‘Licence to Mill’: Social Operating Licences, Zim Mining Industry

Source: ‘Licence to Mill’: Social Operating Licences, Zim Mining Industry | Sunday Mail (Local News)

Alexandra Mliswa and Takudzwa Mathende

CONVERSATION around what is known as a “social licence to operate” (SLO) are more common in the extractive industries (mining, oil and gas), which is no surprise given the destructive nature of the operations. But what exactly is an SLO and how important is it in the Zimbabwean mining landscape?

To answer the first question, we must first look at what is sometimes called the “legal licence to operate”.

Mining companies must comply with statutory requirements set out in Zimbabwe’s legislative framework in order to be allowed to operate-these can be thought of simply as “rules”.

Failure to abide by these rules will mean that a company will not be allowed to commence operations all together or, that these operations will be suspended until the noncompliance is remedied.

Some of these ‘rules’ are contained in the following legislation; the Mines and Minerals Act (Chapter 21:05), the Environmental Management Act (Chapter 20:27), the Gold Trade Act (Chapter 21:03), the Minerals Corporation Act (Chapter 21:04), and the Precious Stones Act (Chapter 21:06) to name a few.

Beyond the sphere of a legal licence to operate lies the concept of a social licence. This social licence has gained popularity over the last two decades.

Essentially, the idea is that a legal licence alone is not enough.

In addition, a mining company must have the acceptance and approval of its stakeholders.

The main difference is that a legal licence to operate is mandatory, whereas a social licence to operate is not. Strictly speaking, it is important but not compulsory for mining operations.

A social license is acquired by meeting the demands of the local community, activists and the general public.

Some scholars have stated that an SLO contains five key components, which are: environmental impact of the ?rm’s products and processes; customer power; customer interest; corporate/brand visibility; and community pressure.

Given that in Zimbabwe there is a single customer for the purchase of all minerals — the Government, only three out of the five components are relevant to this discussion. These three are the environmental impact, brand visibility and community pressure.

In Zimbabwe, it is the disputes between the mining companies and the local communities that dominate the media.

The grievances range from human rights violations, displacements and environmental degradation, to the overall disillusionment experienced by the local community when they find that their expectations have been unmet and the promises first made by the mining companies are left unfulfilled.

It is against this backdrop that we ask the second question: just how important is a social license to operate for mining companies in Zimbabwe?

Society legitimises businesses by allowing it to function and use scarce resources and in turn businesses need to fulfil certain obligations.

This legitimacy from society is an SLO. A SLO may be sought through Corporate Social Responsibility(CSR) and/ or Corporate Social Investment (CSI).

It is worth mentioning that in Zimbabwe, CSR and CSI are used interchangeably but are very different in both theory and practice.

They all fall under the concept of ‘corporate citizenship’ which is broadly concerned with a company’s responsibilities towards society. More specifically, corporate citizenship in the mining sector is aimed at producing higher standards of living and a better quality of life for the communities that surround them while still maintaining profitability for stockholders and stakeholders.

It is important for mining companies to understand the distinction between CSR and CSI in order to better meet the legal and social expectations of the communities within which they operate.

It is also important for communities to understand the distinction to put them in a better position to make informed decisions.

CSR refers to strategies that companies use to take more responsibility for their impact on society and the environment through the management of all internal business practices in a way that considers the interests of all stakeholders and the environment.

CSR encourages companies to operate in ways that serve their own interests, as well as those of the communities that they affect.

CSR is not a once-off project but is a continuous practice that should be embedded in all areas of the business.

Ideally, Zimbabwean mining companies should have a stand-alone unit that deals with ‘legal and social compliance equipped with qualified staff.

Because CSR is embedded in daily business practices, it should improve the company’s image while also increasing profits.

On the other hand, we have CSI which refers to programmes undertaken by companies to benefit society, without the intention of generating profits.

It involves companies actively giving their time, money, skills, and expertise to benefit the community and environment.

Unlike CSR, CSI programmes exist outside of a company’s ordinary business practices and are largely developmental in nature.

CSI programmes are intended to uplift and develop communities and should therefore be relevant to the needs of the communities.

So far, with few exceptions, CSI activities by Zimbabwean mining companies have been restricted to social relief of distress and haphazard charitable activities and hardly anything aimed at sustainable development.

The social relief of distress is normally provided in response to disasters or politicised funding to communities, for example the funding that was provided under the CSOTs and agricultural inputs programmes.

Linked to the issues of CSR and CSI is Public Participation PP, Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA).

Zimbabwean mining companies should rely on scientific researches like Baseline Assessment, EIAs and SIAs in the formulation of their CSR and CSI programmes.

These are ethical and scientific approaches that guide mining companies’ CSR and CSI to strategically aid in minimising the negative externalities and proactively maximise the positive impact on society.

Ethical business starts from conducting necessary preliminary EIAs and SIAs that inform the social, economic, physical and environmental issues to be addressed on an ongoing basis to ensure the “social licence” is established and maintained.

This also acts as a preventative measure to conflicts that nay occur between the company and the community.

Although it is said ethics cannot be legislated, the Government of Zimbabwe should also move to enforce ethical business practices through legislation.

As an example, the position existed when the Indigenisation and Economic Empowerment Act (Chapter 14:33) (IEEA) was in force.

The IEEA facilitated for community development in what could be called mandatory CSI. This was done through CSOTs (Community Share Ownership Trusts).

CSOTs were intended to be a vehicle for community development in which mining companies were statutorily required to cede 10 percent of the shareholding to the relevant CSOT — the proceeds of which were used for community development.