The Social Licence to Operate in the Context of Mining Projects and Indigenous Peoples: Is it Sufficient Just to Comply with the Law?

Abstract

Hard rock mining companies that comply with the law related to permits, approvals and indigenous consultation are not always successful in developing good relationships with the affected communities. Most of them are pushed to undertake actions beyond the limits of the law to create a good relationship with the project’s host indigenous community(ies). In the late 1990’s, the concept of social licence to operate emerged in the mining industry, to refer to the level of acceptance that a mining company has in the community where a project is intended to be developed. The process of acquiring a social licence to operate, which is not a permit provided by law, is necessary for the success of a mining development and the generation of certainty on its operations. This thesis describes the theory of the social licence to operate and the legal framework for indigenous consultation in Canada and Ecuador, two countries with different hard rock mining history and heritage. It then describes two projects per jurisdiction, a successful one in terms of social relationships with indigenous communities, and another one in which conflict and grievances occurred during the development of the project. The objectives of this research are to: (i) demonstrate that the company’s compliance with the law is not sufficient to acquire a social licence to operate; and (ii) based on the experience of the analyzed cases, identify the practices beyond the limits of the law, that aid in the acquisition of the social licence to operate.