Anglo American Learns CSR Lessons In South America

Friday, 15 May, 2015

“There is”, says Anglo American’s chairman Sir John Parker, “a heightened lack of trust between the mining industry and its various stakeholders”. In making this statement in his company’s latest annual report, Sir John doesn’t say how he thinks that lack of trust has arisen, but he does at least go on to set out some strategies by which this issue can be addressed.

“One of the industry’s greatest challenges”, he continues, is “reconciling the different and often conflicting concerns of the majority of our stakeholders on how mining should be best conducted and on its impact”.

The remedy? “Effective partnerships”, “greater community support”, and “more engagement with government at all levels”.

More specifically in the case of Anglo it means 3,047 community projects worldwide, US$1.7 billion spent on local suppliers, and thousands upon thousands of jobs created. Sir John highlights examples, including the construction of water plants to serve local communities in South Africa, “paying attention to biodiversity” at the Minas Rio iron ore project in Brazil, and something called a “dialogue table” at the Quellaveco copper project in Peru, which is one of the largest copper projects in the world.

A “dialogue table” was certainly needed at Quellaveco, since local anti-mining sentiment had erupted into street demonstrations in 2010, forcing development work to be temporarily suspended.

At issue were concerns about water, one of the most prominent of all community and social relations issues the world over. The company had thought it had done enough to reassure locals that the water table would not be impacted adversely by the development at Quellaveco. The locals said otherwise.

But Anglo’s response was interesting. Instead of hunkering down into a belligerent forcing of the case with the Peruvian authorities, it instead initiated renewed dialogue with the locals organised in conjunction with a prominent locally elected politician. That dialogue became known as the “dialogue table” and addressed three key issues: water, the overall environmental impact of Quellaveco, and Anglo’s wider contribution to the social needs of the region.

Not all dialogue tables in Peru are successful. Indeed, as Anglo’s own promotional literature points out, the history of conflict relating to mining in Peru goes right back to the first days of the Spanish conquest, when Pizarro undertook to release the last Inca emperor in exchange for a huge ransom in gold, and then reneged on the deal.

In more recent times, Newmont’s troubles at its huge Yanacocha mine have been well documented. It’s taken out 19 million ounces of gold from Yanacocha, worth over US$7 billion, but it garnered worldwide negative press coverage for the protests and violent clashes that erupted in 2004 when the company was forced to retreat over plans to envelop a nearby hill called Cerro Quilish that the locals deemed a red line.

Would Quellaveco suffer the same sort of reverse at the hands of local activists? Not if Anglo could help it. As part of its dialogue table the company engaged with over 30 different organisations representative of civil society, and professional and industrial groups.

The resolution took a while to come, but when it did it was fully comprehensive and at the end, at least according to Anglo’s version, both sides had a much more in depth understanding of the other.

The project was allowed to go ahead, and for its part Anglo agreed to fund major additional water infrastructure works to deliver a significant increase in water available for agriculture. Furthermore, the company also agreed to changes to its mine closure plan and undertook to restore the river valley to its original course as well as undertaking detailed environmental monitoring work along the way. In addition Anglo gave undertakings about the provision of employment and training.

But in spite of all that, questions still remain about whether Quelleveco will or will not make it into production, and if it does what the timetable will be. The latest information is that Anglo’s senior management will take a final development decision to the board later this year.

When they do, you can bet the project’s CSR will be very heavily scrutinised indeed, because as recent events at Putumayo and elsewhere demonstrate, Quelleveco won’t be the last time that local protests get raised against Anglo projects.  Which will come as no surprise to Sir John.