Disputes from Maracanã to Marikana put pressure on mining

Disputes from Maracanã to Marikana put pressure on mining

From Brazil to South Africa and beyond, disputes threaten to disrupt the extractive industry. More than ever, mining firms need to address their social and environmental costs in a sustainable way to quell them.

All eyes are on the pitches of Brazil where the world’s top footballers are currently battling against one another. But another fight taking place in the jungles of Brazil, as well as in forests, woodlands, mountains, deserts, and other resource-rich terrain worldwide has, undoubtedly, much bigger implications.

For two days last week deep in the eastern Amazon, more than 1,000 kilometers from the nearest World Cup stadium, 400 Xikrin Indians went head to head with Vale, the third largest mining company in the world. The confrontation consisted of blocking off, locking in employees, and threatening to burn down the large Onca Puma nickel mine.

The tribes want to modify an agreement detailing Vale’s compensation to the community for the project’s environmental damage. This comes just two years after Brazilian federal prosecutors temporarily shut down the mine due to the Brazilian multinational’s breach of a previous preliminary license for the same reason.

Mining disputes in South Africa

Over 8,000 kilometers east in the North West province of South Africa, a similar dispute has been ongoing for two years.

On August 16, 2012, police killed 34 wildcat picketers at the Marikana platinum mine. Tension and further industrial action concerning the wages offered by mine owner Lonmin have not only persisted since, but have spread throughout the South African platinum and palladium sectors, affecting the likes of Anglo American Platinum and Impala Platinum. The three companies are the world’s largest producers of the transition metal.

As a result, Pretoria has faced a five month-long coordinated platinum strike, its longest and costliest ever, from a once-fringe trade union that has emboldened hundreds of thousands of workers and frustrated resource extractors throughout the country. The South African economy accordingly shrunk by an annualized rate of 0.6% during the first quarter of 2014.

These scenes of environmental and labor unrest besetting mining firms are not isolated occurrences. They are becoming more common for two reasons.

Cyclical contractions and inequality raise awareness

First, in spite of temporary economic contractions and untimely predictions of the “death of commodities” last year, rising consumption and urbanization across the globe means that long-term prospects for most minable commodities are, largely speaking, bullish. Consumers, especially the 70 million new ones who will enter the middle class every year, will continue to need more and more metals, stones, gravel, and other raw materials. And so, miners are constantly looking past the low-hanging fruit into new resource-rich areas, many of which are in more challenging, environmentally fragile locations.

Second, as global economic (and social) inequality within countries is on the rise, so too is an increasing awareness of that disparity of the workers. Technology may be the “opiate of the masses” in some ways, but in others it has galvanized employees and actually served to bolster support for industrial action. Just take a look at the recent strike of 40,000 shoe factory workers in Dongguan, China, which was fully coordinated by disgruntled personnel on a popular mobile messaging program “faster than censors could stop them.”

Mining companies have been slow to adapt. Some, like Gulf Minerals, an Australian firm, have yet to fully master the art of sensitivity, judging by their wholehearted endorsement of the Turkish mining sector less than one month after the country’s worst-ever mining disaster. But this pales compared to Lonmin’s directive to workers “to get mining again” one day after the Marikana massacre.

Many mining companies are in need of substantive changes to their labor and environmental policies in a time of increasing scrutiny. Balancing the books to get through temporary periods of excess supply and lower commodity prices is understandable. But doing so on the back of workers, especially when some of the largest and most profitable miners already receive close to royalty-free access to mining on public lands (as in the U.S.), or a sizable government loan (as in Australia) may not be sustainable.

A number of jurisdictions have already clamped down on mining for environmental and social reasons: Panama has banned mining on native land, the Indian state of Odisha has ruled against all mining activities, India itself has prohibited mining in forests, the Argentinean state of Mendoza still has its open-pit mining ban in place, and El Salvador looks set to become the world’s first country to ban the extraction of metals altogether.

This is hardly a critical mass. But it emphasizes the growing opposition to mining operations on environmental and social grounds. The new reality for mining firms, unlike the resources they seek buried under the ground, is not hard to find. Finding a way to maintain “business as usual,” however, is.

About Author

Kevin Amirehsani

Kevin is a Denver-based policy and public engagement consultant. He was previously the head of operations for a solar energy startup in Lagos, researcher for the US Commercial Service in Cape Town and the Institute for Democratic Governance in Accra, and Peace Corps volunteer in Cameroon. He holds an MSc. in International Political Economy from LSE along with a B.S. and B.A. in Industrial Engineering and Political Science from UC Berkeley.