extractive sector community agreements - formalising and dignifying relationships to change...

Extractive Sector Community Agreements

Professor Bruce Harvey

Formalising and dignifying relationships to change

behaviours

The sky did not fall in!

Argyle Diamond Mine, Western Australia

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Diavik Diamond Mine, NWT, Canada

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Flambeau, Wisconsin, USA

Peeling Back the Onion - Impacts and Influence

Examples of thinking local

The Arrow of Time• Cannot win an

emotional argument with an economic one

• The arrow of time – the future must be founded in the present and past

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Argyle Diamond Mine, Western Australia

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600 400 200 0 200 400 600

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

Age

grou

p

Persons

Males Females

Indigenous

400 200 0 200 400

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

Age

grou

p

Persons

Males Females

Non-Indigenous

Distribution of the Indigenous and non-Indigenous populations1 of the East Kimberley by age and sex, 2001

Where are the young people?

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Three critical elements in agreement making…

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Agreement making takes a long time…

Institution to institution

Simple Agreement

Agreement Making Protocol

1. Enhanced knowledge base

2. Agreement making protocol

3. In principle agreement

4. Comprehensive formal agreement

5. Registration & celebration

6. Implementation

General Principles

No Success

Success

Leave on good terms

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Argyle Participation Agreement

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Indigenous employment - Rio Tinto Australia

Num

ber of employees

0

5000

10000

15000

20000

25000

30000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q2, 2012

Indigenous employees x 10 Total Rio Tinto Australia employees(Actual number)

(2294)

Indigenous employment

Disconnected Business

• Donations and other charitable contributions

• Direct funding or delivery of disconnected welfare programmes

• Unilateral construction of civic infrastructure

• Disconnected Offsets• Payments to agencies that offer

‘outsourced’ community development services

The Business of the Business

• Human Resources • Procurement• Security• Environment• Finance & accounting• Infrastructure & asset management• Maintenance & operations • Health & Safety• (Project) Management

Community Development will not deliver social licence…….

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Key Drivers

• Enduring value to shareholders

• Sustained ability to operate & develop new projects

• Sustainable business advantage

• Developer of choice

• The right thing to do

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Argyle Diamond Mine, Australia

Argyle Diamond Mines:owned and operated by Rio Tintoopen-pit diamond mine in the East Kimberley region of NW AustraliaMine Lease area located on the traditional country of 4 indigenous communities, composed of 5 estate groups

Participation Agreement agreed with local indigenous communities in 2004.Participation Agreement registered by the Native Title Tribunal of Australia in 2005 as an Indigenous Land Use Agreement (ILUA) ILUAs in Australia perceived to often restrict companies and communities and can be very difficult to amendParticipation Agreement includes a Management Plan: a flexible subsidiary agreement that provides guidelines on important community issues not directly addressed in the ILUA Management Plan addresses: land rights, income generation, employment and contracting opportunities, land management and indigenous site protection.

Courtesy Emma Irwin WBG

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Argyle Diamond Mine, AustraliaCompany frames relationship with community in terms of “tenancy”, seeing the qualified community as “landlords”Company recognises that indigenous community holds primary ownership of the land - working towards handing land back to Traditional Owners is key to Agreement Participation Agreement key component is creation of Relationship Committee, consists of:

4 company representatives26 Traditional Owner (TO) representatives from 6 estate groups of the Mine Lease Area.

Establishment of Relationship Committee demonstrates commitment to honour and empower Traditional Owners role in influencing the Management Plans that affect their communities - a direct reflection of overarching principle of community as ‘landlords’Role of Relationship Committee (which meets quarterly) is:

to monitor implementation of Management Plansmake recommendations to parties on improving implementationconduct a review of each Management Planprovide reports annuallyidentify employment opportunities set timeframes for negotiations between Argyle and the TOs.


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Argyle Diamond Mine, Australia (cnt’d)

Capacity Building:Participation Agreement includes:

training for every representative on the Relationship Committee to ensure capacity to fulfill responsibilities. Key capabilities include understanding the agreement (both company and Relationship Committee) and ability to comprehend/ assess financial statements and reports.

To enable better understanding of Agreement - summary boxes written in plain English - as well as a video are included to make legal/technical language more accessible. Agreement establishes a Secretariat, provided for and staffed by company, to:

assist the Relationship Committee in facilitating meetingsassisting TO representatives to participate in the committeeconducting informative meetings with the local indigenous communities ensuring the committee operates properly.

Agreement provides training for the TO representatives on the committee but also for all Tos to assist them in participating in the agreement - includes organisational and managerial support to TOs in their engagement


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Argyle Diamond Mine, Australia (cnt’d)

Key Findings: Factoring flexibility into Agreement to adjust to trends and circumstances and to ensure sustainabilityArgyle developed a Management Plan Agreement with local TOs to accompany the ILUA to address how the company and the community would work togetherParticipation Agreement demonstrates concerted effort to ensure mutual understanding and communication between the company and the community – key principle of tenant/landlord relationshipArgyle provides training to TO representatives as well as support mechanisms for the wider community Argyle employees receive cross-cultural training to build capacity on the company side to understand the perspective of the TOs.


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Where Agreements fit in a larger process

Understand key social, environmental and economic factors

Gather data on demography, labour market, education profile, family and individual wellbeing, etc.

Understand the current state and drivers of change, regardless of presence or absence of the business

Identify potential risks and opportunities

1. Situational analysis 2. Build engagements & partnerships

3. Develop Community Programmes

Build partnerships with government agencies, community/ NGOs/ Academy and other corporate entities

Agree needs and ensure these are mutually understood and accepted

Partnerships should be based on respective expertise and collaborative inputs

Programmes should reflect baseline assessments and consultation

Programmes cover educational, health or livelihood initiatives and provide local employment, small business and contractor opportunities

Programmes should build long term local skills and knowledge

Initiatives undertaken should encourage self help and avoid dependency

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Social License Business Case for Long-life Mines

• Strategy fundamentally turns on short/long-life • Short mine-life strategy directed to closure • Long-life mines require long-run social legitimacy

and political acceptability• Societal and political stability depends on full, gainful

and satisfying employment• Stability needs to be based on sustainable local and

regional economic and social relationships

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Benefits of Robust Regional Economy

• A mobile pool of skilled employees• A selection of locally-based enterprises• Competitive forces• Diverse local capacity• The inherent stability of local government• Employees living ‘at home’• Normal societal institutions• An attractive lifestyle for employees

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Robust Regional Communities

• Built on diversity• Direct employment• Enterprise and small business development• Industrial services and procurement• Tourism and cultural activity• Historic and heritage preservation• Sports and recreation• Agribusiness, possibly based on unique local

traditional products• Partnerships/Joint Ventures• Provide social mandate, ……secured by agreement

Rents, Employment and Enterprise