License to Operate - Webinar Q & A

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Q: You mentioned three companies with FPIC public statements/commitments. Are you seeing any movement by other companies towards FPIC or social license to operate practices? In other words, what advancements have been made in the past few years across the industry?

Francois Meloche: I see a move to adopt human rights and community relations policies but without mentioning FPIC per se. I think this is because of the lack of clarity and consensus around what consent means and the general fear that giving too much power to local authorities or communities will make extractive projects impossible. The International Council on Metal and Mining (ICMM), Toward Sustainable Mining (TSM) and the Prospectors and Developers Association of Canada (PDAC) are also having an influence on the "consent vs. consultation" debate. Some companies have had thorough internal discussions on FPIC and decided to not adopt the standard.

Philippe Belanger: We know that Conoco Phillips is facing similar situations regarding oil extraction in Peru. Their website states: “The Company’s approach to engagement with indigenous communities, in locations where they are an important stakeholder group for our operations, is consistent with the principles of the International Labour Organization Convention 169, concerning Indigenous and Tribal Peoples, and the United Nations Declaration on the Rights of Indigenous Peoples.”[1]

We have also had discussions with Goldcorp and Barrick about FPIC issues, but they haven't made any commitment. However, Barrick has recently created a CSR advisory board which includes Mr. Gare Smith, who worked on Talisman's FPIC document,[2] and Mr. John Ruggie who will serve as a special consultant. The possibility of the implementation FPIC policy may be re-examined.

Q: In the absence of field visits, how do you, as SRI analysts, pull apart the complex strands of the different positions of various local communities (some of which might support a project while others might oppose it) and whether the company has carried out a fair procedure to address these? How feasible or common is it for you to get access to the operations themselves?

FM: We try to get feedback and information from a variety of sources (NGO, communities, governments, companies) but often international NGOs and companies are our main sources. We need to assess the credibility of our sources and make sure they are transparent and not manipulating us. For this to happen we need to be transparent ourselves as to our objectives and we need to build and maintain relationships. It can be hard sometimes as we speak to companies and NGO who may not be in dialogue and have positions that are irreconcilable.  

PB: Field visit are usually expensive for organizations like ours and remain rare. We usually try to gather information from various sources and analyze their relevance, but we must also be aware of each sources agenda in order to do so. Depending on where you are in the engagement process, it's important to determine which information you really need. If there is some clear indication of conflict or risk of conflict with a local population, and the company doesn’t have any public commitments, there is a need for a policy and guidelines. Once this significant step is done, we then take a closer look at how those policies are implemented. An independent analysis by a credible organization may also be required. We are now working on this with Talisman. The Goldcorp HRI study project  on the Marlin mine have begun to raise standard in this regard.

Q: Has Talisman given you any indication of how much they have spent over the past four years on the engagement process in Peru or the total process in adopting the Global Community Relations Policy?

FM: No. In Peru, they have hired at least one new community consultation experts this year and have organized several meetings with communities. They also announced that they would fund development projects worth $3 million in the region. As for their policy, they have invested staff time and consulted with outside groups as well as funded the Foley Hoag paper, but I don’t have an estimate of how much that cost.  

PB: No, but we didn't ask for this information. However, we know that they have enhanced their capabilities in this domain since we began the engagement almost four years ago.

Q:Have you done any analysis to evaluate which individual mining assets in companies' development pipelines are likely to have FPIC issues.  Presumably companies that have FPIC-exposed reserves need stronger management processes than those without? Second question - are some commodities affected more by FPIC issues than others?

FM: Pipelines are one of the sectors most exposed to FPIC-related issues as they generally span large territories and are also exposed to the risk of possible disruptions in the transportation of product (i.e. oil or gas). There may be a relationship between the challenge of obtaining a social license and the type of commodity as some minerals, like gold, require cyanide for their extraction and displace and use large quantities of earth and water. But it is more a factor of geography than geology. Population density, vulnerability of biodiversity and ecosystems, previous experience with mining (good or bad), and unsettled territorial claims are all factors that should be considered to assess the social risk of a project.

PB: To my knowledge gold, oil (including pipeline), and uranium have been highly exposed to FPIC issues. Superior management skills that are not stalled in an old school mode (i.e. “move them out and dig”) are essential in the new communication area. How exploration companies adapt their practices is also important. A lot of issues really start at this phase and I think that major companies will have to take a careful look at their relationships with communities before buying a project that has been explored by a junior enterprise.



[2]See Amy K. Lehr, and Gare A. Smith, 2010, Implementing a Corporated Free, Prior, and Informed Consent Policy: Benefits and Challenges. http://www.foleyhoag.com/NewsCenter/Publications/eBooks/Implementing_Informed_Consent_Policy.aspx?ref=1