Managing Relations Between Investors in the Extractive Sector and Local Communities

"In the mining sector, as in other sectors, such as agriculture, that powerfully affect the lives of local communities, there is growing recognition that communities play an essential role in governance. Across the world, people are becoming more aware of their traditional land rights as well as the profound ecological, social and economic implications arising from the extraction of mineral resources. Given the growing awareness of both the impacts and potential returns from resource exploitation, local communities are demanding greater involvement in decisions with respect to mining operations and a greater share of the benefits. Increasingly, traditional approaches to mineral exploration, extraction and development, based solely on securing legal and/or regulatory compliance from the relevant government authorities, are no longer sufficient to facilitate access to mining sites and assure a supportive local environment for mining companies. Despite at times significant investments in community initiatives, many companies in the extractive sector, especially in developing countries, have failed to secure legitimacy and acceptance within the communities surrounding mining areas. Governments can and have tried to intervene where tensions between investors and communities have arisen, but they are limited in what they can achieve. In response to this ongoing problem, the concept of Social License to Operate (SLO) has grown in prominence over the last two decades. Investors in the mining sector are now acknowledging the need to gain and maintain an SLO from the communities affected by mining activities to avoid delays and interruptions to their operations and potentially damaging and costly conflicts."