What attending an anti-CSG rally taught me – communities now expect Generation 3 engagement processes

Organised by Lock the Gate alliance and GetUp and chaired by Alan Jones, the recent Food Security Forum contained rhetoric and attendance from both sides of the political sphere. While this movement’s blend of environmentalists and farmers appear to be strange bedfellows, many of the issues raised by the speakers should come with little shock to community engagement practitioners with experience in the resources industry.

While the four speakers, all women located throughout the State, spoke to localised concerns, there was an overwhelming thread that appeared in all speeches: the desire for a transparent, two-way engagement process. From Ruth Armstrong, who spoke about having to “take the responsibility to push DERM to take action” around dust and noise complaints to Heidi Ross who criticised a perceived lack of transparency and demanded proper consultation, the Forum demonstrated how communities have come to expect and now demand Generation 3 engagement practices.

Indeed, having attended the Forum and returned home to review the Generational framework, I was struck how the heurisms of various speakers reflected the framework so succinctly. People now want transparent and open access to information that assesses the risks and impacts to their community. The desire for transparency goes beyond the need for access to the often substantial (1000s of pages) EIAs replete with inaccessible and alienating language and diagrams. Rather, people want to be provided with an understanding of the possible impacts on their community and environment in a way that is direct and easily consumed. Similarly, speakers demanded ‘real’ consultation –  where they are listened to and their concerns acted upon.

Obviously, it is hard to assess the on-ground work of various resources companies through the narrative of protest speakers.  However, it appears that the present anti-CSG/mining activity is as much concerned with not just what companies are doing, but how they are going about it.

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Land acquisition and resettlement

One of the well known and criticised impacts of mines is that of land acquisition and involuntary resettlement. Mines, like other large development projects (particularly dams) often involve the assumption of large tracts of land.

Resettlement (whether it is involuntary or not) is an issue that affects millions worldwide. For example, in India alone, more than twenty million people were displaced between 1950-1980, while between 40-45 million were resettled in China between 1950 and 2000 (Cernea 2003, 6). While the majority of these displacements were a result of hydro-power generation projects, extractive projects have certainly been a contributor. Further, some commentators suggest that resettlement as a result of mining will expand in the future, due to the growth in open-cast mining based on the exploitation of larger tonnage, lower grade deposits.

Resettlement – problematic outcomes

Based on past studies, it would be easy to assume that resettlement is inherently linked to further impoverishment. Evidence has found the resettlement is associated with the following fundamental and recurrent risks:

    • Landlessness
    • Joblessness
    • Homelessness
    • Marginalisation
    • Increased morbidity and mortality
    • Educational losses
    • Food insecurity
    • Loss of common property

(Cernea 1997, 2000, 2003 16).

Many commentators on these outcomes may argue that these outcomes are of governmental concern and responsibility. However, despite the truth in this, ensuring that appropriate resettlement practice is adhered to is increasingly becoming a concern and indeed a responsibility of the private sector.

The reasons for this are twofold:

  • The private sector is often in a position where the acting government has ineffective systems in place in relation to resettlement. This inadequacy ranges right from the beginning of the process, with ineffective (or non-existent) land titling and property ownership systems through to the ‘end game’ of resettlement.
  • As a result of governmental inadequacy, companies often assume a quasi-governmental role, in essence becoming the agent of land tenure change. Consequentially, the company then inherits the responsibilities associated with resettlement in the eyes of local and international stakeholders. Further, this responsibility in enhanced through the concept of CSR, whereby companies are considered responsible for the social outcomes of projects.

Indeed, issues surrounding land resettlement have at times assumed a key role in company-community conflict in the mining sector. The now (in)famous company-community conflict at Minera Yanacocha South America (MYSA) remains a case in point.

The Minera Yanacocha South America (MYSA) is the largest gold producer in South America and was the first foreign-owned mine in Peru (Newmont Mining Corporation 2011). MYSA has been the subject of an intense amount of conflict and criticism over the majority of the mine’s life, despite the vast amount of wealth it has generated for the region and the government.

Amongst other issues, resettlement and land acquisition have been a driving force of the conflict from the onset (Bebbington et al. 2008, 19). The early land acquisition process is widely acknowledged as flawed: MYSA virtually acted as the agent of land tenure change, rushing communities through the process and resorting to expropriation and evictions in instances of community resistance (Bury 2005, 231–232). These practices (which have since been changed)[1] resulted in several lawsuits and were responsible for a number of the early eruptions of violence (Bury 2002, 12–13). The complaints around resettlement also argue that land holders have not been able to replace their previous land, due to a reduction in land availability and the resultant inflation of land values in the region (Bury 2002, 12–13)[2].

The complaints noted above point to a recurring issue noted in the literature on resettlement: that cash based compensation at its best does not genuinely compensate land holders and at its worst results in increased impoverishment (Cernea 2003; Maldonado 2009). Indeed as Cernea notes:

Evidence demonstrates irrefutably that the purchasing power of cash compensation typically ends up being less than necessary to repurchase the assets lost (even if compensation is paid at replacement costs).

The transaction costs, production time wasted, start-up costs etc all eat at compensation value. Further, various cultural pressures and immediate needs often divert compensation proceeds away from asset replacement. Land markets are limited, prices go up, worth of compensation goes down.

At the end of the day, the need to resettle populations for infrastructure, hydro, and mining project is not going to diminish. However, ineffective and flawed resettlement practices and the resultant (and costly) company-community conflicts need not.

Got ideas on best practice for resettlement? Comment and share your thoughts.

Bebbington, Anthony, Denise Humphreys Bebbington, Jeffrey Bury, Jeannet Lingan, Juan Pablo Muñoz, and Martin Scurrah. 2008. ‘Mining and Social Movements: Struggles Over Livelihood and Rural Territorial Development in the Andes’. World Development 36 (12). World Development: 2888–2905.

Bury, Jeff. 2002. ‘Livelihoods, Mining and Peasant Protests in the Peruvian Andes’. Journal of Latin American Geography 1: 1–19.

Bury, Jeffrey. 2005. ‘Mining Mountains: Neoliberalism, Land Tenure, Livelihoods, and the New Peruvian Mining Industry in Cajamarca’. Environment and Planning A 37 (2): 221 – 239. doi:10.1068/a371.

Cernea, M M. 2003. ‘For a New Economics of Resettlement: a Sociological Critique of the Compensation Principle’. International Social Science Journal 55 (175): 1–2. doi:10.1111/1468-2451.5501019_3.

Downing, Theodore. 2002. Avoiding New Poverty: Mining-Induced Displacement and Resettlement. Mining, Minerals and Sustainable Development & The International Institute for Environment and Development.

Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region. 2006. Republic of Peru – Wealth and Sustainability: The Environmental and Social Dimensions of the Mining Sector in Peru. The World Bank.

Maldonado, Julie Koppel. 2009. ‘Putting a Price-Tag on Humanity: Development-Forced Displaced Communities’ Fight for More Than Just Compensation’. Hydro Nepal Journal of Water Energy and Environment 4 (4): 18–20. doi:10.3126/hn.v4i0.1817.

Newmont Mining Corporation. 2011. ‘The South America Region’. Newmont Mining.

Quiroz-Onate, Diego. 2008. ‘Newmont Mining Corporation: Embedding Human Rights Through the Five Star Management Program’. United Kingdom: The Robert Gordon University.

Whellams, Melissa. 2007. ‘The Role of CSR in Development: a Case Study Involving the Mining Industry in South America’. Masters, Nova Scotia: Saint Mary’s University.


[1] MYSA established an ‘Original Landowners Program’ in 2001 that was designed to assist resettled families (Whellams 2007, 57).

[2] It should also be noted that land acquisition in Peru is complicated by a complex and often poor legal framework; land is often owned communally in rural areas and despite the introduction of titling for these areas decades ago, many communities do not currently have the titles to their land (Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region 2006, 106)

Consent versus Consultation & the IFC

Souce: PinkMoose

Free, prior and informed consent has a sister acronym: one that up until now, surfaced more regularly in documents produced by industry (and governments) – free, prior, and informed consultation. By and large, if you are looking at enforceable standards (as opposed to soft standards, such as UN Declarations) consultation is the focus of FPIC, rather than consent.

This distinction has long been the ‘thorn in the side’ of this right in the view of Indigenous Peoples and their advocates. However, this trend is changing, with the International Finance Corporation (the lending arm of the World Bank) releasing its new Performance Standards, which will come into effect in January 2012.

The updated Performance Standards were a result of an 18 month consultation with affected stakeholders. As a result, free, prior and informed consent is now enshrined in Performance Standard 7.

Updated Performance Standard 7 – IFC

At the moment, where and how FPIC will be operationalised under the IFC standards is the burning question. The accompanying Guidance Notes are yet to be published – although they were due for publication at the end of October 2011*.

For more commentary, see: Foaley Hoag

* Anyone been able to track them down?

Linked literature: financial returns of stakeholder engagement

It used to be the case that the value of a gold mine was based on three variables: the amount of gold in the ground, the cost of extraction, and the world price of gold. Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude.

Why? Because one has local support and the other doesn‘t.

In this article, the authors take a valuation approach to ascertaining the impact of stakeholder engagement on the value of mining companies. The authors posit that stakeholder engagement (and lack thereof) can be empirically related to company value. For those of us for whom algebra is a long forgotten art, some of the methodology may be a little esoteric; however, this emphasis also provides strength to the CSR business case, which has often been criticised for focusing on qualitative rather than quantitative data.

Check out: Spinning Gold: The Financial Returns to External Stakeholder Engagement

H/T to Peter Bruce

Image credit: Uncle Kick-Kick

Wealth disparity and ineffective mining wealth distribution – national issues affecting mining-community conflicts in Peru

In a country with considerable mineral wealth, mining-community conflicts have become a part of the socio-political landscape in Peru. For example, the government’s latest report on social conflict noted 214 conflicts across the country, which are mapped below (Defensoria del Pueblo del Peru 2011, 1). Importantly, those areas identified in red below as having 11 or more registered conflicts, are all associated with mining activity.

 National social conflict map – July 2011

(Defensoria del Pueblo del Peru 2011, 4). (Activo=active, latente=latent, socioambiental=socio-environmental)

While there are always specific localised motivators to conflict, it is undeniable that there are underlying pre-existing issues that contribute to these conflicts. The rise of extractive conflicts nationally is generally related to:

  • wealth disparity
  • the neo-liberal reforms that reduced taxes and royalties coupled with local municipal inability to effectively distribute mining related revenues(Arellano-Yanguas 2011, 619).

Mining in Peru over the last decade has typically occurred in remote regions that are typified by their extreme poverty and lack of services. Indeed, despite steady decreases in poverty levels in the coastal populations over the last decade, the rural Andean region’s poverty levels have increased, culminating in a shocking 69% in 2008 (Arellano-Yanguas 2010, 60). Further, these disparities between rural and urban poverty levels are the most severe in Peru, even when compared to its poorer Andean neighbours (Arellano-Yanguas 2010, 61).

Put simply, mining ventures often bring incredible wealth and services to areas that are marked by their lack of these resources. Consequentially, mining companies end up becoming quasi-governmental service providers, and issues arise when companies are not able to effectively take on their new-found role. Further, the companies direct injection of wealth into the communities surrounding it are finite: employment and contracting opportunities generated by mines are limited, and those whom are lucky enough to be recipients become an elevated class; leaving behind those that are not able (or wish) to participate (Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region 2006, 105–106). Indeed, Arellano-Yanguas argues that the desire of communities to enjoy a greater share of the economic or financial benefits of mining is a strong motivator of conflicts in Peru; where disruptive conflict is seen by communities as the only viable and effective bargaining tool (2010, 111).

The level and distribution of mining related governmental revenue is another feature of these conflicts. President Alberto Fujimoro undertook an aggressive neo-liberalisation project in the 1990s in order to attract foreign investment in the country’s ailing economy. As part of this project, mining taxes and royalties were reduced to be some of the lowest in the world, resulting in many communities voicing concerns (Vasquez 2011, 24). In response, the government undertook activities to increase the amount of mining revenue flowing back into affected communities through the Mining Canon (Canon Minero). However, local governments are often ill-equipped to effectively invest the funds in ways that adequately and sustainably addresses the array of social issues affecting remote communities, resulting in the problem persisting (Vasquez 2011, 24; Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region 2006, 109).

Arellano-Yanguas. 2011. “Aggravating the resource curse: Decentralisation, mining and conflict in Peru.” Journal of Development Studies 47 (4): 617-638. doi:10.1080/00220381003706478.

Arellano-Yanguas, Javier. 2010. Local politics, conflict, and development in Peruvian mining regions. PhD, England: University of Sussex.

Defensoria del Pueblo del Peru. 2011. Reporte de Conflictos Sociales. Peru: Defensoria del Pueblo del Peru, July.

Elizalde, Bernarda, Christina Sabater, and Melissa Whellams. 2009. Appendix 1: Narrative Reports – 1E Minera Yanacocha, Peru. In Community Relationships Review – Global Summary Report, Newmont, ed. Gare Smith and Daniel Feldman. Foley Hoag.

Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region. 2006. Republic of Peru – Wealth and Sustainability: The Environmentaland Social Dimensions of the Mining Sector in Peru. The World Bank.

Vasquez, Maria. 2011. The role of employee capacity building in reducing mining company-community conflicts in Peru. Masters, Vancouver: University of British Columbia.

Identifying indigeneity and mining projects: a contentious and complex task

For mining projects, identifying indigeneity has become increasingly important due to the system of frameworks that require specific procedures to be undertaken by companies and governments when impacting indigenous communities. This short article discusses the complexity of identifying indigeneity itself, with a focus on Peru.

Campesinos by 350.org

Identifying indigenous communities is widely recognised as a difficult and indeed contentious task (Kuper 2003). This is perhaps even more so in Peru due to a variety of historical and cultural factors. Peru has widely been noted academically as ‘un país sin indígenas’ (a country without indigenous peoples). This statement is intended whimsically, in response to the absence of an indigenous movement in a demographically indigenous country (45%), which is in striking contrast to its Ecuadorian and Bolivian counterparts (Morrissey 2009, 496; Greene 2006, 333).

The terms Indian (indio) and indigenous (indígena) in Peru have specific cultural meanings, which put simply, are ethnic slurs. While it is not my purpose to fully consider the complexities of ethnic classification in Peru, it is important to note that the relationship between Indian and mixed (mestizo) is widely regarded as a fluid continuum that is not so much concerned with race as it is with ‘development’ (Jackson and Warren 2005, 561; García 2005, 8–9; Starn 1991, 70). In her study of Peruvian ethnic identities, De la Cadena notes that within Peruvian ethnic identity construction, individuals become ‘de-indianised’ through a process of literacy and urbanisation, aptly described in a traditional saying ‘a literate Indian is a lost Indian’ (De la Cadena 2010, 346; De la Cadena 2000, 310) . Ultimately, being mestizo does not necessarily mean erasing indigenous cultural identity (García 2005, 9).
The self-identification of communities as ‘campesinos’ (peasants) can point to indigeneity. The term campesino came to be applied legally to rural indigenous communities in 1969 under the Agrarian Reform Law. This law, and the reforms that followed it, were designed to redistribute the land to the communities who had worked the land under the hacienda system of governance (Coxshall 2010, 41; Cleary and Steigenga 2004, 52; Stocks 2005, 95; Kamphuis 2011, 5–6). Campesino communities are typified by their subsistence farming, culturally distinct cultural practices and institutions (such as rondas campesinas – peasant rounds), in addition to communal land holding practices. Thus, campesino communities are recognised under Peruvian law as having the same rights as indigenous peoples (International Labour Office, n.d; Fulmer 2010, 6).

The importance of the role of NGOs in the construction of indigeneity should be considered. While this subject is certainly contentious academically and has been disregarded by the company , it is impossible to ignore the fact the NGOs have consistently acted as key actors in the indigenous movement over the last twenty years. Lucero argues that NGOs such as Oxfam, “legitimising certain identities and de-legitimising other (Lucero 2011, 2). With the continued support of international NGOs, the demands of local actors have increasingly been articulated in terms of indigenous rights frameworks (Lucero 2011; Sandt 2010, 33; Coxshall 2010, 44). Regardless of whether or not the communities in question are considered ‘indigenous’ by the national government or the company, it appears that they are recognised as such on an international stage. As a result, it is likely that this motivator of the conflict will remain, based on continued support and interest by international NGOs.

That ‘indigeneity’ is a complex and ambiguously defined identity demonstrates the need for a solid ethnographic understanding of communities prior to undertaking extractive projects.

Bibliography
De la Cadena, Marisol. 2000. Indigenous Mestizos, De-Indianisation, and Discrimination. In Indigenous Mestizos: the politics of race and culture in Cusco Peru, 1919-1991, 307-330. London: Duke University Press.

———. 2010. “Indigenous Cosmopolitics in the Andes: Conceptual Reflections beyond ‘Politics’.” Cultural Anthropology 25 (2) (May 1): 334-370. doi:10.1111/j.1548-1360.2010.01061.x.

Cleary, Edward L., and Timothy J. Steigenga. 2004. New voice in religion and politics in Bolivia and Peru. In Resurgent voices in Latin America: indigenous peoples, political mobilization, and religious change, 43-65. Rutgers University Press.

Coxshall, Wendy. 2010. “When They Came to Take Our Resources: Mining Conflicts in Peru and Their Complexity.” Social Analysis 54 (1): 35-51. doi:10.3167/sa.2010.540103.

Fulmer, Amanda. 2010. Consultation and its Discontents: Mining, Indigenous Communities and Rights in Peru and Guatemala. In Toronto.

García, María Elena. 2005. Making indigenous citizens: identities, education, and multicultural development in Peru. Stanford University Press.

Greene, Shane. 2006. “Getting Over the Andes: The Geo-Eco-Politics of Indigenous Movements in Peru’s Twenty-First Century Inca Empire.” Journal of Latin American Studies 38 (02): 327-354. doi:10.1017/S0022216X06000733.

International Labour Office. Peru – Latin America – Activities by region.

Jackson, Jean E., and Kay B. Warren. 2005. “INDIGENOUS MOVEMENTS IN LATIN AMERICA, 1992–2004: Controversies, Ironies, New Directions.” Annual Review of Anthropology 34 (October): 549-573.

Kamphuis, Charis. 2011. “The Convergence of Public and Corporate Power: Yanacocha Mine, Campesino Dispossession, Privatized Coercion.” SSRN eLibrary.

Kuper, Adam. 2003. “The return of the native.” Current anthropology 44 (3): 389-402.

Lucero, Jose. 2011. Seeing Like a NGO: Encountering Development and Indigenous Politics in the Andes. In Tulane University, New Orleans, April.

Morrissey, Laura. 2009. “The Rise of Ethnic Politics: Indigenous movements in the Andean region.” Development 52 (4): 496-499.

Sandt, Joris J. 2010. Legal strategies dealing with negative consequences of extractive projects in Latin America. Cordaid.

Starn, Orin. 1991. “Missing the Revolution: Anthropologists and the War in Peru.” Cultural Anthropology 6 (1) (February 1): 63-91.

Stocks, Anthony. 2005. “TOO MUCH FOR TOO FEW: Problems of Indigenous Land Rights in Latin America.” Annual Review of Anthropology 34 (October): 85-104. doi:10.1146/annurev.anthro.33.070203.143844.

Free, Prior and Informed Consent and the Extractive Industry

Protesting in the Highway, John Donaghy

Since becoming an international standard in non-binding law, free, prior, and informed consent (FPIC) has been increasingly recognised by major actors in the extractive industry, such as Rio Tinto, Anglo American Alcan, and Xstrata. Despite this, the industry as a whole has not endorsed FPIC and has publicly stated reservations in regards to the principle and its implementation. However, FPIC is arguably a necessary component of the CSR agenda for the extractive industry, as it acts as both a fundamental tool of good engagement practice and aides to mitigate the social risk imbedded in projects that neighbor Indigenous Peoples.

What is FPIC?

FPIC is the principle that Indigenous Peoples’ have the right grant or withhold their FPIC in relation to the development of extractive projects that will affect their lands and livelihood. Specifically:

  • ‘free’ = Indigenous Peoples’ are not coerced
  • ‘prior’ = consent is sought before the initiation of development activities.
  • ‘informed’ =  Indigenous Peoples’ are provided with full information in regards to the project, including negative impacts, in a manner that they comprehend and understand.

Importantly, the FPIC process differs from consultation, in that it places Indigenous Peoples’ in a position of authority over the project’s development. In contrast, consultation only requires that companies engage with communities, and address their concerns. Increasingly, the principle of FPIC is being implemented by companies as the risk of not implementing this process is seen to be too great.

Why do it?

Put simply, the FPIC process is becoming an integral principle in corporate social responsibility (CSR) programmes because previous consultative methods have failed to prevent costly community opposition. Indeed, despite the growth of the CSR agenda in the extractive industry in the last twenty years, it appears that community opposition has grown simultaneously.

Instances of mines either being temporarily or permanently shut-down because of community actions abound, which can be interpreted as physical manifestations on non-consent. For example, in 2006, Esquel was forced to abandon the Argentinean Esquel Gold Project, resulting in $378.9 million written off of Esquel’s balance sheet, in addition to a loss of $1.81 billion (est) in reserves (Herz, La Vina, and Sohn 2007).[1]

In the past, companies have attempted to respond to community opposition through engagement, consultation, and philanthropic programmes. However, communities’ responses have neither been systematic or desired. This is arguably a result of the fact that these programmes are not meeting the core or root causes of opposition. Indeed, surveying a range of studies on community opposition, Laplante and Spears found that the central issue of the majority of complaints from communities in regards to extractive industry projects concentrated on the lack of consultation and consent sought by the company (Laplante and Spears 2008).

In contrast, the process of gaining a communities’ FPIC arguably results in a stronger social license to operate, that in turn presents real financial benefits to companies. Indeed, Shell estimates that through engaging in a FPIC process for the Malampaya project cost approximately $6 million, while accruing $50 to $70 million in avoided expenditure and fast-tracked production.  

FPIC – Legal Status

The divergence in opinions on FPIC in regards to the extractive projects begins with issues around its legal status. The legal concept of FPIC is based on a number of international instruments, jurisprudence, and human rights standards. These include:

  • the UN Declaration on the Rights of Indigenous Peoples’(2007) (Declaration)
  •  a binding judgment by the Inter-American Court of Human Rights (Saramaka People (2007)(Weitzner 2009)),
  • the International Labor Office’s (ILO) Convention No. 169, Concerning the Indigenous and Tribal Peoples in Independent Countries (1989).

Advocates point to these instruments and argue that the right of Indigenous Peoples’ to give FPIC is now universally recognised under international law. (Weitzner 2009; Herz, La Vina, and Sohn 2007). In contrast, opponents to the implementation of FPIC, such as the International Council on Mining and Metals’ (ICMM) John Mitchell argue that the FPIC is not a universal legal requirement: rather, it is, ‘a requirement in only a small number of jurisdictions’ (Mitchell 2004). In truth, the legal status of FPIC rights for Indigenous Peoples’ lies somewhere in between.

At present, the only binding instrument that recognises FPIC rights for Indigenous Peoples’ is the ILO Convention No. 169, which has only been ratified by 22 countries, as shown in Figure 1 (Chan 2008).

Figure 1: Global ratification of ILO Convention No. 169

Source: (Maziotis 2010)

Further to this, the Convention does not provide for FPIC in cases where the state owns mineral or sub-surface resources; however, in such instances, Indigenous Peoples’ are given the right to consultation, participation in benefits, and fair compensation (International Labour Office 1989). In contrast, the right to FPIC for Indigenous Peoples’ is provided for in the Declaration, although it is a non-binding legal instrument.

Despite its status as ‘soft law’, the Declaration, which has been endorsed by 147 countries, is reflective of social expectations globally, and very well may start to affect domestic legal frameworks in the future (Lehr and Smith 2010). Indeed, as Lehr and Smith note, there exists a risk that that the right to FPIC may be implemented and be applied retroactively, which would ‘affect existing company concessions’ considerably (2010). On this basis, it becomes clear that the current soft status of FPIC is largely irrelevant, as both the risk of future implementation and increasing awareness of the concept socially, demands that companies begin to implement FPIC processes in their dealings with Indigenous Peoples’.

Incompatibility with state sovereignty

In a related issue, opponents of FPIC argue that the principle of FPIC is inconsistent with a state’s sovereignty over natural resources (Buxton 2010; ICMM 2003; Perrault, Herbetson, and Lynch 2007). While states generally hold sovereignty over natural resources, it is important to note that a state’s authority to manage these is constrained by both the Declaration and other human rights conventions. Indeed, as Weitzner notes,

‘a company failing to ensure FPIC is implemented in such a context may be opening itself and the country’s government to a potential court challenge (2009).

Further, through not implementing a FPIC process, companies increase the risk that they will encounter various physical manifestations of non-consent, as addressed earlier in this essay.

Right to veto

Perhaps the key issue for opponents of FPIC is the matter of ongoing consent, or more bluntly, the right of Indigenous Peoples’ to say ‘no’ during the project cycle. Recognising FPIC as a right may result in companies having to abandon projects. In the initial instance, this may in fact result in better outcome for companies, wherein they do not invest in projects that they may have to abandon at significant loss in the future (Lehr and Smith 2010; Laplante and Spears 2008). More importantly, the issue of withdrawal of consent during the project life-cycle is arguably a greater cause of concern for companies. However, in this instance, one must first consider that consent acts as a formalised representation of a social license to operate, and ‘any license that is authorised can also be revoked if the rules are not followed’ (Weitzner 2009). Furthermore, current research demonstrates that rather than increasing instances of project shut-downs, FPIC processes tend to decrease such instances. Indeed, as noted earlier, there are a variety of ways for a community to demonstrate non-consent, many of which are incredibly costly for the companies involved.

Finally, opponents argue that FPIC is simply too difficult to operationalise. Indeed, by the very nature of FPIC, there will never be a clear cut process map that can be effectively implemented across all sites, because no two communities are exactly the same. Specifically, the greatest challenges to the process are identifying consent givers and the intricacy of ensuring that the consent is informed.

Practical implementation – an insurmountable task?

While guidelines are clear in that they state that consent should be derived consensually from a community in accordance with traditional customs, one of the greatest difficulties in obtaining consent in this instance is ensuring that minorities within the community and minoritised communities as a whole are given the capacity to grant or withhold their consent. In regards to gaining consent from minorities within a community, a major road-block to overcome in the FPIC process is ensuring that women, who often hold lower social status in traditional communities, or whose societal functions prevent them from participating in the FPIC process are included (Macintyre 2003)[2]. However, to argue that including minorities within a community is solely an issue for the FPIC, rather than CSR practices as whole is disingenuous. Identifying and engaging minorities is recognised as an issue within a wide variety of CSR practices and processes. Indeed, there are a range of tools and processes for ensuring companies adequately engage with minorities, such as women.[3]

Similarly, the issue in regards to engaging Indigenous communities as whole when they are often minoritised points to an ongoing reality for CSR practice, rather than an indictment on the validity of the FPIC process. The fact that companies may have to build the capacity of affected communities is becoming an operational reality in the extractive industry (IUCN-ICMM Dialogue on Mining and Biodiversity 2008). While ensuring capacity may lengthen the early stages of the project cycle, it is important to note that an investment in a community prior to exploration helps protect a company’s later and much larger investment during construction and production.

Ensuring that communities are able to provide informed consent is a hurdle, but it is not an insurmountable one. Macintyre rightly notes that communicating the environmental and social impacts of extractive projects to communities is highly problematic, particularly in instances where a community has had no prior exposure to the extractive industry (Macintyre 2003). However, as with engaging minority groups, the burden of adequately informing a community is not unique to the FPIC process, but is an issue for CSR practice as a whole. And again, companies are presented with a range of options for effectively communicating with the affected communities. As has been noted earlier, in this instance, there will never be an off-the-shelf solution for this process, and it will often need to be tailored according to the capacity and knowledge of the community in question. However, examples of effective communication abound. For example, for the Camisea oil project, Shell utilised bilingual written material, a website, participatory workshops, posters, videos, pictures, and scale models to inform the community of the project’s scope and impact (Environmental Law Institute 2003)

Evidently, the arguments against FPIC are neither unique to the principle itself, nor insurmountable. The process of FPIC offers companies a formalised manner in which to engage in communities. Indeed, through engaging in FPIC with affected Indigenous Peoples, companies can both solidify their social licence to operate and reduce the risks involved in operating in developing countries. The legal status of FPIC, while non-binding, is at the very least, an indication of things to come, and more presently, reflective of wider social expectations that are placed on actors when dealing with Indigenous Peoples. While it is possible to argue that companies are not legally obligated to implement FPIC, companies will increasingly find themselves judged on their implementation (or lack thereof) of the principle, by Indigenous Peoples and the wider international forum. Similarly, it is a given that implementing FPIC is complex, time consuming, and places an onus on companies to engage and build the capacity of Indigenous communities and minorities within them. However, without doing so,  companies invite the very real risk that communities will demonstrate their non-consent by engaging in action to prevent the company from operating.

Further, the issues that are identified in operationalising FPIC are inherent in engaging with Indigenous Peoples, and will not disappear if the right to FPIC does. On this basis, FPIC represents a growing necessity to the CSR and operating agendas of the extractive industry.

Bibliography

Buxton, Abbi. 2010. Democratic Pragmatism or Green Radicalism: A critical review of the relationship between Free, Prior and Informed Consent and Policymaking for Mining. Working Paper Series. London: Development Studies Institute.

Chan, Connie K. 2008. Lisa J. Laplante & (and) Suzanne A. Spears, Out of the Conflict Zone: The Case for Community Consent Processes in the Extractive Sector. Yale Human Rights & Development Law Journal 11: 117.

Environmental Law Institute. 2003. Prior informed consent and mining: promoting the sustainable development of local communities. Washington, D.C.

Herz, Steven, Antonio La Vina, and Jonathan Sohn. 2007. Development without Conflict: the Business Case for Community Consent. Washington, D.C.: World Resources Institute.

Hill, Christina, and Kelly Newell. 2009. Women, communities and mining: the gender impacts of mining and the role of gender impact assessment. Australia: Oxfam Australia.

ICMM Letter. 2003. ICMM PRELIMINARY COMMENTS ON THE
DRAFT FRAMEWORK FOR RESPONSIBLE MINING. June 16.

International Labour Office. 1989. C169 Indigenous and Tribal Peoples Convention, 1989.

IUCN-ICMM Dialogue on Mining and Biodiversity. 2008. Mining and Indigenous Peoples
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[1] For further examples of projects shut-down because of community opposition, see: (The ethical funds company 2008)

[2] Women are used here as an example of a minority group.

[3] For example, see: (Rio Tinto and Centre for Social Responsibility in Mining 2009; Hill and Newell 2009)