When a mining company's CEO, who has championed good community relations, steps down, the quality of these initiatives can suffer. So how to stop that from happening? 

In walks the new CEO, maybe with a laser focus on M&A or cutting costs. Suddenly high-quality social programmes put in place under the last CEO take a back seat.

Then the inevitable happens. There are fewer consultations between management and community leaders. The mining company becomes less responsive. An education programme gets paired back, another is cancelled. And so on ...

It is not long before the host community feels disappointed, neglected and even betrayed.

Lower quality social programmes may result in some short-term cost savings but will likely store up bigger problems down the road.

Change the business model

But there is no reason for this to happen when there is a change of CEO, and it shouldn’t. Avoiding this outcome starts with making good community relations an integral part of the business model.

Think of it as being a bit like companies in North America and western Europe, which must respect the rights of their employees by law. They provide benefits such as paid annual leave, safe working conditions, sick pay and so on. These are the conditions of employing people in these geographies.

The more enlightened companies take this duty of care even further than required by the law realising that happy employees are good for business.

A bold vision

The business model should encompass a compelling vision that ensures the metals mined benefit society as far as reasonably possible.

That is not just the end consumers of those metals, but also the communities that live next to the mines.

For instance, we’ve worked with Mexico-based miner Fresnillo plc to use silver to purify water for host communities. This not only helps build a connection between the mines and the people who live nearby, it also helps to lock in how social programmes are designed, with the metals’ benefits spearheading the way.

This goes further than traditional host community activities, such as providing educational and medical facilities, as it engages both interested parties, communities and companies, helping ensure an enduring commitment.

Dedicated community relations teams

The next step is about institutionalising that vision. That means embedding community engagement activities into the mining company’s standard operational procedures. This includes creating detailed community engagement policies, methodologies and frameworks.

These programmes should be supported by key performance indicators so outcomes can be measured and publicly reported.

The company’s community relations personnel should be empowered to do their best work and feel that they own these initiatives.

In my experience this approach results in higher quality outcomes for communities and the mining company.

Make it transparent

In turn there should be transparency around the mining company’s host community initiatives – it's goals and whether they’re being met.

Most of the big, listed mining companies dedicate some space to this in their annual reports – though sometimes they could do with more detail.

Any verification by third parties that these initiatives are being carried out properly is always a plus.

Unlike costs related to the mining, transportation and processing of metals – managing community relations might appear to be a secondary or peripheral expenditure to the new CEO.

A compelling investment

However, apart from meeting legal obligations imposed by some countries, I’ve always argued that prioritising good community relations is a good investment – even if it is hard to measure the return on that investment.

Creating harmonious host community relations lowers reputational and operational risks and cooperation can even advance the development of new mining projects.

Otherwise, angry communities can whip up lots of bad publicity thanks to easy access to social media. Sometimes they can even close mines down through protests creating losses and operational headaches for the mining company.

It should be remembered that fostering good host community relations is key to 'earning’ that all important social licence to operate mines.

Strategic importance

It is therefore strategically crucial for good community relations to be integral to a mining company’s business model and vision regardless of who is in charge.

The new CEO can change the business’s priorities and that is their prerogative. But if good community relations policies are institutionalised, publicised and are well understood by investors and stakeholders, it makes it less likely they will be sidelined by new management.