Despite a chequered past, international norms and political mobilisation point towards a gradual turnaround in the relationship between the mining sector and indigenous peoples

The history of resource extraction is a rich but inglorious one. Indigenous peoples have often found themselves at the heart of this story, and rarely have they been there voluntarily.

The same cannot be said for those who live on the surface beneath which the extractive companies need to reach. This is especially true for the world’s indigenous peoples, who number an estimated 370 million. Often socially marginalised and geographically remote, they are especially vulnerable to the effects of large-scale investment projects.

“It’s acknowledged that experience of indigenous communities vis-à-vis extractives has not always been a happy one by any means,” says Aidan Davy, director at the International Council for Mining and Metals (ICMM).

Mining impacts

ICMM’s own report on indigenous peoples spells out the potential impacts that resource extraction can bring. It does not make for light reading: physical resettlement, destruction of forests and fisheries, social conflicts, risk of diseases such as Aids, uncontrolled immigration, and so forth.

Remarkably for a business-funded group, ICMM takes the bold step of detailing incidents of bad practice in its recent Good Practice Guide.  

One example, aptly entitled “The costs of getting it wrong”, cites a mining company facing allegations about cyanide use and toxic pollution. Rather than consult with the local indigenous community, it launched a public relations campaign. The policy backfired, with the government subsequently ordering a three-year moratorium on mining in the area.

Such cases are no secret. An internet search quickly throws up conflicts in almost every corner of the world where indigenous groups and mining collide.

“Indigenous peoples’ groups continue to identify social and environmental impacts that show that companies’ commitments lack credible and independent performance monitoring,” says Abbi Buxton, author of a new discussion paper by the International Institute for Environment and Development.

The paper comes ten years after the introduction of the industry-led Mining, Minerals and Sustainable Development initiative. The situation may not be perfect, the IIED concedes, but big improvements have been made.

Even the harshest critics of the mining industry accept that mining companies are changing their tune with respect to indigenous peoples.

“Over the last five years in particular, there’s been a definite change in the industry’s awareness and active participation in negotiating its presence in indigenous territories,” says Ramsey Hart, programme coordinator for campaign group Mining Watch Canada.

Credit for this change lies in several areas. Change certainly wouldn’t have happened had indigenous groups themselves not mobilised politically. Global media attention and pressure from civil society groups more broadly has helped too.

International norms have also played a fundamental role. ILO Convention 169, which came into force two decades ago, kick-started a discussion in policy circles regarding indigenous issues. This dialogue regained attention with the 2007 adoption of the UN Declaration on the Rights of Indigenous Peoples.

Hart observes that, while important in framing public debate, both sets of norms are “hardly in the mainstream of international business community”.

The UN’s Guiding Principles on Business and Human Rights have done something to correct that, but the real breakthrough came in January 2012 with the introduction of the International Finance Corporation’s revised performance standards.

FIPC commitment

The standards include a specific commitment to free, prior and informed consent with respect to extractive projects in indigenous territories. The clause, widely referred to as FPIC, strengthens the IFC’s guidance, which previously obliged developers of IFC-funded projects merely to consult.

ICMM’s Aidan Davy describes the revised standards as being “at the progressive end of the spectrum”. He also points to their multiplier effect. The conditions have been taken up “lock, stock and barrel” by the 77 signatories of the Equator Principles, which cover projects with capital costs of more than $10m.

The mining industry has been cautious about endorsing FPIC, however. Genuine confusion exists about the IFC’s precise definition of FPIC. Considerable debate, for example, surrounds the need to respect traditional, yet potentially exclusionary decision-making processes.

Concerns also centre on government attitudes towards FPIC. Very few host governments have signed it into national law. Committing to FPIC in all projects could therefore place a company at a competitive disadvantage with less scrupulous players.

The prospect of FPIC becoming a de facto veto mechanism for a minority within an indigenous community is also held up by the mining industry as a potential problem.

Most mining companies commit to extensive consultation with indigenous groups, but agree to FPIC only on a case-by-case basis. Those cases where FPIC is applied tend to be in regions where local regulators insist on it.

Greater legislative clarity is therefore required, argues John Samuel, head of social performance at London-based miner Anglo-American.

“To be effective, FPIC needs to be enshrined into national law and the permitting process, which is clearly a decision that has to be made by voters and legislators in the relevant geographies,” he says.

Civil society groups have responded predictably, arguing that industry is trying to water down or redefine the notion of “consent”.

For indigenous rights groups, the bottom line comes with the ability to say no. Fiona Watson, field and research director for Survival International, says: “If people don’t consent to whatever development it is on their land, then companies must respect that. Otherwise, what is the point of consultation?”    

Forward-looking

In reality, however, few large companies relish the prospect of going ahead with a project in the face of fierce opposition by local indigenous groups. The reputational damage, plus the cost in terms of delays and project risk, present major disincentives. 

“The more forward-looking companies know that the broad community is going to have to say ‘yes’ to the project if it’s to go ahead,” says Daniel Litvin, director of the specialist consultancy Critical Resource.

In a similar fashion, the more progressive wing of the mining industry is conscious that their social licence depends on delivering tangible benefits to indigenous communities.

Again, the industry’s track record is not exemplary in this respect. “Indigenous communities want to be beneficiaries of the process of development and that historically just hasn’t happened,” notes Litvin.

Sharing out the benefits is not as easy as it sounds. The problem with mining is that it is capital intensive, and not labour intensive, says David Logan, co-chair of London-based advisory firm Corporate Citizenship.

“[This] means that the value generated typically goes elsewhere and local people can be in danger of receiving very little of the return,” he explains.

While most mining projects now include a revenue-sharing arrangement with indigenous groups, progressive mining companies are looking at ways to help such groups develop their own enterprises.

ICCM’s Davy points to a number of “extraordinary success stories” where indigenous individuals have developed independent businesses. Case studies can certainly be found, but these remain the exception rather than the rule.  

Complex though economic integration may be, Anglo-American’s Samuel insists the will is there among progressive mining companies.

“Even traditional lifestyles cost money, and most indigenous groups welcome good economic opportunities,” he says.

“So there’s clearly a shared interest in working together, and over the last decade this has become commonplace across the mining industry.” 

The indigenous experience of mining is still far from perfect. Yet the industry has turned a corner. Protection of indigenous peoples’ rights is now a central concern. Working out how to fulfil their wider human and economic rights is the big question mark that lies ahead.

What is FPIC?

FPIC is free, prior and informed consent. It comprises the following essential elements:   

• consent that is obtained free of coercion or manipulation;
• securing such consent prior to any authorisation by the government or third parties, and prior to commencement of activities by a company affecting indigenous peoples’ lands, territories, and resources; and
• consent that is informed by meaningful participation and consultation of indigenous peoples based on the full disclosure of relevant aspects of the proposed project by the company and permit granting authority in a form that is understandable and accessible to indigenous peoples and local communities.

Source: Framework for Responsible Mining

International norms on indigenous peoples

IFC Performance Standards: The Performance Standards of the International Finance Corporation are applicable to all projects supported by IFC and MIGA arms of the World Bank Group. Standard 7 of the revised standards includes the right to free, prior and informed consent in all aspects of project design, implementation and expected outcomes.

ILO 169: Indigenous and Tribal Peoples Convention: Adopted in 1989 and entering into force in 1991, ILO 169 is the major binding international convention concerning indigenous peoples. It recognises the aspirations of indigenous peoples to exercise control over their own institutions, ways of life and economic development. It has been ratified by 22 countries.

UN Declaration on the Rights of Indigenous Peoples: Adopted by the United Nations in 1989, the declaration contains 46 articles. As well as setting out the rights of indigenous people to culture, identity, language, employment, health, education and other issues, the document endorses indigenous peoples’ right “to remain distinct and to pursue their own visions of economic and social development”.

Other codes covering the mining sector that reference indigenous rights include ICMM’s Sustainable Development Framework, Framework for Responsible Mining, the Natural Resource Charter and Akwe-Kon Guidelines.