MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Development

Annotated Bibliography >

by elizabeth

MINING AND DEVELOPMENT

DEVELOPMENT: WHAT DOES IT MEAN?

Mining and development have a complex, constantly evolving relationship. While mining projects are frequently presented as an opportunity for economic growth and development, it is often a matter of debate whether the opening of a new mine brings the benefits envisioned by mining companies and government officials. There are many diverse, dynamic issues concerning mining and development.

To understand the relationship between mining and development, the first issue that must be addressed is the meaning of the concept of “development.” As the field of development has evolved, new approaches to development have broadened the goals and measures of development. Consequently, these new understandings of development have influenced how the mining industry is seen in relation to development.[i]  Originally, development was understood in economic terms as primarily driven by economic growth. As a result, post-World War II international institutions such as the World Bank centered international development strategies around increasing national GDP and GNP, without regard for equal distribution or potential societal or environmental costs associated with economic growth.

In 1987, the World Commission on Environment and Development’s Brundtland Report promoted the term sustainable development, defining it as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”[ii] This definition created space for socioeconomic and environmental considerations, but has also proven to be unclear[iii] and open to strategic interpretation[iv]. For example, Stuart Kirsch says that certain companies designed areas of protected land in exchange for approval of mining projects, allowing them to promote themselves as sustainable while simultaneously neglecting any other environmental harm directly or indirectly caused by a project[v]. The concept of sustainable development is consequently particularly relevant for mining. Mining extracts non-renewable resources and there are many environmental externalities involved in mining activities. A negative externality, where part of the cost of an action is passed onto society instead of the producer, is exemplified by pollution as it affects everyone’s air quality. A considerable amount of literature revolves around the question of the “sustainability” of mining, particularly the compatibility of the mining industry with sustainable development strategies.

Another important development perspective that has gained importance recently is that of “human development”. Amartya Sen, a leader in the field of human development, advocates disregarding traditional economic measures of development and focusing on increasing the capabilities of people to lead lives that they have “reason to value.”[vi] This perspective creates a more defined space for social and human considerations through the use of empirical indicators like the Human Development Index. This allows for more precision than the more ambiguous and often contested concept of sustainable development.

Newer theoretical ideas criticise the very notion of “development”, seeing here a concept laden with Western normative assumptions and interests. An important work in this line of thought is Arturo Escobar’s book, “Encountering Development” which argues that development is a Western discourse that has created a global hierarchy that marginalizes people in the Global South[vii]. The post-development perspective challenges the motivations underlying developments and criticizes Western outsiders’ top-down technocratic approaches to development projects. In this perspective, classical development is problematic because it rejects indigenous knowledge, promoting instead  “superior” Western values and technologies. Post-development theory raises questions about “development” as envisioned by Western elites in contrast to local understandings of development. This divergence is important to consider in the context of mining.

Bebbington, Bury, et al put forth the idea of “co-production” of development. They analyzed rural territorial development in the context of mining in Latin America and outlined rural development as “the product of negotiation, interaction, and conflicts” between mining companies, social movements and government. They argue that interactions between these actors contribute to “the forms and trajectories of development currently emerging”[viii]. Social movements are understood as politicizing development processes, and permitting less powerful voices to be heard, affecting rural territorial development outcomes. Development is therefore not seen as a one-way process, but the outcome of negotiation between multiple actors.

When considering the effects of mining on development in Latin America, it is important to keep in mind the inherent ambiguities and power relations involved in development itself. Development is situationally defined, and different groups will have different understandings of how it should be undertaken and what it should accomplish.

DEVELOPMENT IN PRACTICE:

The Resource Curse

Latin America has an extensive history of resource extraction. Ever since Europeans first arrived in the Americas in the fifteenth century, there have been countless attempts to extract Latin America’s natural wealth. From early explorers searching for the fabled land of “El Dorado” to massive silver mining operations at Potosi, resource extraction has played a central role in Latin American history. Hopes for national growth have often depended on these natural resources reserves, yet many countries still perform poorly on development measures. Some scholars explain this with reference to the “resource curse,” a hypothesis that countries with an abundance of natural resources are likely to lack economic growth and development. Advanced by Auty in 1993 and Sachs and Warner in 1995, the debate over this hypothesis continues today. There are several mechanisms through which the resource curse is argued to operate. One of the most common arguments is that governmental quality provides the connecting link between resource abundance and poor development outcomes. For example, Richard Auty, one of the most prominent theorists of the resource curse, argues that resources abundance creates “predatory states” [ix] that prioritize resource extraction and wealth over the well being of the population,[x] resulting in poor performance on development indicators.

It is important to consider the broader history of natural resource abundance and extraction and poor economic performance in Latin America before focusing on mining-specific issues. If this resource curse is applicable to Latin America’s development, then how it operates must be understood before the relationship between mining and development can be improved.

The Social License to Operate and the Extractive Industries Review

Growing concerns about the environment, sustainability, and development have increased attention on extractive industry operations such as mining. Mining companies have responded to concerns about sustainable development by saying that through corporate social responsibility initiatives and direct benefits, they are contributing to sustainable development. Such a position is necessary for a company to obtain/maintain a “social license to operate.” Coined in the World Bank Extractive Industries Review, a social license to operate (SLO) exists when “a mineral exploration or mining project is seen as having the approval, the broad acceptance of society to conduct its activities.”[xi] Thus, as societal expectations have changed, the mining industry has had to make changes in its operations in order to maintain its SLO.  The Mining, Minerals and Sustainable Development project and the Extractive Industries Transparency Initiative are examples of industry initiatives to hold onto its SLO. The critical question to be explored is whether changes in the industry are only superficial or if they will be effective in improving sustainability and development outcomes.

Between 2001 and 2003, the World Bank Group appointed Emil Salim (Indonesia’s minister for the environment and development) to conduct an external review of its policies with regards to the extractive industries. The Extractive Industries Review (EIR) aimed to assess the compatibility of extractive industries with sustainable development and poverty reduction. The review report and outlined conditions deemed necessary for accomplishing these goals, including strengthening governance in host countries, tracking poverty reduction, greater industry transparency, broader inclusion of local stakeholders, and promotion of alternative energy and fuel sources. The World Bank Management response rejected several of the key recommendations of the EIR report, and has been criticized for lacking “any clear, concrete commitment for actually doing anything.”[xii] Many critics have echoed this though, arguing that the World Bank Group has not enacted recommendations and that little has changed in the industry since the EIR. For example, Lawrence and Reisch note that despite EIR recommendations meant to inhibit corruption and rent-seeking behaviour, the World Bank Group still does not consider host country governance when supporting projects[xiii]. The World Bank Group’s Management response to the EIR has been highly contested and criticized by NGOs for rejecting most of its recommendations and the sincerity of the industry’s commitment to sustainable development has been questioned.

The experience of the Extractive Industries Review raises the problem of industry’s preference to promote development through self-regulation and voluntary agreements. The voluntary sustainable development framework outlined by the International Council on Mines and Mining was created in 2001 as a means of voluntary industry self-regulation. The current chairman is the CEO of Newmont Mining, and the executive consists of exclusively CEOs. As a result, the Council has been criticized for defining issues from the industry perspective only, lacking specificity, and being “completely controlled”[xiv] by the industry. In a paper for The UN Research Institute for Social Development, Utting argues that for voluntary initiatives to be more effective, they should be integrated with legal instruments and should not be regarded as a replacement for legal standards[xv]. However, proponents of voluntary initiatives say that voluntary self-regulation allows companies to adapt and respond to new issues, remain competitive, and have a standardized framework for operations in numerous international countries.[xvi]

Voluntary and self-regulated practices are often criticized for not holding companies accountable or creating any substantial change in their practices[xvii], while allowing them to promote their CSR initiatives and gain a social license to operate. The World Bank Group is currently undertaking new reviews of industry and development. The recommendations of these new reviews will be important for the prospects of development in many countries.

Canadian International Development Agency Strategies

Canadian involvement in mining has become particularly controversial recently with media coverage of CIDA’s new public-private partnerships strategies. CIDA has directed its foreign aid towards non-government organisations that partner with mining companies to support corporate social responsibility initiatives. Currently, partnerships exist between Plan Canada and IAMGOLD, World University Service of Canada and Rio Tinto Alcan, and World Vision Canada and Barrick Gold. The Canadian Minister for International Coordination, Beverley Oda, stated that public-private partnerships “provide an opportunity for our government to help companies fulfill their corporate social responsibilities and benefit those in need.”[xviii] A recent Op-ed by the heads of these NGOs explains their rationale for partnerships. They argue that they can do better work partnering with companies than “sitting on the sidelines” and say that these partnerships will allow them to improve CSR practices using the knowledge they have accumulated over the years[xix].  A 2011 press release from Rio Tinto in regards to a cross-sector partnership in Ghana with WUSC praises the partnership for avoiding duplicating efforts and leveraging other resources[xx].  This partnership strategy has been highly criticised for subsidizing multinational corporations while pulling funding from NGOs that are not aligned with these corporations[xxi]. The effectiveness of this strategy is an important area to investigate as these partnerships get underway. One aspect to consider is whether funding diverted from other countries and NGOs will have a negative impact on development. Another important question is whether or not this approach allows for community input into development agendas and the extent to which it represents a top-down, technocratic strategy. Although this approach is relatively new for CIDA, public-private partnerships are argued to be an increasingly important trend in development. The long-term impact and effectiveness of these partnerships is an important area to investigate as more partnerships get underway.

OTHER CONSIDERATIONS FOR DEVELOPMENT:

Participatory development:

Participatory development strategies stems evolved out of the basic needs approach of the 1970s. These strategies encourage the involvement and the empowerment of local populations in development projects. It is a matter of debate whether effective participatory development strategies have not been implemented in Latin American communities affected by mining projects. Corporate social responsibility projects are often promoted as involving local communities.

The Marlin mine in Guatemala, owned by Goldcorp is one of the most well-known conflict mines and provides an example of the controversy surrounding participatory development and CSR. A study by Zarsky and Stanley found that the mine was “contributing little to sustainable development” and notes that the mine was told to suspend operations due ot inadequate consultation with the local community[xxii]. Goldcorp, however, says that it is actively working with the community to improve development outcomes. The Goldcorp 2011 Response to the Human Rights Assessment Report of the Marlin Mine emphasizes the role of the Mesa de Dialogo, a “multi-stakeholder dialogue process…with active participation from the local communities” that occurs at least monthly in communities around the mine. They also state that their pre-existing sustainable development programs in the area have benefitted from “engagement with local communities” and commit to continuing this collaboration[xxiii]. It is important to note that Zarsky and Stanley note that there is a lack of data with which to evaluate the “potential development spillovers”[xxiv] of the Marlin mine. As the case of the Marlin Mine demonstrates, critics and corporations often disagree over the extent to which participatory development strategies are implemented in mining communities.      

Another important question for the prospects of development in communities affected by mining is how to successfully implement participatory development approaches. A common criticism of participatory development strategies is that they often exclude women.[xxv] If woman are more affected by the negative externalities of mines, as some authors claim[xxvi], then they must be included in participatory development strategies.

Participatory development strategies may help reconcile conflict deriving from divergent understandings between the local community’s understanding of development and development as envisioned by international or corporate actors. In order to understand how residents understand development, mining companies must engage in more substantive dialogue with local communities. For indigenous communities, the right to free, prior and informed consent about mining projects was enshrined in the UN Declaration on Indigenous People’s Rights, but non-indigenous communities have no such protection. Furthermore, a UN Declaration is not guaranteed to be translated into practice in every country, thus the effectiveness of this protection in practice is an important area to investigate.

Livelihoods:

The livelihoods approach to development was a popular idea in the 1990s that proved difficult to translate into practice[xxvii]. The most common definition of a livelihood was coined by Chambers and Conway in 1992, and focused on one’s capabilities, assets, and activities as a means of making a living[xxviii]. Mining projects often result in substantial changes to local livelihood strategies. Although projects promise positive livelihood changes through job opportunities, technology transfers, creation of downstream industries, and physical infrastructure, they often negatively impact livelihoods. In many cases they limit people’s access to resources, such as water and land. Especially in Andean regions, the severe threat to traditional water resources operates through both immense water demands and contamination[xxix]. Mining projects have the potential to disrupt livelihoods in the local community as well as downstream. For mining to contribute to development, stable alternative livelihood strategies must be both available and desirable for local communities.

CONCLUSION:

Development remains a contested concept, understood differently by the various local communities, NGOs, states, and corporations involved in the debate over mining in Latin America. Its meaning has shifted over time, from revolving around economic growth to more recent emphases on sustainable development and human-centered development and the emergence of post-development theory in the 1990s. While the relationship between mining and development remains unclear, the trend towards private-public development partnerships through CSR initiatives will have important implications for the possibilities of development in mining areas. Ultimately, much depends on how one understands development and what one believes should be prioritized.


Bibliography

[i]Jeannette Graulau, “‘Is Mining Good for Development?': The Intellectual History of an Unsettled Question,” 2008.

[ii]WCED (The World Commission on Environment and Development) “Our Common Future,” 1987.

[iii]Bill Hopwood, Mary Mellor and Geoff O’Brien, “Sustainable Development: Mapping Different Approaches.”

[iv]Stuart Kirsch, “Sustainable Mining,” 2010.

[v]Ibid.

[vi]Amartya Sen, Development as Freedom, 1999.

[vii]Escobar, Arturo, Encountering Development: The Making and Unmaking of the Third World, Princeton University Press, 1994.

[viii]Anthony Bebbington et al, “Social Movements and the Dynamics of Rural Territorial Development in Latin America,” 2009, 2876.

[ix]Evans, Peter, “Predatory, Developmental, and Other Apparatuses: A Comparative Political Economy Perspective on the Third World State,” 1989.

[x]Richard Auty, “How Natural Resources Affect Economic Development,” 2000.

[xi]Susan Joyce and Ian Thomson, “Earning a Social License to Operate: Social Acceptability and Resource Development in Latin America,” 1999.

[xii]Hopkins, David. “World Bank Rejects Reforms in Extractive Industries Review.” edie newsroom, August 6 2004.

[xiii]Shannon Lawrence and Nikki Reisch, “The World Bank Group, the Extractive Industries Review (EIR) and Governance: Evaluating the Bank Group’s Implementation of it’s Commitments, January 2006.”

[xiv]Olga Emelianova and S. Prakash Sethi, “A Failed Strategy of Using Voluntary Codes of Conduct by the Global Mining Industry,” 2006.

[xv]Utting, P, “Promoting Development through Corporate Social Responsibility – Does it Work?” Global Future, Third Quarter, 2003.

[xvi]Petrina Schiavi and Fiona Solomon. “Voluntary Initiatives in the Mining Industry: Do They Work?” Greener Management International, 2007.

[xvii]Olga Emelianova and S. Prakash Sethi, “A Failed Strategy of Using Voluntary Codes of Conduct by the Global Mining Industry,” 2006.

[xviii]“Minister Oda Announces Initiatives to Increase the Benefits of Natural Resource Management for People in Africa in South America,” Media Relations Office, CIDA, 2011.

[xix]Chris Eaton, Rosemary McCarney and Dave Toycen, “Ngos Are Part of the Mining Conversation,” The Globe and Mail, January 31 2012.

[xx]Rio Tinto Alcan. “Rio Tinto Alcan Adopts Cros-Sector Partnership Approach to Sustainable Development in Ghana.” Montreal, 2011.

[xxi]Catherine Coumans, “CIDA’s Partnership with Mining Companies Fails to Acknowledge and Address the Role of Mining in the Creation of Development Deficits,” 2011.

[xxii]Stanley, Lyuba Zarsky & Leonardo. “Searching for Gold in the Highlands of Guatemala: Economic Benefits and Environmental Risks of the Marlin.” Boston MA: Global Development and Environmental Institute Tufts University, 2011.

[xxiii]Goldcorp. “Goldcorp’s Second Update to the Marlin Mine Human Rights Assessment Report.” 2011.

[xxiv]Stanley, Lyuba Zarsky & Leonardo. “Searching for Gold in the Highlands of Guatemala: Economic Benefits and Environmental Risks of the Marlin.” Boston MA: Global Development and Environmental Institute Tufts University, 2011.

[xxv]Andrea Cornwall, “Whose Choices? Whose Voices? Reflections on Gender and Participatory Development,” 2003.

[xxvi]Ana Isla, “A Struggle for Clean Water and Livelihood: Canadian Mining in Costa Rica in the Era of Globalization,” 2002.

[xxvii]Scoones, Ian. “Livelihoods Perspectives and Rural Development.” Journal of Peasant Studies 36, no. 1 (2009).

[xxviii]Chambers, Robert and Gordon Conway. “Sustainable Rural Livelihoods: Practical Concepts for the 21st Century,”, 1992.

[xxix]Anthony J. Bebbington and Jeffrey T. Bury, “Institutional Challenges for Mining and Sustainability in Peru,” 2009.