Canadian mining ... more than a PR problem

Published by MAC on 2010-05-20
Source: Mining Weekly, Ottawa Citizen

The mining industry has a PR problem

By Liezel Hill

Mining Weekly

14 May 2010

TORONTO - Mining companies based in the US and Canada find themselves in a strange situation.

With demand for commodities from China and India still red hot, and, as the rest of the world begins to clamber back from the Great Recession, most producers are cranking out all they can to take advantage of high prices and widening margins.

But, while bottom lines are thriving, the industry is having to defend its actions domestically and abroad to an increasingly hostile public.

The death of 29 coal miners at a West Virginia mine in April galvanised antimining sentiment in the US, and President Barrack Obama's public criticism of the mine's owner, Massey Energy, and attendance at the memorial service for the fallen men, has helped keep the tragedy in local and international headlines.

And in December last year, Canadian governor-general Michaëlle Jean was subjected to chants of ‘Canada go home' on a visit to Mexico, where antimining protests took centre stage during her trip.

A month earlier, Canadian miners watched in frustration as environmental and human rights groups marched dozens of witnesses before Parliamentary committee hearings, to relate allegations - some nothing short of horrific - of Canada-based miners' involvement in human rights and environmental crimes abroad.

The November 2009 hearings were held to discuss the contentious private members Bill C-300, which has proven a flashpoint for both miners and their opponents.

Put simply, the Bill proposes to give the Canadian government authority to investigate complaints about the behaviour of resources companies based in the country operating abroad, and withhold public money from offenders.

The proposed legislation has received the support of numerous nongovernmental organisations (NGOs), including Amnesty International and MiningWatch Canada, which described it as "our best chance to assure the accountability of our government to us, as taxpayers and citizens, by assuring that government financial and political support will not be provided to companies that breach human rights and environmental standards".

As a private members Bill tabled by Liberal MP John McKay under a Conservative government that opposes it, the legislation has not been given much chance of success.

But when the Bill narrowly passed a second reading in the House of Commons in April last year, the industry sat up and took notice, especially after the Parliamentary hearings several months later captured national headlines with tales of rape, extortion and murder.

Testimonies during last year's hearings on Parliament Hill included a former Argentine Environment Minister's claims that she, her staff and even her children had been personally threatened by mining companies that opposed government efforts to regulate the industry's activities.

Romina Picolotti told the Parliamentary committee that she was eventually forced to resign because of the aggressive tactics employed by Canadian and other foreign miners.

Other allegations included that a Canadian-Australian miner had cooperated with a military massacre in the Democratic Republic of Congo that left at least 73 people dead in 2004.

In the wake of the hearings into Bill C-300, a number of other Canadian companies have been in the news in Canada, including privately owned Blackfire Exploration, whose Mexican mine was shut down by authorities, reportedly because employees of the company were linked to the murder of an antimining activist.

HudBay Minerals has also been criticised for its handling of opposition to the company's Fenix project, in Guatemala, after protests over attempts to relocate people living on the property turned violent.

These stories invariably develop into a round of ‘he said, she said', pitting the companies - which insist on their innocence - against NGOs and local opponents of the industry.

Even McKay agrees that most Canadian mining firms operating overseas are probably complying with international standards for corporate social responsibility (CSR), but he argues that there is still a need to identify and sanction the ones that are not.

There are even cases where, in a reverse of the stereotype, Canadians travelling to parts of Central and South America have been advised to identify themselves as Americans because of the negative reputation Canadian mining companies have picked up, McKay says.

There needs to be a mechanism that sanctions those companies that do not uphold certain standards, he argues.

But the mining industry has lobbied hard against the Bill, pointing out that there are already structures and systems in place to tackle CSR issues, and warning that the Bill will unleash a tsunami of complaints, and that the investigations and hearings that follow will stain the reputations of companies, whether or not they are eventually found to be guilty.

And a potentially more harmful outcome is that host governments could use the Canadian investigations as an excuse to delay, revoke or cancel permits and approvals, whether or not the investigations actually turn up any proof that the original complaint was valid, says Michael Bourassa, global mining group coordinator for law firm Fasken Martineau.

The Bill will go to a third reading this spring, but is not expected to go much further, because the ruling Conservative government has said it will oppose the legislation.

But whether or not it passes, the legislation has certainly managed to raise questions in a lot of people's minds about whether the industry really is as responsible as it claims.

Like the evil corporation in James Cameron's blockbuster Avatar, mining companies are finding themselves portrayed as pursuing their targets with no regard for natural environ ments or local communities.

And while the fickle opinion of the general public may not seem like much of an issue, the negative perception of the industry trickles into the way permits are assessed, and can make it harder for companies to get the support of local communities around projects - a requirement that is becoming increasingly important in both developed and poorer countries.

Resources pundit Don Coxe tells a story of a geology class where almost half of the students were not there to learn about building mines, but rather to get an inside track on how to oppose them.

Between hard-to-get permits and a groundswell of opposition to the idea of mining among local communities, it is becoming more difficult than ever to build a new mine, Coxe told an audience at the Prospectors and Developers Association of Canada (PDAC)convention earlier this year.

US Scrutiny

While Canada's mining industry gets most flak for its activities abroad, its US counterpart can expect increasing scrutiny at home, after the country suffered its worst mine accident in more than 30 years in April this year.

In the wake of the disaster, shareholder CtW Investment Group has called for Massey CEO Don Blankenship to be removed, but the board has backed its CE (and chairperson, for that matter) and said a change of guard would be "inappropriate".

Not surprising, the company's activities and record are being picked over with a fine-toothed comb. And its competitors, like Consol Energy and Peabody Energy, are being pulled along for the ride.

Laws will likely change, and inspections will become more frequent, analysts and company executives agree.

The more aggressive scrutiny will almost certainly have an effect on industry productivity, says Steven Leer, CEO of the second-biggest US coal-miner, Arch Coal.

"While mines might pass an inspection with flying colours, nevertheless, it does impact on productivity," he comments.

The incident has also taken on political overtones, and Massey's press release writers are being kept busy as the company tries to limit the damage.

On April 27, the coal miner fired out a whopping five media statements in response to various statements and claims made at Senate hearings held that day into workplace safety and the April 5 mine accident, as well as by mine safety officials after surprise inspections at some Massey mines.

Company executives have also railed against what it says is an unfair portrayal of the firm as having pursued profit over safety concerns.

A lengthy and detailed article in the New York Times, linking the accident to allegations of safety and health oversights at the Upper Big Branch mine, elicited another indignant press release from the coal miner.

The Best Form of Defence

Amid all this hostility, however, the mining sector - particularly in Canada - is showing signs that it is fed up with regular public whippings.

The industry has rallied strongly against the proposed Bill C-300, so much so that the annual PDAC convention looked more like a political rally at times, as volunteers distributed anti-C-300 flyers, buttons and other paraphernalia.

More recently, Barrick Gold, the country and the world's biggest gold producer, set aside an unusually long period of its annual shareholders meeting to discuss its CSR activities and defend the company against criticism of its record.

The gold miner is a favourite target of human rights and environmental groups, and the shareholders meeting, as a rule, draws groups of protesters in the streets of downtown Toronto.

Two people from near-mine areas - one from Papua New Guinea and one from Chile - also gave statements during the question time, lambasting the company for its treatment of their communities.

But even before that, both CEO Aaron Regent and chairperson and founder Peter Munk took time to comment on the issue, and Regent included a video detailing the miner's efforts to help rebuilding after the 8,8 magnitude earthquake in Chile in his remarks.

While the company denies allegations of wrongdoing levelled at it, it is working on improving its CSR performance, he said.

"Public expectations of how a company should conduct itself are rising," Regent commented.

While the CEO's comments focused on the good Barrick is doing, Munk was more outspoken.

The company is continually being attacked by a "very noisy and very articulate" opposition, he said.

Munk was unbowed by criticism of the company, insisting that CSR is part of Barrick's "DNA".

"By moving into these countries and develop- ing their mines, we provide, way beyond the importance of money, human dignity. That's where Barrick is so outstanding. That's where Barrick as a Canadian company with Canadian ethics, with Canadian values has been able to operate throughout the world," he said.

Local communities are "dying for Barrick's jobs, for Barrick's investments", he averred.

Munk said he had personally talked to the Presidents of the Dominican Republic, Argentina and Chile - where Barrick has big new mines planned.

"There wasn't one that did not say: ‘Please, please, Barrick, please, build your mine in our country. We need foreign investments, we need opportunities, particularly in those remote regions'."

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Tories not serious about corporate ethics abroad: MP

Social responsibility counselor yet to investigate a single complaint

By Glen McGregor

The Ottawa Citizen

10 May 2010

The low profile of Canada's new corporate social responsibility counselor shows the Harper government isn't serious about forcing Canadian companies to act ethically abroad, a Liberal MP says.

Last October, the government named Marketa Evans as a federal CSR counselor to help Canadian companies in the extractive sector -- mining, gas and oil -- resolve social and environmental issues when working abroad.

However, six months after her appointment, she had yet to hire one of her two allotted staff members, had not investigated a single complaint, and was still waiting to have a fax machine installed in her office.

A search through the databases of the Canwest newspapers and the Globe and Mail found not a single mention of Evans, although her appointment was briefly referenced in a CTV report on a Canadian nickel mine in Guatemala.

"This is purely a political face-saving exercise," Liberal MP John McKay said of Evans' position. He says the mandate given to her by the Harper government renders her toothless to act against companies that breach human rights or environmental standards outside the country.

"She has no ability to investigate absent the consent of the corporation. There's not a snowball's chance that any investigation will be started."

McKay believes Evans' job was created in response to his private member's bill, which would not allow federal agencies to do business with extraction companies that didn't act responsibly abroad.

A government response to a question McKay tabled in Parliament provided some description of what Evans had been doing since she began work. International Trade Minster Peter Van Loan said Evans had hired an administrative assistant, met with stakeholders in the extraction industry and participated in various conferences and workshops, but her office had yet to field a single complaint, Van Loan allowed. A fax machine was on its way.

"You'd think she would have opened one or two files by now," McKay said.

But Evans said she has been busy in the job, developing rules of procedures for a dispute resolution mechanism she will use to handle complaints. She can't take a complaint until that's in place, she said.

There has been "a tremendous amount of outreach" she said. Because participation is voluntary, she needs to bring all the stakeholders in potential disputes onside.

"I couldn't just go into a room and a write a bunch of rules and come out and tell everyone this is the way it's going to be," she said.

"I think it's a crystallizing around becoming a trusted, honourable broker that can facilitate," she said.

Public consultations on the procedures will begin June 1, she said.

Evans' office operates out of space in Toronto and has a budget, including three salaries, of $654,240 a year. She said she had a policy advisor seconded to her from the Department of Foreign Affairs and International Trade.

Since Van Loan's response, she also now has two fax machines in her office.

Before her appointment, Evans was the executive director of the Munk Centre for International Studies at the University of Toronto and had worked for the Canadian Imperial Bank of Commerce.