Investigating giant mining operations

The operations of the world's giant mining companies have often raised concerns due to their alleged insensitivity to the local communities and the environment.

However, research financed by the International Development Research Center (IDRC) indicates that the multinationals are much better than local mining firms in promoting the welfare of the people living near their mines.

The research involved three giant mining projects in Chile. This included the Escondida copper mine -- the largest private mine in Chile -- owned by a consortium led by Australia's Broken Hill Proprietary, the Calenderia copper mine owned by the U.S.- based Phelps Dodge Corporation, and the Fachinal gold and silver mine owned by the U.S.-based Coeur D'Alenne Mines Corporation.

The research was carried out by a team of researchers led by Jose Miguel Sanchez, an economist at Chile's Pontifica Universidad Catolica, the results of which were reported by Santiago-based mining journalist Louise Egan in the IDRC website.

To the researchers' surprise, these projects contradicted the widely held stereotype that large multinational companies are impersonal and insensitive giants, with little regard for local populations or the environment.

The researchers did document some negative impacts, ranging from the depletion of water resources in the area surrounding the Escondia and Candelaria mines to an increase in prostitution and venereal disease in a town near Fachinal.

But due to certain "good practices" pursued by the companies, the "damage" done to the communities was minimized, the team concluded.

The most successful in this regard was Escondida, which maintained working relationships with local scientists and responded swiftly to any allegations of pollution or threats to wildlife by commissioning studies.

The team also concluded that the main reason for the relatively healthy relations between large mining interests and local communities is the existence of internal corporate guidelines defining each company's mission, standards, and procedures.

"In all cases, we see a corporate model, or a shared mental model, that responds to a particular mission," one of the team anthropologist Julio Castillo said. This practice of defining "how to do things right" is absent in most small locally owned mines.

The corporate model, which rules regardless of the local context, shapes the way the company interacts with the community. It also sets environmental standards that are often superior to local laws.

A second set of "good practices" noted by researchers concerns a company's external affairs strategy -- how it relates to the community. In the areas where Escondida and Candelarie are located, there is a strong sense among community members that the presence of the mining firms has brought economic benefits to them.

The researchers attribute that to the companies' commitment to local purchasing and hiring. For example, 80 percent of Escondida's 2,000 permanent staff and 82 percent of Candelaria's employees were hired locally.

In addition, all three companies have a policy that gives preference to local suppliers.

Another key point mining companies should understand, the researchers say, is the value that local communities place on any permanent contributions to regional development.

This is especially true in areas with a strong mining culture, where enthusiasm over the economic benefits of new mining projects is tempered by the knowledge that all mines will eventually close. -- IDRC