Accountability and political instability
In addition to resource nationalism, miners are under increased scrutiny to ensure they are paying more than mere lip service to corporate social responsibility (CSR), due diligence and sustainability.
“Investors, NGOs and foreign governments are all starting to pay more attention to environmental, social and governance (ESG) issues, and political risk as part of their decision-making when they invest in mining companies and projects,” Foulkes confirms.
“Several years ago, legal cases involving mining companies were largely focused around extraterritorial corruption, but now, particularly in Canada, these are being expanded to encompass a broader set of sustainability and LTO issues.”
Foulkes is referring to three civil cases that may ultimately make a trio of Canadian-based miners – Tahoe, HudBay and Nevsun – accountable on home turf for alleged human rights violations abroad.
“Mining companies are not just under pressure from the governments of the countries where they work but also from their home governments, to act in a way that maintains the standards set by that jurisdiction,” explains Foulkes. “In Canada, there is also a longstanding plan to set up a stronger ombudsman to oversee the corporate responsibility performance of mining operators abroad.”
But what of the broader issue of political stability? As Critical Resource founder Daniel Litvin recently pointed out, if mining firms get their response to political turmoil wrong, it can cost them billions.
“Issues of political stability are very complicated and difficult to understand, let alone manage,” says Foulkes. “We’ve been working in Brazil, where the Odebrecht scandal is a really big deal; in Kenya, where there are disputed elections, in Argentina, the scene of clashes between the president and congress; and in Guatemala, where the industry is heavily constrained by the lack of a mining code.
“In Brazil, however, companies mainly deal with provincial authorities and so political issues in the capital may not impact them. So it is important to assess countries on a project-by-project basis.”