By Tapuwa O’bren Nhachi
Extraction of natural resources can bring economic and social benefits to communities, through local job creation and resource revenues, but it can also create social changes that can lead to or cause social conflicts. Stakeholder-related risks in the extractive sector have risen rapidly over the last two decades. Time and again, companies have experienced how negative environmental impacts – such as pollution, a spill from a tailings dam can generate significant negative social impacts as well, for example on local community health and livelihoods.
Local communities’ reactions to these impacts can quickly escalate from complaints to protests and conflicts, raising the risks of the company. Managing such conflicts security providers using heavy handed tactics that can lead to even more serious impacts, such as injury or even deaths such as those experienced in Marikana (South Africa). Such situations have significant costs for the community and extractive companies as well. 
Therefore extractive companies that minimise risk, observe human rights through the art of engagement and corporate accountability in communities they operate tend to be more stable and generate sustainable profits. This article explore stakeholder engagement as a strategy for conflict management in the extractive sector in Africa.
The origins of social conflict comprise lack of sufficient consultation and community engagement, lack of accurate information on mining impacts, differing expectations of social and economic benefits, environmental concerns, disputes over land use and economic reparation, Artisanal and Small Scale mining activities, migration to mining areas, and differing acceptance of large-scale mining in communities.
The Special Representative of the UN Secretary-General for Business and Human Rights in the 2010 report to the UN Human Rights Council indicated that non-technical risks accounted for nearly half of all risk factors faced by extractive companies, with stakeholder-related risks constituting the largest single category. One international oil and gas extractive major that shared its findings with the representative on a non-attribution basis estimated that it may have experienced US$6.5 billion value erosion over a two-year period from stakeholder-related risks.
Rachel Davis and Daniel Franks in their research entitled “costs of company conflict in the extractive sector” reveals that extractive companies do not typically identify and aggregate the full costs arising from conflict with local communities into a single number that would catch the attention of senior management or Boards.
Instead, they tend to be rolled into local operating costs. This is ironic, if not perverse, because the positive things those companies do to try and prevent such losses do show up as direct costs. It can be learnt that the single most often overlooked cost is staff time spent managing conflicts with local communities and regulators. But it can be illustrated that, such conflicts can easily escalate and then come the major advocacy campaigns and law suits, which certainly do show up on the corporate ledger with damaging social costs.
The good news is that, UN business and human rights mandates the kinds of policies and processes that extractive companies (and others) need to put in place to prevent and address negative social impacts and their associated costs are clear and increasingly well understood in the international and local but still to be implemented locally. However, some extractive companies have put on the connections between key systems for identifying social impacts, responding to grievances, and tracking performance.
The key ingredient to sustainable extractive business is engagement and this should be done in all stages of the extractive period. It is essential to establish blameless interactions between governments, large-scale mining companies, and local communities at the earliest stages of extractive projects. This is especially important in countries that have a history of colonialism, where governments have neglected local communities and indigenous people, and where distrust of governments or other groups in society are common. Examples around the world have shown that local communities clash with mining operations if they perceive that projects have been imposed on them without sufficient consultation which is the common case in most developing countries.
Since extractive operations affect nearby communities socially, economically, and environmentally, communities anticipate to contribute in decision-making and to share in the benefits of mining. It is therefore imperative to take these opportunities into account and to discourse the concerns of local communities as early as possible. If community concerns are integrated into mining projects (for example to prevent, control, and reduce environmental impacts) and if local communities see that they are receiving a fair share of benefits (for example, through employment opportunities, construction of public infrastructure, and CSR programs), then local communities are more likely to welcome these extractive projects.
Stakeholder engagement, including on-going dialogue and information sharing, must continue throughout the extractive phases and even following mine closure and remediation. Failure to do so create distrust towards extractive companies, especially in countries where there is a history or perception of extensive abuse, social inequality, and expropriation. Cynicism often fuels or exacerbates social conflicts. It also makes it very difficult to resolve social conflicts once they occur and such costs have a financial and social bearing on both the extractive companies and companies as well as a reputational effect on the government that will be difficult to extinguish.
Lack of dialogue and precise information create social conflicts due to inappropriate social perceptions. For example, in Latin America, opposition to mining is often centred on entitlements that it has caused substantial ecological (environmental) damage. However, research by the World Bank has found that “the claims of environmental damage apparently stemmed from poor communication by the companies and, in some cases, from manipulation by local politicians and communities.”
Stakeholder engagement is not just about listening to the community one time. It is a continuing process between extractive companies and communities that includes being open and receptive to concerns, seriously considering and evaluating all concerns raised, taking action to solve relevant concerns, and being accountable to the communities. Part of this process involves informing communities about how problems are being addressed. For instance, it is not enough to monitor water quality and availability; the findings need to also be communicated to the community in ways that they can understand it easily. It is important that extractive companies have respectable communication with communities from the onset of their relationship, are open to communities’ concerns and suggestions, and provide lots of information when necessary. It is important that companies dedicate a unit to these tasks and provide information on a regular basis.
Information that should be shared with the public includes: taxes and revenues collected by governments, impending taxes expected to be collected, the way taxes and revenues are distributed among governments, local government projects that will benefit local communities (planned and executed), environmental risks (for instance, availability of water, quality of water, management of risks), management of accidents that may have occurred, and implementation of CSR programs.
Social conflicts may arise in spite of the economic benefits local communities receive due to high or unmet expectations. Unworkable demands are usually the result of lack of information and communication between governments, extractive companies, and local communities. If local communities are not able to communicate their concerns, then extractive companies will not be able to satisfy their social demands regardless of the amount of job creation or community development support. 
The impacts and benefits of mining may be shared between several communities near large-scale mines, yet each community may be uninformed of other community and regional benefits.
The procurement and purchase of land for extractive purposes is a common cause of negative encounters between extractive companies and local communities. Some of the difficulties associated with voluntary resettlement can take years to surface. For instance, community members may not have the skills needed to maintain houses built using permanent materials that replaced their traditional homes; or they may lack sufficient access to natural resources (fishery areas, agriculturally productive land) in new settlements. Involuntary relocation usually poses more risks than voluntary relocation, as it can lead to homelessness, food insecurity, loss of access to public services, and social breakdown. Indigenous people are particularly vulnerable due to their strong cultural and spiritual connections with the land on which they live.
In conclusion, many conflicts related to land use and land acquisition can be prevented through government regulations and mining business practices. Government regulations and policies that reduce conflicts include granting land rights to local communities (especially indigenous people), establishing fair negotiating mechanisms for land acquisition, and providing social services in resettled areas ( education, health, and transportation services). 
Mining business practices that have reduced conflict include creating new job opportunities for those who have been displaced, ensuring good agricultural productivity in resettled areas, guaranteeing provision of social services and access to common resources, compensating those people who did not have property rights but have occupied and/or made improvements to the land, and buying land at about same price from all community members and paying fair prices (“replacement value” instead of ”market value”).For example, Antamina Mine (Peru) bought all the land that it planned to use during the entire mining cycle at once and it paid similar prices for land of similar quality. It did this to avoid future conflicts and feelings of resentment that had been experienced in other mines. Stakeholder engagement is based on mutual trust and commitment from both parties is a prerequisite for sustainable extractive business that is beneficial to all.
Tapuwa Nhachi is a Program Coordinator with the Institute for Sustainability Africa (INSAF), an independent research institute and think tank on Sustainability and Sustainable development in Zimbabwe. He can be contacted at [email protected]
