Earning a social licence to operate: Social acceptability and resource development in Latin America

"IntroductionIn the 1970s, environmental concerns and associated liabilities were a new and unknown aspect of corporate risk. Today, social concerns and the associated conflicts that they can generate constitute a rapidly expanding aspect of risk. Although not a new phenomena — the Bougainville copper mine was forced into closure in 1988 — social risk has emerged as considerably more important, and increasingly visible, in the last few years. Social risk is now an aspect of all mining activities which needs to be calculated into project assessments, and to be managed throughout the life of a project. While social risk has a number of aspects at the corporate level, such as company image and shareholder relations, at the level of the individual project, its primary component is social acceptability, and the principal tool for managing it is the Social Licence to Operate.Social Risk in Latin AmericaThroughout Latin America there are newly modernized mineral codes and economic systems introduced over the last ten years which, together with new environmental legislation, look very much like regulations in developed countries. To the corporations, the existence of these instruments means that the risks from the environmental issues associated with the project are known; they are legislated, defined, quantifiable and hence manageable.It seems ironic that, just when comprehensive regulations for the environmental management of mining have been put in place throughout Latin America, there arise an increasing number of challenges to mining activities. For, in spite of the apparent guarantees provided by these new legislative reforms, communities in Latin America today are more frequently standing up and taking exception to the presence of mining companies, or the ways in which the companies are conducting themselves. The viability of projects becomes threatened because they are considered socially unacceptable, a phenomenon that we describe as social risk. These challenges are less about opposing mining activities than many people would think. Rather, they are based on an increasing desire on the part of the local population to have some measure of control over their own future, and to participate in the development process from the earliest stages."