Close

How Gold Mining Supports Community Development

This article was contributed by the World Gold Council.

Our research, published in The social and economic impacts of gold mining report, has helped us identify and quantify how gold mining supports economic growth by bringing foreign direct investment and substantial trade and tax revenues to host countries, while also creating direct and indirect jobs and employment. But there is still a challenge in ensuring that the industry’s potential ability to create and distribute value is effectively communicated to those living and working in close proximity to gold mining operations.

July-28

It is now widely acknowledged by responsible miners that they cannot operate in any sustainable way if they have not secured a social license to operate – an ample level of acceptance or approval of their presence by local communities and stakeholders, beyond any official, governmental permission. But gold mining operations vary widely and host communities are extremely diverse. Thus, attempting to arrive at an acceptance of gold mining through a better understanding of the industry’s socio-economic benefits is made more complex by the wide range of company responses and the localized nature of many community initiatives. Gold mining often occurs in remote locations and many gold mining companies invest substantially in local infrastructure and utilities. Building or enhancing roads and ports or water and electricity supplies may all be necessary to core business operations at a mine, but they are also very likely to benefit local businesses and communities across the surrounding area and these benefits may well outlive the mine. These benefits, however, are not always clearly captured or articulated by companies or reported in a consistent manner to community stakeholders.

In other words, we urgently need more shared points of reference that are widely relevant to all stakeholders.

Our research therefore sought out approaches which not only appear to have achieved demonstrable progress, but are of potential relevance to a range of communities and suggest broadly applicable solutions to shared issues and problems.

Many companies have committed to paying fees into local development foundations, trusts and funds, but there is still some debate as to how successful these vehicles have been in channeling funds to create enduring and sustainable shared value. This is possibly because of the disparate expectations and capacities of stakeholders and, perhaps most significantly, a lack of integration with local community development aspirations and governance structures. However, as Newmont’s Ahafo Development Foundation has shown, if implemented via extensive local consultation, community-driven decision making and transparent processes, such funds can provide a very useful means of supporting local development projects and enhancing local capacity.

It is increasingly acknowledged from within and beyond the gold mining industry that one of the most effective ways of contributing to local development is by building ‘linkages’ that may emanate from mining operations, but extend well beyond them. Focusing again on Ghana and an approach now widely recognized as representing good practice, the Ahafo Linkages project, initiated by Newmont (with support from the International Finance Corporation), has been a notable success in building local economic capacity and, importantly, diversity. The program has helped the growth of local small-to-medium scale businesses so that they might not only be better equipped to service the Ahafo mine, but are also more able to pursue wider opportunities beyond it.

Gold mining can thus act as a catalyst, encouraging what academics describe as ‘agglomeration’, which refers to the increased benefits to the local economy that are accrued when a growing number of companies and people settle and increasingly interact in or around a specific location. This increased concentration in economic activity helps drive and sustain wider community development.

In addition to driving the expansion of local commerce and contributing to local infrastructure and education initiatives, one of the issues prioritized by gold mining has been the development of community healthcare. This is frequently reported as primarily reflected in the building of hospitals and health centers. Of course, ensuring the health of the mining workforce simply makes good business sense. But many initiatives, such as improved water and sanitation, can demonstrably improve the wellbeing of both employees and the host community and establish models of good practice which may then be adopted by other stakeholders.

We have seen this recently in approaches to the diagnosis and preventative control of malaria, many of which were first implemented by gold mining companies, but then taken up and extended by governmental and supranational bodies.

In our research we therefore adopted a wider perspective, looking at whether the growth in gold mining’s contributions to national economic development might have also coincided with improvements in the health of the wider population – that is, beyond the mine and its workforce.

We looked at seven countries which have experienced growth in gold mining’s economic impact over the last decade and also suffered from infectious diseases, specifically malaria, tuberculosis and HIV/AIDS, that the gold mining industry has taken measures to address. Whilst some very substantial challenges remain, and the improvements in disease control cannot be solely attributed to the gold industry, our findings indicated that in most countries, as the gold mining industry has grown, the prevalence of these diseases has substantially reduced.

It is, of course, vital to recognize that for communities to benefit from responsible gold mining requires agreement and collaboration. Gold mining companies may be responsible for ensuring that their presence in a community and country results in a range of socio-economic benefits for their hosts, but they cannot achieve this alone. We hope that the growing body of research, including our own, identifying and quantifying the nature of the value created and distributed by the industry will help facilitate greater shared understanding among its stakeholders and this will, in turn, support closer partnerships committed to the delivery of shared value from gold mining at a global, national and community level.

Comments

There are no comments. Be the first to comment.

Post a Comment

Your email address will not be published. Required fields are marked *