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How Mining Companies Can Achieve an Effective “Social License to Operate” in Latin America – Part 3

Effective Diagnosis for Mining Companies to Achieve a Social License to Operate: Who should perform the diagnosis? What to do after the investigation?

Final in a series of articles about mining companies achieving an effective social license to operate

by Jordi Ventura

See Part 1: What is a Social License to Operate (SLO) and How Do Mining Companies Achieve an SLO?

See Part 2: Effective Diagnosis of Social License to Operate – Off-site preparation and on-site investigation

What happens after the investigation?

It is imperative that a follow-up SLO diagnosis report be prepared as soon as practicable after the on-site visit (and, as a time and cost saving measure, perhaps the SLO diagnosis report should be initiated during the visit). The SLO diagnosis report should contain, at a minimum, the following:

  • a description of the scope and methodology employed in conducting the on-site investigative work SLO diagnosis;
  • the on-site investigative work findings and conclusions (making sure that they are duly supported);
  • concrete recommendations for correcting problems/issues encountered during the on-site investigative work; and
  • with the input and assistance of experts in the sustainability concepts, proposals for the adoption of key concepts.

The diagnosis team will present an advance copy of the SLO diagnosis report to relevant members of the mining company’s senior management team and will schedule one or more meetings with the senior management team to discuss the key findings and action items from the report. At the scheduled meeting(s), in addition to discussing the particulars of the SLO diagnosis report, the diagnosis team will:

  • identify and assess the most immediate actual and potential risks and challenges that exist in seeking to obtain the local community’s acceptance and trust;
  • decide what concrete action items must be undertaken to minimize and/or manage the most immediate risks and challenges – and establish a budget and a timeframe for completion; and
  • determine which key recommendations or action items should be commenced immediately – and establish a budget and a timeframe for their completion.

Who should perform the diagnosis for a Social License to Operate?

The SLO diagnosis is most effective when conducted by a diagnosis team composed of experts in different, yet complementary disciplines.

  • A successful diagnosis team must possess, at a minimum, the following qualifications:
    • fluency in the foreign language(s) of the host country;
    • familiarity with the legal system and cultural nuances of the host country and local communities;
    • familiarity with the mining company’s objectives, structures and operations, past successes and failures;
    • significant experience conducting SLO diagnoses (or similar);
    • superior analytical ability and thoroughness; and
    • ability to write – in the host country’s language and in English – a clear and succinct final SLO diagnosis report.
  • Ideally, the members of a successful diagnosis team should also be knowledgeable concerning:
    • international, corporate, mining, environmental, business and related law matters, including industry-specific technical expertise; and
    • all matters – legal, social, political and otherwise – that may have an impact on the company’s mining operations.

A successful SLO diagnosis teams are headed by one or more attorneys who otherwise possess the qualifications enumerated immediately above.

One of the main reasons to have the diagnosis team headed by attorneys is that the company may be able to make effective use of attorney-client privilege, which is recognized in some form in nearly all countries. Additionally, attorneys are likely to identify important related issues that other professionals might overlook, such as title ownership and land ownership. (We will discuss how attorneys can perform an effective mining legal diagnosis in future blog articles).

If certain conditions are met, attorney-client privilege typically protects communications between clients and their attorneys in two key ways:

  • by prohibiting the attorney from disclosing the communications; and
  • by protecting the client from being compelled to disclose the communications in legal proceedings;

Further, by having the diagnosis team headed by attorneys:

  • problems discovered during the SLO diagnosis can be timely corrected/ameliorated by the company;
  • the attorneys have the ability to review, assess and make recommendations concerning the company’s in-country operations including:
    • corporate structure
    • corporate securities and ownership
    • the legality and enforceability of mining, building and other administrative licenses and permits
    • supplier agreements
    • key employment contracts
    • possible litigation risks
    • anti-corruption
    • anti-bribery
    • contractual matters

Implementing recommendations made in the SLO diagnosis is the final and most critical step in achieving an effective social license to operate.

This is our third and final article in this series on How Mining Companies Can Achieve an Effective Social License to Operate in Latin America.

See Part 1: What is a Social License to Operate (SLO) and How Do Mining Companies Achieve an SLO?

See Part 2: Effective Diagnosis of Social License to Operate – Off-site preparation and on-site investigation

A full discussion of issues related to a Social License to Operate can be found in the book Minerals and Mining: The Life of a Mining Project. Jordi Ventura is the author of its chapter titled “The life of a mining project: Effective diagnosis of a social license to operate.”

Jordi Ventura is a member of JMBM’s Natural Resources and Mining Group. His practice focuses on the representation of mining companies in Latin America, where he has conducted effective mining legal diagnoses and effective diagnoses of social licenses to operate. He represents the mining industry in mining leases, joint venture and operating agreements, option agreements, exploration and development agreements, and mine operating contracts. He has been the lead attorney in mergers and acquisitions, divestitures of business entities and other land transactions. Jordi Ventura is licensed to practice in Utah and Colorado; he is not licensed in California. Contact Jordi at JVentura@jmbm.com or +1 415.984.9689.