource Development Paradigm
  11. 11. -5- institutions are recognizing the importanceFigure 2-1 Growth of International NGOs of sustainable development. Numerous investment funds have been established thatGlobal media / CNNization of the world – have social/ethical as well as financialThe global media reaches into every corner objectives and criteria. Investor interest in aof our planet, influencing consumers, firm’s non-financial performance has ledmarkets and stakeholders. No matter where Dow Jones, one of the most respecteda resource development project is located, it economic institutions in the world, to createis only one incident away from international a Sustainability Index. (Placer Dome, ainfamy and its resultant bottom line impact. global mining company headquartered inCameco, a Canadian mining company, BC has been accepted onto this index.)discovered this after a relatively minor spillin Kyrgzstan turned into a costly Internet and other communicationsinternational incident in May 1998. innovations – We live in an age where, no matter where one is on the planet, it isEthical Investment Funds / Dow Jones possible to communicate economically andSustainability Index – Driven by the desire instantaneously with other individuals andof some investors to judge more than interests from around the world. Accordingfinancial performance and the recognition to Time Fortune “a company’s activities, inthat there is a direct connection between even the remotest parts of the world arecorporate responsibility andsustainable long-term “Corporations must start shouldering their share offinancial performance, social responsibilities… the world could stumblefinancial markets and back into warfare if global business interests don’t address the serious social concerns surrounding globalization” Thomas d’Aquino President, Business Council on National Issues (Banff, Sept 21, 2000)The Changing Resource Development Paradigm
  12. 12. -6-subject to immediate inspection and reaction Reputational Capital – For many firms, theby virtual networks of consumer oriented most valuable asset they have is their brandactivists”. NGOs and other interests (reputation) and they will go to extremeregularly use communication to advance lengths to protect it. In the resource industrytheir causes and interests. Email and brand value can translate into improvedinternet communications is cited as the key marketability, easier permitting andorganizing tool responsible for the Anti- regulatory approvals and enhanced access toLandmine campaign’s Nobel Peace Prize, future opportunities. Firms that are knownand for organizing protestors at the WTO for their social, environmental and economicmeetings in Seattle and the recent World performance will have distinct advantages inBank meetings in Prague. acquiring new opportunities and operating existing projects. Reputational capital isGlobalization – Resource firms operate in a also a factor in project financing. Multi-world where financial and product markets lateral financial institutions such as theare global. How a company operates in one International Finance Corporation (IFC) arecorner of the planet can quickly affect its beginning to review the social andfinancing, marketing and operations in other environmental performance of projects. Incountries and areas. fact the IFC has recently appointed an Ombudsperson as part of a drive to boost theIncreased permeability of institutional social and environmental performance of itsand organizational boundaries – investments. As well, NGOs are holdingBoundaries and borders are becoming public and private sector financialblurred – the line between business, institutions responsible for thegovernment, community and civil society is environmental and social performance ofno longer distinct. The old saying, the investments, and attempting to devalue thebusiness of business is business simply reputational capital, and thus attack thedoesn’t hold any longer. client base of those institutions that finance questionable projects.The Changing Resource Development Paradigm
  13. 13. -7-Regulatory frameworks and initiatives include United Nations’ Secretarylicensing/permitting procedures Resource General Kofi Annan’s January 1999projects everywhere must pass through challenge to global business leaders to sign aincreasingly detailed environmental review ‘Global Compact’ based on internationalprocesses in order to receive necessary principles concerning human rights, socialpermits and developmental approvals. development, labour and environmentalSocial and community issues are also standards 4. Another initiative is the Globalbecoming a major component of this Sullivan Principles (built on the originalprocess. Public forums draw attention to Sullivan Principles which promoted ethicalthese aspects of a project which, if not business practice in apartheid-era Southaddressed in good faith with stakeholders, Africa), which promote economic, socialcan cause expensive delays and add cost and and political justice by companiescomplexity to project development and worldwide.ongoing operations. In additon to the various multi-stakeholderInternational standards and directives initiatives, there are a number ofThere is a growing surge of initiatives international standards and directives 5 (seepromoting standards for responsible footnoted list below) that have beenbusiness behaviour 3. Many of these involve 4 See http://www.unglobalcompact.org/ for details on thismulti-stakeholder (Business, Governments initiative. 5 Some of the more important ones include:and Communities/Civil Society) • World Bank: Operational Directive 4.30 – Involuntary Resettlement;collaboration (See Section 3 for several • World Bank: Operational Directive 4.20 – Indigenous Peoples;examples of multi-stakeholder collaborative • IDB: Community Consultation, Sustainable Development;initiatives). The latest codes cover all • IDB: Operational Directive 710 – Involuntary Resettlement;aspects of sustainable business. Recent • International Labour Organization Convention 169 on Indigenous and Tribal Peoples Convention; • United Nations Conference on Environment and3 Development: Chapter 26, Agenda 21; For a detailed discussion and analysis of variousinitiatives see A Content Comparison of Various Codes of • United Nations: Declaration on the Rights ofConduct at http://www.web.net/~tccr/benchmarks/rsp- Indigenous Peoples (Draft)Organization of AmericanGSP.htm This page was developed by the Global States: andAccountability Program at the Interfaith Center on • Declaration on the Rights of Indigenous PeoplesCorporate Responsibility. (Draft)The Changing Resource Development Paradigm
  14. 14. -8-promulgated by various multi-lateral undermining their long-term financialagencies such as the United Nations. A sustainability.Directive such as the World Bank’sOperational Directive 4.20 – Indigenous Combined, the trends and activitiesPeoples, sets out the expectations and discussed above demonstrate the newrequirements for how World Bank financed paradigm of business. They underscore anprojects will interact with Indigenous expectation of how companies andPeoples. When combined with the multi- communities should engage and howstakeholder initiatives and the other trends resource development and extraction shoulddiscussed above, these standards and occur in a manner which creates sustainabledirectives are beginning to create somewhat and meaningful benefits for local people andof a global standard for business. While communities. Stakeholders in Britishlittle has been done to formalize this Columbia’s resource economy cannot affordemerging trend, firms that habitually to ignore this reality.transgress it by ignoring the environmentaland social aspects of thier operations riskTwo recent surveys, one in Canada and the other in Europe, illustrate the global nature of thisissue.According to a recent Environics Poll:• 43% of Canadians feel that a company’s role in society should be to “set higher ethical standards and help build a better society”;• Only 11% of Canadians feel that a company’s role is to “make profit, pay taxes, create jobs and obey laws" (meaning that the remaining 89% feel a company has a larger responsibility).The Changing Resource Development Paradigm
  15. 15. -9-A recent Burson-Marsteller/Business Leaders Forum survey demonstrates that the corporatesocial responsibility agenda is growing in importance, and that significant shifts in emphasis areoccurring. The key trends they identified are:• Corporate social and environmental responsibility must be dealt with as an integrated part of business planning;• Exemplary environmental performance is regarded as a minimum requirement when assessing a company, but more and more attention to softer, human relations is also now being demanded; and• Charitable giving by companies - whilst still commendable - is not of sufficient importance on its own, and, in fact, unless good social and environmental stewardship is in place, charitable giving is viewed with suspicion. permitting processes and enable the company to better manage social and political risks and “should help us to achieve greater profitability”. The growing interest in corporate social responsibility and sustainable development has spawned a number of research effortsSpeaking in Ottawa at a conference on and multi-stakeholder initiatives as industry,Ethics in the New Millennium, Placer Dome governments, institutions, NGOs,CEO Jay Taylor noted that their communities and other stakeholders strive tocommitment to community development operate in this new paradigm. In addition to“represent(s) an added cost, but is an the international multi-stakeholderessential investment in our future”. He went initiatives discussed in detail in theon to note that this investment would following section, there are numerous otherimprove access to projects, expedite efforts to document and encourage improvedThe Changing Resource Development Paradigm
  16. 16. - 10 -corporate involvement in community with the overall result of sustainingdevelopment and adjustment. Some shareholder value.representative examples are discussedbelow. Information on past research and publications can be reviewed atThe Conference Board of Canada, and http://www.conferenceboard.ca/ccbc/.many other Conference Boards around theworld have launched research efforts and are Business at the Summit is an annual eventcoordinating conferences 6, round tables and organized by British Columbia Indigenousother fora for the exchange of information and Industrial leaders to provide anand ideas on corporate social responsibility. opportunity for discussing and enhancingThe Conference Board of Canada has corporate aboriginal relationships in theestablished a special unit, the Canadian province. The Summit encourages face-to-Centre for Business in the Community face dialogue and cooperation between(CCBC), which focuses exclusively on Indigenous Peoples and business leading toissues related to corporate social the identification of common agendas andresponsibility. In addition to publishing the creation of mutually beneficial economicvarious reports and organizing conferences, opportunities. The Summit first took placethe CCBC acts as a resource for member in 1995 at the Squamish Nation Recreationfirms. Based on their research and other Centre and has occurred annually since thatwork over the past several years they time. The 1999 Summit focused on themaintain that corporate social responsibility theme “Partnerships for Prosperity” withcan help to achieve a balance between speakers and workshops dedicated toeconomic, environmental and social profiling successful partnerships andimperatives as well as addressing discussing strategic issues and approaches tostakeholders’ expectations and demands, identifying and developing mutually beneficial relationships between business6 Mr. Greg Goodwin, Executive Director of Community and Indigenous Peoples.Enterprise for the MCDCV recently made a presentation ata Conference Board of Canada Conference in Ottawa,Canada.The Changing Resource Development Paradigm
  17. 17. - 11 -The Canadian Council for Aboriginal performance benchmarks in companies thatBusiness (CCAB) is a national non-profit want to develop mutually beneficialorganization that promotes the full relations with Aboriginal people andparticipation of Aboriginal communities in communities.the Canadian economy. Membershipincludes leading Canadian corporations and Additional information on CCAB and theirIndigenous organizations. Working with programs, research and other activities isindustry and other stakeholders, CCAB available on their website atundertakes a number of initiatives aimed at http://www.ccab-canada.com.increasing aboriginal involvement inbusiness. The Mining and Energy Research Network (MERN), is based in the CorporateCCAB is currently working with the Citizenship Unit of the University ofNational Quality Institute and Canadian Warwick at Coventry, United Kingdom.Indigenous and business leaders to launch an MERN is an international collaborativeinnovative program to promote and research programme seeking to facilitaterecognize leadership in relationships improvements in the social performance andbetween corporations and aboriginal people. competitiveness of mining and energyThe initiative involves a certification companies. It seeks to understand theprogram for corporate aboriginal relations relationship between regulation, technicalcalled Progressive Aboriginal Relations change, social policy and competitiveness in(PAR). This initiative, which is in the the global minerals industry. MERN’sprocess of certifying the first four objective is “Can minerals and energycompanies, will provide companies with the resource development, demonstrablyright to use the PAR logo, signifying that essential to modern industrial society, bethey are committed to community relations, undertaken without damaging theindividual capacity building, aboriginal environment or undermining theemployment and business development. development opportunities of localPAR sets out a framework for establishing communities and can the benefits beThe Changing Resource Development Paradigm
  18. 18. - 12 -distributed amongst stakeholders more consensus and identify the reasons forequitably?” disagreement in other areas. The round table process is a unique form ofAdditional information on MERN and its consultation, permitting progress on diverseresearch projects can be found on their issues. It is of value in overcomingwebsite at entrenched differences and arriving athttp://users.wbs.warwick.ac.uk/ccu/mern. recommendations for action.” 7The National Round Table on Many of the Round Table’s initiatives, suchEnvironment and Economy (NRTEE) is as the ongoing Sustaining Canada’s North:an independent advisory body that provides Aboriginal Communities and Non-decision makers, opinion leaders and the Renewable Resource Development seek toCanadian public with advice and document and promote best practices inrecommendations for promoting sustainable environmental and corporate socialdevelopment. National Round Tables were responsibility. The program mentionedformed in many countries as a result of above will focus on non-renewable resourceagreements generated at the 1992 United development issues in the Western Arctic.Nations Conference on Environment and Working with industry, local AboriginalDevelopment (UNCED) in Rio de Janeiro. communities, government andThe Canadian National Round Table on the Environmental Non-GovernmentalEnvironment and the Economy uses; “A Organizations (ENGO), the purpose is tomulti-stakeholder approach, combined with produce concrete recommendations on howimpartiality and neutrality. By creating an to accommodate competing interests in theatmosphere in which all points of view can area of mineral development and oil and gasbe expressed freely and debated openly, the exploration to ensure long-termNational Round Table has established a sustainability of these communities. Aprocess whereby interested parties 7 National Round Table website http://www.nrtee-themselves define the environment/economy trnee.ca/eng/programs/aboriginal/aboriginal-interface within issues, determine areas of bulletin4_e.htmThe Changing Resource Development Paradigm
  19. 19. - 13 -recent workshop identified a number of retention of revenues generated by non-important themes: renewable resource development. Additional information on the NRTEE is• Doing it right – the high level of available on their website located at participation demonstrated faith and http://www.nrtee-trnee.ca. optimism that key players are able to work together to ensure that non- The World Business Council for renewable resource development more Sustainable Development (WBCSD) was effectively contributes to building also formed as a direct result of UNCED. A sustainable Aboriginal communities; number of global business leaders made a• The crisis in community capacity- commitment at UNCED that they would building – participants discussed promote improved social and environmental capacity-building (i.e., skills and responsibility in their own companies and education), as a long-term challenge that amongst the global business community in must to addressed to ensure communities general. WBCSD is a coalition of some 150 benefit from non-renewable resource international companies united by a shared development, and a short-term crisis in commitment to sustainable development, i.e. capacity was also identified; environmental protection, social equity and economic growth. Members are drawn from• Respect – the need for all-encompassing 30 countries and more than 20 major respect was stressed throughout the industrial sectors. They organize workshop; conferences, collaborates in research and• Partnerships – partnerships are needed other initiatives 8 aimed at encouraging and that will involve Aboriginal people from supporting improved social and the beginning to build a common vision environmental practices. The WBCSD with all stakeholders; and recognizes Corporate Social Responsibility• Retention of local benefits – participants 8 WBCSD collaborates with the Prince of Wales Business expressed a desire to see the local Leaders Forum and is a key stakeholder in the Global Mining Initiative, both of which are discussed in detail in the following section.The Changing Resource Development Paradigm
  20. 20. - 14 -(CSR) as a critical aspect of their work and The above, combined with the four multi-have organized five sectoral projects to stakeholder initiatives discussed in theunderstand, promote and support CSR in following section, illustrate the multi-industry specific situations. The five dimensional interest in corporate socialsectoral projects encompass Forestry, responsibility. Two common themesMining and Minerals, Cement, Mobility, and permeate most initiatives. They are:the Electrical Utility Industry. • The importance of bringing stakeholdersThe forestry project aims to foster dialogue together to participate in developingamongst all forest stakeholders; to provide their own solutions and to facilitate theglobal business leadership; and to develop a sharing of experiences and initiatives;strategy to manage the sustainability of andforests. Twenty-one companies andorganizations form the industry working • The necessity of approaching corporategroup for the project. The project’s primary social responsibility as a strategicpurpose is to develop a factual base upon business issue rather than as awhich to begin a constructive dialogue philanthropic add-on.process with stakeholders in broader forestissues. Another anticipated outcome is the Practical examples of the application ofultimate creation of new public–private these principles are discussed in five casepartnerships to address the myriad of forest studies in Section 4.issues that currently cause so muchconfusion.Additional information on WBCSD can befound on their website athttp://www.wbcsd.ch.The Changing Resource Development Paradigm
  21. 21. - 15 -3 INTERNATIONAL MULTI- The Natural resources cluster brings STAKEHOLDER INITIATIVES together a number of corporate and civil society stakeholders to share informationA number of multi-stakeholder initiatives and examine specific examples. This clusterhave been launched in the past ten years that is co-convened by CARE International, BPdirectly relate to the community component Amoco and the World Bank Group. Theof sustainable development. What is cluster identified focus projects in mining,significant is that the institutions involved in and oil and gas, which demonstrated thethese initiatives are significant global application of the tri-sector (industry,players in the area of finance and resource government and civil society) approach todevelopment and are leaders in the changing development. Project locations wereparadigm of natural resource development. distributed throughout the developing world (Venezuela, Colombia, India, Indonesia,3.1 Business Partners for Development etc.)Business Partners for Development (BPD) isan initiative launched by the World Bank in The organizational structure of BPD1997. It is a “programme designed to study, attempts to ‘lead by example by:support and promote the creative • Involving the World Bank Group andinvolvement of businesses as partners internationally recognized NGOs inalongside governments and civil society for cluster activities to help companies andthe development of communities around the local NGOs transcend issues and workworld”. BPD is divided into four more effectively with each other and‘clusters’; Natural Resources, Water and host country governmentsSanitation, Youth Development and RoadSafety. Each cluster has identified a number • Providing an opportunity forof focus projects that are being used to better practitioners and other stakeholders tounderstand the role of business as a partner review leading edge projects andin development.The Changing Resource Development Paradigm
  22. 22. - 16 - maximize learning and dissemination of In order to maximize learning from BPD, knowledge. the partners have recently added a fifth cluster, the Knowledge Resource Group.• Convening workshops, study sessions This group is convened by the Prince of and other activities to better understand Wales Business Leaders Forum (see and build from the focus group discussion on this organization later in this examples. section).Additional information on Business Partners in Development is available onThe focus group projects have identified that their website at www.bpdweb.org.effective sustainability programs havedirect benefits for the tri-sector partners. 3.2 Global Mining Initiative The Global Mining Initiative (GMI) grewBusiness out of an informal discussion held in 1998• Reduced and shared social risks between CEOs from nine companies who• Compliance with emerging social were concerned about the sustainability of ethics and regulations the mining industry in the face of societies• Improved access to new opportunities growing discontent with industry• Increased shareholder value performance and a shift in ability of stakeholders to effectively impact business activity. Initial discussions resulted in the conclusion that the problems facing theCivil Society and Government industry would not be resolved with a public• Increased local socio-economic impact relations program and that to change public• Increased regional development impact attitude, industry must change the way it• Greater sustainability of community does business. projects• One of the primary elements of the GMI is the Mining Minerals and SustainableThe Changing Resource Development Paradigm
  23. 23. - 17 -Development Project (MMSD). This project • More active engagement between theis an independent process of participatory industry and others in order toanalysis with the objective of identifying understand the issues better, and thehow mining and minerals can best contribute identification of the priorities as we goto the global sustainable development forward; andtransition. The MMSD project has gained Clarification on where the boundariesmomentum and industry sponsorship for this lie for action by different participants.program has grown from nine to twenty With this information and a newseven of the world’s leading mining platform for constructive stakeholdercompanies. dialogue, industry sponsors of the MMSD project will develop” an actionTo ensure transparency and independence, plan for change” based on the prioritythis study has been commissioned through issues identified and in partnership withthe World Business Council for Sustainable strategic stakeholders.Development and is managed by theInternational Institute for Environment andDevelopment (IIED) 9 Additional information on GMI and MMSD is available at www.iied.org/mmsdThe expectation is that this Study willgenerate:• Broadly based and authoritative analysis 3.3 Prince of Wales Business Leaders of key issues which arise from people’s Forum expectations of sustainable development; The Prince of Wales Business Leaders Forum (PWBLF) is an international• The foundation for the new relationships educational charity set up in 1990 to and partnerships which the scale of the promote responsible business practices challenges demands; 9 See IIED website at http://www.iied.org/ for information on the organizationThe Changing Resource Development Paradigm
  24. 24. - 18 -internationally that benefit business and • Helps to create an enablingsociety, and which help to achieve social, environment to provide the conditionseconomic and environmentally sustainable for these practices and partnerships todevelopment, particularly in new and flourish.emerging market economies. Through:Fifty leading companies from Europe, the • Making the case that in the new worldAmericas, Asia and the Middle East support order, well-led and competitivethe Forum. In addition to its corporate businesses have a positive role to play inmembership, the Forum’s network also development challenges, throughincludes valuable strategic alliances with responsible core business practices andinternational agencies such as the World engagement with societyBank, United Nations, EuropeanCommission, the United Kingdom • Showing that – while partnership andDepartment for International Development, collective action is difficult – in themajor international non-governmental networked society it is essential toorganizations and international and national combine business skills and resourcesbusiness coalitions. with community support and public accountabilityThe Forum: • Demonstrating that scale can only be• Encourages continuous improvement in achieved and economic exclusion responsible business practices in all addressed through enabling aspects of company operations environments in which governments,• Develops geographic or issue-based international institutions and the media partnerships to take effective action on play a part. social, economic and environmental issues According to the PWBLF, in the mid-1990s, its attention on issues of business ethics,The Changing Resource Development Paradigm
  25. 25. - 19 -social development and human rights was experience reaches across cultures,seen as rather radical and ill focused. Less countries and unfamiliar contextsthan six years later, the same issues could be • It has recorded demonstrable success indiscussed comfortably in most Boardrooms. engaging the attention of businessThis underscores the earlier discussion on leaders, and mobilising them at all levelsthe changing paradigm and shifting of in practical action - to make aboundaries and responsibilities. difference through core business practices, community involvement andThe Forums defining characteristics are: policy dialogue• The Forum provides a focus on the • It has experience of implementation in contribution of business to social progress, as well as to economic the demanding conditions of transition multipliers and good environmental economies – through implementation of practice – the triple bottom line in responsible business practices and practice public/private partnerships • It offers in-depth understanding and• It is a source of practice-based analysis and information on leading edge widely regarded analysis of the business practices from its on the enabling public framework - for ground work - on how the macro trends, responsible business and cross-sector challenges and opportunities in partnerships. responsible business practices can be Additional information on the Prince of effectively linked to the practical micro- Wales Business Leaders Forum is available level implementation on their website www.pwblf.org.• It has a strong track record in partnership-building experience, and is 3.4 UNEP Annual Round Table with the trusted as a neutral facilitator of cross- Finance Industry sector partnerships with business, public The United Nations Environment Program and NGO sectors. Its capacity building (UNEP) Financial Institutions Initiative onThe Changing Resource Development Paradigm
  26. 26. - 20 -the Environment was launched in 1992 with the Statement outlines the principles of thethe intent to engage a broad range of initiative.financial institutions - from commercialbanks to investment banks to venture “We members of the financial servicescapitalists to asset managers to multi-lateral industry recognize that sustainabledevelopment banks and agencies - in a development depends upon a positiveconstructive dialogue about the interface interaction between economic and socialbetween economic development, development, and environmental protection,environmental protection, and sustainable to balance the interests of this and futuredevelopment. generations. We further recognize that sustainable development is the collectiveThis Initiative, which maintains a Secretariat responsibility of government, business, andin the United Nations Environment individuals. We are committed to workingProgramme, promotes the integration of cooperatively with these sectors within thesustainable development considerations into framework of market mechanisms towardall aspects of the financial sectors common environmental goals.operations and services. An additionalobjective of the initiative is to foster private We regard sustainable development as asector investment in environmentally and fundamental aspect of sound businesssocially sound technologies and services. management.A core part of this Initiative is to foster An International Round Table is held everyendorsement of the UNEP Statement by year to bring together stakeholders.Financial Institutions on the Environmentand Sustainable Development, which Additional information is available on thecommits signatories to incorporating initiative’s websiteenvironmentally sound practices into their www.unep.ch/etu/finserv/fimenu.htmoperations. The following introduction toThe Changing Resource Development Paradigm
  27. 27. - 21 - 4 EXAMPLES OF EFFECTIVE CORPORATE SOCIAL RESPONSIBILITY 4.1 Cameco in Northern Saskatchewan Cameco is the largest uranium producer in the world, with mining activities in Northern Saskatchewan. Early in the development of these properties Cameco recognized that business success was inextricably connected to its ability to work effectively with the residents of the area, ensuring that they received meaningful and sustainable benefits from mineral development. Northern Saskatchewan has a total population of 38,000 people living in many small communities scattered over 250,000 square kilometers. Demographically, the north’s population is 75% aboriginal representing the Woodland Cree, Dene, and Metis Nations. The majority of the aboriginal population of northern Saskatchewan are treaty Indians (First Nations) living primarily in communities on treaty reserve lands. The remaining aboriginal and non-aboriginal populationThe Changing Resource Development Paradigm
  28. 28. - 22 -lives in small settlements and villages under participating in trapping, hunting and otherprovincial jurisdiction. traditional activities when they are not at the minesite.Cameco’s management knew that failure towork effectively with Northern By November 1999, 450 aboriginalSaskatchewan residents would add cost and employees, representing about 45% of thecomplexity to all aspects of the permitting site operations workforce, made Camecoand licensing process and could even one of Canada’s leading industrialundermine the sustainability of the entire employers of aboriginal people. Northernindustry in the region. People were not people employed in Cameco’s miningprepared to support the mining development operations collectively earn approximatelyunless it provided them with meaningful C$20 million in direct salaries and wagesbenefits such as employment and business every year, and the majority of thisopportunities. employment income remains in the north. Salaries are attractive (Cameco employees atIn response, the firm developed a complex its Key Lake minesite average $56,000 perarray of economic, social and community year including benefits) and mostrelations programs, with a strong focus on communities have little other permanentemployment and business development. wage based employment.Cameco has facilitated the integration ofaboriginal northerners by giving priority to Cameco has cooperated with variousnorthern hiring, requiring contractors to agencies representing federal and provincialmeet northern hiring targets, maintaining a governments, and First Nations and Metisseven-day in, seven-day out work schedule organizations to develop a proactive, long-and a network of northern air traffic pick-up term labour force development strategy. Inpoints for employees. This system makes it 1999, Cameco invested more than a millionconvenient for northern employees to work dollars in post-secondary education andin the mines one week and remain in their training support, scholarships, educationhome communities the next, often awards programs, summer studentThe Changing Resource Development Paradigm
  29. 29. - 23 -employment, science program sponsorships,school site tours, school-based athletic Chart 4-1 Cameco Northern/Aboriginalprograms and career information initiatives. Cameco Northern/Aboriginal PurchasesAll were designed to encourage northern Purchases in CAD$ $93.3 100 $74.5aboriginal children to stay in school, pursue Millions $44.5 $44.1 50 $22.8 $27.9post-secondary training and consider 10.6 16.7 0occupations in the mining industry. As a 1991 1992 1993 1994 1995 1996 1997 1998result of these efforts, Cameco is beginning Yearto experience substantial gains in the Purchasesemployment and advancement of aboriginal In addition to employment Camecopeople in the management/supervisory, systematically promotes northern businesstechnical/professional and trades development, giving preferentialoccupations. As of September 1999, consideration to suppliers with northern andCameco directly employed 20 aboriginal aboriginal involvement. Volumes ofmanagers/supervisors, 42 aboriginal northern purchases have increased by 880%employees in technical/professional over eight years, rising from about C$10occupations and 40 aboriginal tradespeople. million in 1991 to more than C$90 million in 1998 (see Chart 4-1). Northern procurement now represents a very substantial part Cameco’s total purchases in support of its northern Saskatchewan mining operations. Northern Resource Trucking (NRT) is one example of a successful northern aboriginal business nurtured by Cameco’s northern business development strategy. NRT’s 71% aboriginal ownership consists of nine First Nations and three Metis communitiesThe Changing Resource Development Paradigm
  30. 30. - 24 -representing the northern Dene, Woodland The efforts of Cameco and other northernCree and Metis people of northern Saskatchewan mining firms haveSaskatchewan. Today NRT employs about precipitated a fundamental shift in the140 people, has annual sales of C$18 million overall development capacity of northernand has a permanent office and transit Saskatchewan. The education level of thewarehouse in the north. area is improving and northern aboriginal peoples have many more professional andAnother example is the Mudjatik/Thyssen managerial opportunities than ever before.joint venture, owned by Thyssen Mining The revenue and associated salaries enablesConstruction Ltd. and the Mudjatik communities to be more financially self-partnership, a consortium of northern sufficient and enhances the overallaboriginal partners. In 1999 they provided economic capacity.over C$39 million in underground miningand construction services to Cameco, While, the short-term economic viability ofemploying more than 100 aboriginal people the region is still very dependent on thein some of the highest paid industrial jobs mining industry, over the long-term theavailable. Other examples include Tron increased capacity will make it easier toPower, wholly owned by the English River identify and develop alternative economicFirst Nation, which had Cameco contracts activities.worth more than C$9 million in 1999.Cameco has developed extensivecommunity consultation and involvementprocedures and has even appointed Chief 4.2 The Porgera Project, Papua NewHarry Cook, Chief of the Lac La Ronge GuineaFirst Nation, the largest First Nation in SituationSaskatchewan, to Cameco’s Board of The Porgera Project is a world-class goldDirectors. mining operation situated in the remoteThe Changing Resource Development Paradigm
  31. 31. - 25 -highland province of Enga in Papua New capital cost exceeding one billion dollarsGuinea (PNG). Gold in this area was first US. Key players involved in impacting thediscovered by John Black, an Australian success of the project were:patrol officer, on March 25,1939. Thisdiscovery coincided with the western • Local Landowners;world’s making first contact with the people • National Government;of the Porgera valley. Due to the remote and • Provincial Government; andhostile environment encountered in the • Joint Venture Partners.Porgera Valley, exploration activity waslimited until the 1970’s when Placer Pacific Local Landowners - The miningLtd. began exploration in this unique area. development permit approval process inIn 1979, a joint venture was formed PNG is unique due to their land ownershipbetween Placer Pacific Pty. Ltd, Rension structure. In PNG, landowners have controlGoldfields Pty. Ltd. and Mount Isa Mines over land surface rights. No activityLtd. in order to further exploration activity. proceeds on traditional clan land without theIn the mid 80’s, with the discovery of a full authorization and support of thehigh-grade zone called “Zone Seven,” landowner.commercial development of the Porgeragold deposit became a possibility. The Special Mining Lease area defined forConcurrent with further mineral exploration the Porgera Project occupied over 2,200and preparation of a feasibility study, the hectares of land. Detailed genealogy studiesJoint Venture engaged in local training, were conducted on the special mining leasecommunity relations and business to identify landowners and their traditionaldevelopment activity. In 1988 a decision clan land boundaries. Seven clan groupswas made by the joint venture partners to were identified which were further brokenproceed with the development of a mining down into sub-clan groups totaling twenty-operation, subject to receiving the necessary three. Identification of the geographicalpermit approvals. Construction was to occur location of sub-clan boundaries presented anin four stages over a five-year period at a interesting challenge, as historicallyThe Changing Resource Development Paradigm
  32. 32. - 26 -boundaries had been the cause of clan relocated families in addition to outliningdisputes resulting in tribal warfare. the criteria that would be used to determineDevelopment of the Porgera Project required who would receive a relocation house. Fourcompensation to be paid for surface hundred families, involving over threedisturbance and consequently many old thousand people, were relocated from theboundary disputes resurfaced. Through the active mining area.traditional process of clan tribal fighting andnegotiation the clan boundary issues were Two important factors contributed to theultimately resolved success of the Porgera Project. Firstly, the Landowner Committee played an importantTwo important agreements for role by participating in frequent fora forcompensation and relocation were discussion and communication of issues andnegotiated between the joint venture concerns for the involved parties. Given thepartners and a Landowner Committee complexity of the task there were manyrepresented by the twenty-three sub-clan opportunities for miscommunication,groups. The Compensation Agreement misinterpretation, and misunderstanding duedetermined the rate of compensation to be to language, culture and value differences.paid to a landowner for all improvements Secondly, the Relocation and Compensationmade on the land, as well as determining an Agreements committee structure formed theannual lease rate to be paid to the landowner basis for successfully addressing issues.based on land surface area utilized for There were many circumstances anddevelopment. This Agreement included a concerns that arose that were not identifiedcompensation rate schedule for garden in the original Agreements that neededvegetables, bush material houses, fences, a resolution. Due to the fact that thesewide assortment of jungle trees, vines, ferns agreements were not fixed, but flexible, theyand other bush material traditionally used by could be revisited and re-negotiated aslocal landowners. The Relocation concerns surfaced. Meetings with theAgreement documented the house design Landowner Committee were frequentand specifications that would be built forThe Changing Resource Development Paradigm
  33. 33. - 27 -ensuring the opportunity to resolve issues royalties and taxation would be distributed.and disputes promptly. They included commitments to construct community infrastructure such as schoolsNational Government – Papua New and hospital facilities. Following theGuinea has a democratically elected process of engagement, the Nationalgovernment similar in structure to the government issued the Joint VentureBritish system. One of its key roles was Partners a Special Mining Lease permitissuing the necessary permits for allowing authorizing them to proceed with thethe Project to proceed. The Porgera Project development under the specified terms. Aswas permitted under a process called the with the Compensation and RelocationMining Development Forum. This involved Agreements, success of the Nationala series of open meetings to hear and record Government agreements was due to the factinput at the local, provincial, and national they were “living documents”. Theylevels. Two important issues became the documented the broad intent of thefocus of discussion: agreement, but many unidentified issues needed to be, and were, clarified and• How the wealth created from the mine resolved through an ongoing process of would be distributed; dialogue and negotiation.• Resolution of the environmental impacts. Provincial Government – The Provincial Government’s role as a stakeholder in theThese discussions then led to the Porgera Project was administration of thenegotiation of two agreements; one between provincial revenue generated by the project.the National Government and Landowners Road construction creating access forrepresentatives, the other between the isolated villages became one of theirNational Government and the Provincial primary roles. Providing police services andGovernment. These agreements largely bringing law and order to this frontier wasfocused on how the wealth generated from another role receiving provincialthe mining operations resulting from government attention. These wereThe Changing Resource Development Paradigm
  34. 34. - 28 -fundamental and key elements in the success community. Compensation, local businessof the project because without a system development aspirations and training werebased on order, nothing is sustainable in the in place. With the rapid build up oflong-term. construction personnel to the mine site, (2,000 people) the initial culture shockThe Joint Venture Partners – The experienced by this group was significant.feasibility study completed in 1988 by The cultural learning curve was steep whichPlacer Pacific, Renison Goldfields, and often resulted in landowners shutting downMount Isa Mines Ltd. indicated the work until issues were resolved. Thedevelopment of the Porgera gold deposit frequency of work stoppages due to localwas economically viable. A decision was landowner disputes all but disappeared oncemade to develop the project as equal the Joint Venture Partners began operatingpartners, subject to government approval. as a team. This involved the integration ofOnce the project was approved the National community relations, lands, and businessGovernment exercised its option to development activities with the traditionalparticipate as a joint venture with a 10% construction functions. Local landownersinterest. This left the other partners with an had taught their visitors an important lesson;equal share of 30% each. In 1993, after the project would not go forward unless allthree years of successful operation, the state landowner issues of compensation, businessincreased its ownership in the property to development or other community issues25%; the other three partners reluctantly were resolved. Billions of Dollars were atagreeing to each reduce their ownership to stake This lesson taught the Joint Venture25%. Partners to be good listeners and creative problem solvers.Due to the lengthy exploration phaserequired for this project, the Joint Venture Driving FactorsPartners had time to work within the local The motivation for the Company and theculture of the Porgera valley and develop a Community to work together was simple.working understanding with the local The Joint Venture Partners needed theThe Changing Resource Development Paradigm
  35. 35. - 29 -support of the community to build and benefits of taxation being reinvested intooperate the project and the Community their communities.wanted the project to proceed as they saw itproviding them with a better quality of life. The local landowners viewed the development of the Porgera gold deposit asThe investors needed the landowners to their opportunity to improve their quality oflease the land necessary for the project life. In this way they shared a largedevelopment and also needed their support commitment to see the project proceed andto ensure a stable social environment. become successful. Due to the remoteness ofManaging risk to capital invested through the Porgera valley, basic infrastructure suchactive community relations programs was, as road access, schools, medical facilitiesand continues to be, a strategic component and electricity were nonexistent orof the Joint Venture Partners business plan. nonfunctional due to lack of funds forStaffing within the Lands and Community staffing and maintenance. The Jointrelations department is maintained at healthy Venture Partner’s investment of $ 1 billionlevels, between 80-100 employees. They US dollars provided local employmentwork closely with landowners to address opportunities, royalty payments andcommunity issues and support women’s and infrastructure.youth organizations. Community relationsstaff also work closely with locals to Successesadminister the National Government’s tax The main success of this project was thecredit program. This program allows for a win-win situation created by the primaryportion of the annual tax payable to be short- stakeholders. The community of Porgeracircuited directly into local communities achieved their goal of improving access andimpacted by the mine for the creation of services to the valley with the constructionneeded infrastructure. This initiative was of a good quality road, new airstrip, andlargely in response to local landowner commercially viable electrical power supplycomplaints that they were not seeing the and distribution network. Additionally, they improved the quality of local educationalThe Changing Resource Development Paradigm

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