Like many natural resource sectors, the hardrock mining (metals and precious stones) industry has been under considerable pressure in recent years to improve its environmental and social performance. The financial and reputational costs of mining in areas that are environmentally and/or socially vulnerable have been high for both natural resource companies and the companies that insure and finance them. For example, in 1996 the gold mining company Placer Dome reported a $65 million loss due largely to a spill at its Marcopper mine in the Philippines (Placer Dome,1996).
International initiatives have been launched to examine where and under what circumstances mining is an appropriate land use and how (or even if) it can contribute to environmentally and socially responsible development. Nevertheless, much uncertainty remains in identifying when the potential environmental and social costs of mining are too high. Non-governmental organizations (NGOs)and companies have developed general principles and criteria for identifying areas that should be off-limits to mining, oil, and gas development. However, to date no attempts have been made to identify what might constitute “vulnerable ecosystems.”
This study addresses a critical issue that is central to achieving environmentally and socially responsible mining: The identification of areas that are too environmentally and/or socially “sensitive” for mining. It entailed development of a pilot framework that can be used as preliminary, coarse screen to identify such areas globally. We also adapted the methodology and applied the framework at the national level in two country case studies. This effort represents the first systematic attempt to develop and apply such a framework.
Companies, governments, and NGOs can use the approach piloted in this study to identify environmentally and socially vulnerable areas. The primary audience is insurance companies and financial institutions that seek to limit their potential financial losses associated with mining projects that perform poorly because of environmental and social problems. Other stakeholders, including mining companies, governments, and NGOs, should also find it useful as part of an open, transparent, consultative decision-making process for identifying probable “no go” areas for mining.
The framework developed for this study is not intended to be used as a tool for making final decisions on siting, investment, or “no-go” areas for mining projects. Data uncertainties and the qualitative nature of the methodology make it unsuitable for these purposes. While it does not provide a rigorous, quantitative risk assessment methodology, the framework can be used as a first step to highlight areas that may be environmentally or socially vulnerable to mining, and which may require further assessment. The framework also goes beyond most other risk assessment tools in the mining sector to incorporate indicators of governance capacity as well as other environmental and social indicators for assessing mining risk, hazards, and vulnerabilities.
