South African Mining Companies Face Uphill Battle for Social Licence

• Billions of rands in mining investment depend on legitimacy granted by stakeholders, not just government-issued licences.
• Securing a social licence to operate is crucial for companies to demonstrate responsible conduct and foster trust with stakeholders.
• Companies must continually earn and renew their social licence through conduct and experience, rather than relying on mere engagement or regulatory compliance.

The real challenge lies in earning the trust of employees, communities, and other stakeholders. This is where the concept of 'social licence to operate' comes into play.

The mining industry in South Africa is built on a delicate balance between economic investment and social legitimacy. While securing a statutory mining right is crucial, it's no longer enough to guarantee success. The real challenge lies in earning the trust of employees, communities, and other stakeholders. This is where the concept of 'social licence to operate' comes into play. It's not just about following procedures or meeting regulatory requirements; it's about demonstrating responsible conduct and fostering meaningful relationships with those affected by mining activities.

The consequences of failing to secure a social licence can be severe. Investments falter, communities fracture, reputations are damaged, and livelihoods are lost. The numbers are staggering: billions of rands in mining investment depend on legitimacy granted by stakeholders rather than just government-issued licences.

The term 'social licence to operate' was first coined by Canadian mining executive Jim Cooney in the late 1990s. It refers to the informal but crucial permission that companies require from the societies they operate within. A social licence is neither permanent nor unconditional; it's earned through conduct and renewed through experience. This means that companies must continually demonstrate their commitment to responsible practices, transparency, and stakeholder engagement.

While some companies have made significant strides in this area, many still struggle to distinguish between mere engagement and genuine trust-building. The result is a continued cycle of conflicts between mines and communities, despite the presence of sophisticated stakeholder engagement plans and detailed social performance standards.

Mining remains a vital component of economic activity and employment in South Africa, but many surrounding communities continue to face significant challenges. Unemployment, weak public services, and limited economic alternatives are just a few of the pressing issues that mining companies must address. By prioritizing trust-building and stakeholder engagement, companies can not only mitigate these risks but also unlock new opportunities for growth and development.

In this context, securing a social licence to operate is no longer a nicety; it's a necessity. Lawyers advising mining companies in South Africa should be aware of this shift in focus and advise their clients accordingly.

Lawyers advising mining companies in South Africa should be aware that securing a statutory mining right is no longer sufficient, and must now also focus on earning a social licence to operate through responsible conduct and stakeholder engagement.

Source: Original reporting via Daily Maverick