PERSPECTIVE: Losing the social licence to operate

Mining companies often speak of having a "social licence" to operate. This reflects the willingness of local c...





Mining companies often speak of having a "social licence" to operate. This reflects the willingness of local communities to support their endeavours. The more the miner and the indigenous people talk, the better their understanding and ability to accommodate one another.

What sounds straightforward is often complicated by unrealistic expectations, earlier history, cultural rigidity and interference by third parties.

The latest company on the verge of losing its social licence is Vancouver's Goldcorp, that operates the Marlin gold mine in Guatemala. The most recent report to examine Goldcorp's record there was commissioned by the company in response to charges of human rights violations at the Marlin mine. The report concluded that the company had failed to respect the right of indigenous peoples in that country, but also had brought jobs, healthcare and education to the impoverished western highlands region. Goldcorp further insists that allegations of environmental problems are unfounded.

The failings of the company have been making headlines amid repeated calls to close the mine in May 2010. The Inter-American Commission on Human Rights, part of the Organization of American States, is leading the charge. The commission considers its rulings to be binding on member countries, among which are both Guatemala and Canada. The International Labour Organization also called for the closure of the Marlin mine in February 2010. At press time there was no word on whether the Guatemalan government would actually order the mine closed.

How did the world's third (or second) largest gold producer become embroiled in the Marlin controversy? Goldcorp acquired the mine during its 2006 takeover of Glamis Gold. A year earlier human rights complaints were made following the shooting death of a local resident by an off-duty mine guard and the killing of a protestor by security forces at a mine blockade. So Goldcorp tucked a contentious property into its portfolio, making itself the target of continuing complaints.

Keeping the mine open is in Goldcorp's best interest. Last year Marlin produced close to 275,000 oz of gold or about 11% of the company's total output. It also tallied 4.1 million oz of silver. The 2010 gold production estimate is 290,000 oz. With total cash costs below US$200/oz, continued production is desirable.

Goldcorp is not one of the bad guys. At its other operations the company enjoys a reputation as a responsible mine owner in Canada, the United States, Mexico, Dominican Republic, Chile and Argentina. But should it lose its social licence in Guatemala, it will be seen as a rousing victory for anti-mining activists. News of what Goldcorp does well will be obliterated.

The better outcome would be for human rights watchdogs to facilitate understanding and compromise between the company and Guatemalan communities near the Marlin mine.



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