The art of managing social risks in mining  

Managing social risk is an art and a science.

According to data from the Mining Journal World Risk Report, the greatest risk being faced by operators is securing a social license to operate, with compliance with the terms of that license, at number three on the hierarchy.

They are also the two most-difficult risks to manage.

“Managing social sustainability is not a nice-to-have. Social instability is a threat to both political order and continued economic growth,” says Paul Marketos, Co-Founder and Director at IsoMetrix. He argues that mines need to get more proactive in how they manage their social risks. The prevalence of strikes and protest action among communities is symptomatic of the disintegration of social trust. “This is no small thing, communities are realizing their power to bring mining operations to their knees.

More than that, Paul argues that “Consumers and investors alike increasingly expect social responsibility to be a core part of a company’s mission. Managing social sustainability impacts a mine’s profitability. The trouble is, it is not straightforward to manage.”

Evolving social license to operate challenges

The World Risk Report states that artisanal mining, water use, local infrastructure development, employment, and secondary development are some of the frontline issues in this battle. The impact on local employment is becoming critical, as miners look at improving productivity using technology. As mining companies restart their exploration and mine development, the industry has an opportunity to show innovation in engagement with communities, and in how large capital projects are designed and managed. It is common practice to start engaging the community during the exploration and initial mine development phase.

Forging good community relations is being made much harder by social media, professionalized activists, weak local governance, policy gaps between local and central government and, in some locations, demographic pressure.

Managing social risk

According to the World Risk Report, managing social risks must be proactive, start early and be based on a coherent strategy and sound data. The foundation of future stakeholder relationships is already set by exploration teams. Too often, social risks are only managed once serious capital is committed. This is too late in the process.

Advanced data can give high levels of insight into the multiple social, economic, political and environmental currents. Mining operators need to form strategies and apply ‘Plan, Do, Check, Act’ management cycles in an integrated way. This means:

  • Involving all relevant disciplines from mine planning through to human resources – plus business partners
  • Understanding interactions between project impacts, risks and opportunities, irrespective of theme or timeframe
  • Balancing short and long-term value creation and protection
  • Articulating the benefits of such approaches internally and externally, including through
  • integrated reporting.

A mining company’s social license to operate depends on well-managed stakeholder engagement, and the efficient performance reporting. Managing and reporting on social licence to operate areas faces several challenges for many mines, such as:

  • Multiple systems
  • Cost of gathering data
  • Constant change
  • Missing information
  • Measuring performance
  • Collating manual information
  • Lack of integration pressure on senior management time
  • Data manipulation
  • Inadequate feedback.

The IsoMetrix Social License to Operate Solution

Traditionally, social sustainability and stakeholder engagement have been managed using a variety of standalone or spreadsheet-based systems. Such environments do not provide visibility into an organization’s social sustainability profiles, compromising efficiency and increasing the risk of community dissatisfaction and litigation.

The IsoMetrix Social Licence to Operate software solution provides:

  • Effective stakeholder mapping and engagement
  • SLP and Mining Charter reports at the press of a button
  • Visibility of progress against commitments in the SLP and Mining Charter on a real-time basis
  • A centralized platform for all required data from various systems across different departments
  • Visibility of information through powerful management dashboards
  • Reduced audit time
  • Responsibility and accountability for all assigned actions