Investigating giant mining operations

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