Social issues in the mining industry in Indonesia.

2. Mining is an industry
that more than any Socio-political Mining companies
sector of the factors are the single need to acquire
economy reflects defining complex of sufficient
and is directly issues that understanding of the
impacted by the determine the social and political
political and social success or failure of situation at national
conditions in a a mining operation and local levels
country or a region
2

3. Stakeholder acceptance is key to successful
project delivery
73 % of delays to capital projects relate to ‘non-
technical’ risk – delays in permitting and
community protests
Highly networked society with instant access to
information and news means that local action can
result in global attention
“Management Systems for Social Performance – The Shell Journey,” presented by Shell at the Regional Stakeholder Consultation on the Post- 3
2015 Development Agenda in Nusa Dua – Bali, December 14, 2012

4. Land compensation Environmental
issues (resolved & issues Industrial action Illegal mining
unresolved)
Natural disasters Community Community Ethnic conflict
relations development
4

5. Intercommunity Intra-community Employment Demands of local
rivalry & jealousy rivalry & jealousy government
Infrastructure use Technical failure Poor Divestment of
governance/ethics shares
5

6. PRE- POST-
OPERATIONS OPERATIONS OPERATIONS
Social Impact Stakeholder
Assessment Management
Mine Closure
• Stakeholder • Community • Infrastructure
Analysis and Development • Local Economy
Engagement • Capacity Building • Good Governance
• Community Needs • Good Governance
Assessment • Mine Closure
• Mine Closure Finalization and
• Mine Closure Refinement and Monitoring
Planning Adjustment

7. Priorities relating to different social, environmental and economic goals
determined through participatory process.
Relationship with stakeholders based on collaboration, trust and respect.
No one to be made worse of.
Ensuring the rights of marginalized individuals and groups.
Economic benefits by mining to be shared equitably.
Investment in trust funds, skills training, or social infrastructure.
No unacceptable environmental and other negative legacies.
Capacity to be developed at local level to manage revenues for
development needs through public-private partnership.
7
“Breaking New Ground: The Report of the Mining, Minerals and Sustainable Development Project,” – MMSD, 2002

8. Livelihood of region
Strong social No “ghost towns”
and communities
institutions in place left behind
secured
No serious “Mining culture”
reputational issues firmly established
8

9. Good corporate community relations, stakeholder engagement
and consultation and efforts to meet particular community
demands are means by which companies seek to improve
reputation among those with the ability to impact operations,
and thereby obtain a social license to operate
“Earth Matters: Indigenous Peoples, The Extractive Industries and Corporate Social Responsibility,” Ciaran O’Faircheallaigh & Saleem Ali, 2008 9

10. Any group or individual
who can affect or is
affected by the
achievement of the
organization objectives
“Strategic Management: A Stakeholder Approach,” R. Edward Freeman, 1984 10

11. Stakeholder Stakeholder Stakeholder
Identification Analysis Engagement
What corporate
Who are our What are their social
responsibilities do
stakeholders? stakes? we have to our
stakeholders?
What What strategies,
opportunities and actions, or
challenges are decisions should
presented by our we take to best deal
with these
stakeholders? responsibilities?
“The Pyramid of Corporate Social Responsibility – Toward the Moral Management of Organizational Stakeholders,” - Carroll, A. B., Business
Horizons No. 34, 1991 11

12. To whom does the organization have legal obligations?
Who might be positively or negatively be affected by the organizations activities or decisions?
Who manifested concern about the issues or impacts?
Who has been involved in the past when similar concerns need to be addressed?
Who can help the organization address specific impacts?
Who can adversely affect the organization’s ability to meet its important objectives?
Who would be disadvantaged if they were excluded from the engagement?
Who in the value chain is affected?
Who may have an impact on the reputation of an organization?
Who may influence the policy and regulatory environment in which the organization operates?
Who may impact on the value of the organization?
(Adapted from “ISO 26000: Guidance on social responsibility, 2010 )

13. 1 2 1
3 3
0 = Non-Stakeholder
1 = Latent Stakeholder
2 4 2 2 = Expectant Stakeholder
3 3 3 = Definitive Stakeholder
4 = Primary Stakeholder
1 2 1
“The Primordial Stakeholder: Advancing the Conceptual Consideration of Stakeholder Status for Natural Environment,” - Driscoll, C. and Starik, M.
Journal of Business Ethics, Vol. 49, 2004
“The Natural Environment as a Primary Stakeholder: the Case of Climate Change,” - Haigh, N. and Griffiths, A. Business Strategy and the
Environment, Aug 2007 13

14. Cate- Legiti- Urgen- Proxi- Main Vulnera- Real V+R
Stakeholder gory Power macy cy mity Score
(/20)
bility Impact Score
(/10)
Bupati (Regent) pr 5 5 5 5 20 3 5 8
Regency Planning Bureau
pr 4 5 5 5 19 2 2 4
(BAPPEDA)
Land Admin. Agency (BPN) pr 4 5 5 5 19 3 5 8
Provincial EPA pr 3 5 5 5 18 3 5 8
Gunung Village de 2 4 5 3 14 5 5 10
Wira (informal leader) de 5 5 2 3 15 3 1 4
Clan-based organization
la 1 1 1 2 5 1 1 2
(Jakarta)
Village youth organization de 4 5 1 5 15 0 1 1
Adapted from study conducted by Kiroyan Partners for a mining company to prepare a stakeholder engagement strategy 14

15. “Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets,” International Finance 15
Corporation, 2007

16. Level of Engagement Methods of Engagement
Consult  Surveys
 Focus groups
Limited two-way engagement: organization  Meetings with selected stakeholder/s
ask questions, stakeholders answer  Public meetings
 Workshops
 Online feedback mechanisms
 Advisory committees
Negotiate  Collective bargaining with workers through their unions
Involve  Multi-stakeholder forums
 Advisory panels
Two-way or multi-way engagement:  Consensus building process
learning on all sides but stakeholders and  Participatory decision making process
organization act independently  Focus groups
 Online feedback schemes
Collaborate  Joint projects
 Joint ventures
Two-way or multi-way engagement : joint-  Partnerships
learning, decision making and actions  Multi-stakeholder initiatives
Empower  Integration of stakeholders into governance, strategy and
operations management
New forms of accountability; decisions
delegated to stakeholders; stakeholders
play a role in governance
(“AA1000 Stakeholder Engagement Standard 2011 – Final Exposure Draft,” – AccountAbility, 2011) 16

17. Greater sharing of
information leading to
knowledge
Participatory/
High information exchange
interactive
decision-making
Stakeholder
engagement
Two-way
communication
One-way
communication
Better understanding
Ad hoc of stakeholders and
communication their issues
High stakeholder involvement
“Unfolding Stakeholder Thinking: Theory, Responsibility and Engagement” – Jörg Andriof, Sandra Waddock, Bryan Husted, Sandra Sutherland
Rahman, 2002 17

18. Challenge Mining
of companies
generally
Negative maintaining operate in
Targeted by
public ‘local remote
local and
opinion due license to areas that
inter-
to environ- operate’ in are
national economic-
mental and the face of
pressure ally under-
social resistance
groups developed
concerns by local
and lack
com- social
munities welfare
18
“Corporate Social Responsibility in the Mining Industries,” Natalia Yakovleva, 2005

19. Scope Clause 1
Guidance to all types Two fundamental practices of social responsibility Clause 5
of organization Recognizing social Stakeholder identification
regardless of their size
or location responsibility and engagement
Definition Clause 2 Social resp.
Terms, abbreviations Organizational governance Clause 6
Sustainable development
and abbrev. Terms core subjects
Understanding The Fair Community
Human Labor Consumer
Environ- operating involvement/
Social Clause 3 rights practices ment practices issues development
Responsibility
History, Characterist-
ics, Relationship Related actions and expectations
between SR and
Sustnble. Developmnt.. Integrating The relationship of Understanding the Clause 7
social an organization’s social responsibility
Principles of responsibility characteristics to SR of the organization
Social Clause 4 throughout an
Responsibility organization Practices for
• Accountability Communication integrating social Voluntary initiatives
• Transparency on social responsibility for social
• Ethical Behavior responsibility throughout an responsibility
• Respect for organization
stakeholder interests
Reviewing and improving an Enhancing
• Respect for rule of organization’s actions and credibility
law practices related to SR regarding SR
• Respect for
international norms
of behavior Bibliography: Authoritative sources and Annex: Examples of voluntary initiatives
• Respect for human additional guidance and tools for social responsibility
rights (Adapted from “ISO 26000: Guidance on social responsibility,” November 2010 ) 19

20. Responsibility of an organization for the impacts of its
decisions and activities on society and the environment,
through transparent and ethical behavior that
 Contributes to sustainable development, health and
the welfare of society;
 Takes into account the expectations of stakeholders;
 Is in compliance with applicable law and consistent
with international norms of behavior; and
 Is integrated throughout the organization and
practiced in its relationships.
20
(Adapted from “ISO 26000: Guidance on social responsibility ,” 2010 )

21. ISO 26000
(expected
behaviour)
Maximizing
contribution to
Collahuasi’s sustainable Practices
policies, development in force at
principles Collahuasi
and values
• Interviews with key stakeholders
• Information relating to Collahuasi’s management
system was reviewed along with the recommendations established
in Clause 7 of ISO 26000 (integrating SR throughout an organisation
“Collahuasi and ISO 26000: Towards excellence in sustainability” – Regina Massai C. & Bernardita Fernandez B., presented at SR Mining 2011, 21
October 2011 in Santiago, Chile

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