There Are No Shortcuts to Establishing Trust between Extractive Industries Stakeholders

Oct 18, 2016 | Inga Petersen, David Jensen, and Ousmane Deme
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The Extractive Industries are an important driver of global economic growth. They can also be a vital catalyst for national socio-economic development, especially in resource-rich developing countries and fragile states. However, given the long-term horizon of extractives projects, and large-scale mines in particular, developmental dividends for host countries can materialize with significant delays. This leads to a particular set of challenges for governments, the private sector and local communities.

Understanding of the sector and the distribution of costs and benefits across the project life cycle by local stakeholders is often inadequate and related expectations are difficult to manage. Local communities are disproportionately affected by adverse impacts during construction and operation of the mine before the longer-term socio-economic benefits become manifest. In addition, the sector is rarely recognized for broader, non-fiscal contributions to national development objectives. Impartial, verified data about environmental or socio-economic impacts is difficult to obtain and the lack of transparency and access to information can exacerbate tensions and create conflict.  

Once trust between stakeholders has broken down and conflict erupts, re-establishing confidence and the social licence to operate is a serious challenge. Stakeholder conflicts related to extractives projects can range from damaged relationships and reputations, confrontations and project blockades to direct violence, depending on the level of cumulative grievances and pre-existing root causes. Localized conflicts can also imply major costs to companies arising from lost productivity due to temporary shutdowns or delays.