In recent years, headlines have been dominated by stories of communities interrupting major projects, sometimes due to genuine concerns and other times driven by the influence of rogue elements, often called the “construction mafia.” While the motivations of these business interrupters vary, these incidents underscore the importance of companies maintaining a strong Social Licence to Operate (SLO). But what exactly is an SLO, and why is it so critical?

Understanding Social Licence to Operate

A Social Licence to Operate is the ongoing acceptance and approval of a company or project by its stakeholders, particularly the local community and broader civil society. Unlike a formal regulatory or legal licence, an SLO is an informal, socially granted “licence” that hinges on the local community’s perception and trust. This concept is especially crucial in industries with significant environmental and social impacts, such as mining, forestry, and energy.

The essence of SLO is that companies need more than legal permits to operate; they also need the support and acceptance of the communities affected by their operations. To maintain this licence, companies must engage in responsible practices, transparent communication, and positive community relations. Failure to do so can lead to protests, blockades, legal challenges, and reputational damage, all of which can severely disrupt or even halt operations.

Examples of SLO Failures: Lessons from the Mining Industry

Several high-profile conflicts in the mining industry provide stark examples of what can happen when companies neglect their Social Licence to Operate. One of the most tragic instances occurred at the Lonmin Platinum Mine in Marikana, South Africa, in 2012. The company’s failure to address poor working conditions and low wages culminated in a violent strike that led to the deaths of 34 miners at the hands of the police. This incident highlighted the devastating consequences of neglecting community engagement and worker welfare.

Similarly, Barrick Gold’s Pascua-Lama project on the Chile-Argentina border faced fierce opposition due to environmental concerns and the lack of consultation with local indigenous communities. The project’s eventual suspension in 2013, following legal challenges and protests, illustrated how a company’s failure to secure an SLO could lead to significant financial and reputational losses.

Another notable example is the Ok Tedi Mine in Papua New Guinea, which became infamous for one of the most significant environmental disasters in the mining industry. The mine’s operations caused severe environmental damage, leading to legal action, widespread criticism, and a complete loss of the social licence to operate. The situation was so dire that the company operating the mine, BHP, eventually withdrew, leaving ownership to a trust benefiting the local communities.

Community Reactions and the Role of Rogue Elements

When communities feel their needs and concerns are being ignored, they can mobilise against companies in powerful ways. This was evident in Cerro de San Pedro, Mexico, where local opposition to New Gold Inc.’s operations led to protests, road blockades, and legal challenges, significantly impacting the company’s operations. In Sierra Leone, the Marampa Mine became a flashpoint for conflict due to corrupt local leadership, resulting in community protests and acts of sabotage.

In some cases, the involvement of rogue elements, such as the so-called “construction mafia,” can exacerbate these conflicts. These groups often exploit existing tensions for personal gain, further complicating efforts to resolve disputes and restore an SLO.

Regaining the Social Licence to Operate

For companies that have lost their SLO, regaining it requires a comprehensive and proactive approach. This begins with engaging in genuine and continuous dialogue with all stakeholders, particularly the affected communities. Building trust through transparency, addressing grievances, and ensuring fair distribution of benefits are crucial steps.

Companies must also strengthen community relations by involving local stakeholders in decision-making processes and investing in sustainable development projects that align with the community’s priorities. Addressing environmental concerns, respecting Indigenous rights, and committing to long-term sustainability and ethical practices are essential to restoring and maintaining an SLO.

Moreover, companies must be vigilant against corruption, ensuring that all transactions and agreements are transparent and that benefits reach the intended recipients. This can help prevent the exploitation of local communities by corrupt leaders and rogue elements.

Conclusion

The concept of a Social Licence to Operate is not just a theoretical idea; it is a practical necessity for companies, especially those in industries with significant social and environmental impacts. The consequences of neglecting this licence can be severe, as seen in the mining industry’s examples. However, by prioritising responsible practices, transparent communication, and positive community relations, companies can secure and maintain the trust and support of the communities they depend on, ensuring their operations can continue smoothly and sustainably.

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Thabang Chiloane can be reached at thabang@tc74.co.za.