Transcript Chining Mining Presentation

Community Development
Delivering bottom line results
What is CommDev?
The World Bank/IFC Oil, Gas & Mining Sustainable
Community Development Fund
• $12 million fund focused on helping communities
receive sustainable benefits from Extractive Industry
(EI) projects;
• Supports IFC/World Bank clients who want to
collaborate to go above and beyond social and
environmental safeguards;
• Provides public goods for all stakeholders on community
development in extractive communities;
• Offers capacity building, technical assistance, tool
development and information sharing through on-line
Clearinghouse (www.commdev.org);
• Global, but emphasizes Africa (60 – 70%)
Mining Projects Are Often Seen As “Controversial”…
•Increased pressure by governments and
communities for a larger share of profits
•Social benefits often underestimated
•Environmental degradation often more
feared than real
•Unrelenting civil society attention
•Amplified brand and reputational risk
…and yet no sector is more important to development than ours.
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Industry context
Sustainable Approach to Mining No Longer an
Altruistic Endeavour: It is a Business Imperative
Mining companies are guests in remote,
impoverished areas
Increased NGO activism and reputational risk
A “Social License to Operate” does affect the
bottom-line
A condition of finance/investment – Equator
Principles, World Bank Standards
To ensure long-term success, mining
operations must be strategic,
transparent & equipped with qualified
human resources
Government
(local, provincial,
national)
Investors
Mining
Company
Nongovernmental
organizations
Uninterrupted
operations
Community
Local business
Effective local stakeholder management happens by design
Evolution of how to acquire a social license to operate
Old Approach
• Environmental Mitigation “Do No Harm”
• Unilateral decisions
Thinking About
Development
New International
Best Practice
• Cash Contributions “Handouts”
• Ad hoc philanthropy programs
• No results measurement
• Examples: Building Schools, Clinics
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Community investment strategy
Conduct social baseline study
Participative methodology (consultation)
Identify metrics for monitoring results
Communicate development results
to stakeholders
What Companies say about Community Investment
Challenges
• We spend lots of money on CI but relations with communities
don’t improve (and sometimes even deteriorate)…
• Our CI program itself becomes a source of conflict
• Local stakeholders become dependent on us
• Infrastructure projects we build lie abandoned and unused
• In the end, we have little to show for all the resources spent
• Endless requests from communities – difficult to say “no”
• We get pulled in a hundred different directions
• We end up having to take over the government’s role
• Our CI program has little to do with our core business
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What Causes these Problems?
Limited understanding of often complex local context
Ad hoc approach – reactive to community requests
Notion of “giving” rather than “investing” (grants & donations)
No exit strategy
Focus on bricks & mortar /short-term projects
CI isolated from operational side of business
Lack of participation & ownership of local stakeholders
Failure to measure impact (no baseline /focus on outputs )
Lack of transparency and clear criteria
Lack of alignment with business objectives/core competencies
Community Investment Strategy:
How Can IFC Help?
By offering…A package of
advice and tools designed to
assist companies adopt a more
strategic and sustainable
approach to investing in
community development;
The main deliverable is
company-specific community
investment framework that is
(i) Strategic; (ii) Aligned; (iii)
Measurable; (iv) Sustainable;
and (iv) is designed and should
be implemented in
partnership with other local
stakeholders.
Community Investment Strategy
A Six Stage Process
IFC/Client Engagement process on CI Strategic Planning
IFC
Define the
Business
Case
Diagnostic
and
Scoping
Stakeholder
Engagement
and
Capacity
Building
Strategy
design
Implementation
and
Partnering
Monitoring
and
Evaluation
• End result = COMMUNITY INVESTMENT ACTION PLAN
• Company & its stakeholders agree general criteria, structure,
and parameters within which the company will support local
communities and government in defining and meeting their own
development needs and aspirations.
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WHAT IFC CAN OFFER?
Provide Capacity Building: Tailoring Ghana
Workshop for Vale
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Provide capacity building for
clients, multi-stakeholder teams
and local civil society
Setting clear objectives and a
clear exit strategy
Making the business case – costbenefit rationale
Stakeholder analysis
Engagement with communities
and local government
Participatory processes
Capacity building plan
Quantitative and qualitative
indicators/strong M&E
framework
Communications strategy
Stakeholder Engagement Handbook
Community development results can be maximized through
Partnerships between companies, government and communities
Focusing on Monitoring & Evaluation (M&E)
for Planned Results
Impacts
Outcomes
Outputs
Inputs
Indicators
In determining your CI program
objectives, it is helpful to think
through the sequence of
events and changes that will
yield the desired outcomes.
The opportunity to demonstrate a company's value in the community
Indicators for Community Investment...Education ex:
NEW CommDev Tool: Financial Valuation of Sustainability
• Methodology, enhanced by Monte Carlo simulations
• Shows how results change as key assumptions change
• Process brings together multiple functional lines in companies
• Help companies make strategic decisions about WHICH sustainability
investments to make WHEN
Value Creation (productivity increases)
Value Protection (mitigating delays)
•Project specific issue mapping to
identify high and low risk issues.
•Aggregate estimates of the
extent to which sustainability
investments mitigate projectspecific risks.
•Cost-benefit analysis
•Estimation of value generated by
specific sustainability investments
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Social Advice Example: Improving the effectiveness
of Sadiola Gold Mine’s Community Foundation
IFC social specialists helped Sadiola create a long term
plan which would guide the work of its community
foundation past the life of the mine.
Working directly with the local population, government
authorities and NGOs, the Sadiola Foundation is now
implementing development initiatives focusing on
three main areas:
1.
Development Training and
Capacity Building
2.
Agricultural Assistance
3.
Enterprise Development
Peanut Butter Producers
Trained by Sadiola
Foundation
Local Supplier Linkages – Business Rationale
Using local suppliers allows clients to:
• Reduce delivery times
• Control inventories
• Increase number of local jobs created by project
• Spreads projects’ positive impacts among members of host communities
Leads to:
• Lower operating costs
• Mutually beneficial business relationships between IFC clients and local suppliers
• Social license to operate and mitigation of social risks
• Stronger local support for project
Our advice and assistance includes:
• On the ground support for local businesses inside the supply chain of IFC clients
• Creating and identifying financing solutions for local entrepreneurs
• Establishing and operating local “enterprise centers” to train local businesses
Supplier Development Example : Mozal Aluminum Smelter
Mozal: Mozambique
IFC investment of $133M
Issues
 Weak SME capacity to win and execute local
contracts
Linkages Program
 Advisory services and mentorship program to the
smelter’s SME suppliers
- Identification of SME supplier contracts
- Pre-selection of SMEs and training on
tendering
- Training of SMEs that won the supply
contracts
- SME mentoring/coaching
 Access to working capital
Results
 Increased local spend from US$5M to US$15M
 33 SMEs trained in tendering procedures
 Working Capital loans for 2 SMEs
Supplier Development: Mozal Aluminum Smelter
Evolution of the Mozal Linkages Program
Programs
SMEELP
Mozlink Phase 1
(Mozal construction
phase)
(Mozal operations
phase)
15 SMEs
$5M in contracts
25 SMEs
$15M in contracts
2001
The goal is to:
2003
Mozlink Phase 2
(Extended linkages –
inclusion of other
companies)
50 SMEs
$20M plus in contracts
2004
 Develop SME
Competitiveness
 Transfer knowledge and
business to Mozambique,
involving other large
companies
2006
2007
How
SME Development
Centre
- Sharing Best
Practice
- Benchmarking
Knowledge Sharing
Project
- Mozambique
Business Network
- Mozlink website
Supply Analysis
- New products and
services to be
supplied locally
CommDev.org
•Over 2,000 resources
available
• A “go to” resource for
information and
knowledge on community
development around
extractive industries,
• Tripled user base to over
900 visitors every day in
January 2009.
• Over 50% of users come
from developing
countries.
Thank you!
IFC Contact Information
Arjun Bhalla
Veronica Nyhan Jones
IFC, Oil, Gas, Mining and Chemicals
Department
Phone: 1 (202) 458-0984
Email:
[email protected]
Fax:
1 (202) 473-3839
IFC, Oil, Gas, Mining and Chemicals
Department
Phone: 1 (202) 473-7940
Email:
[email protected]
Fax:
1 (202) 473-3839