How mining companies achieve shared value through inclusive and sustainable agribusiness
Most mining companies have three central concerns when running a site: safety, volume and costs. However, it is widely recognised that without a Social Licence to Operate all three of elements are at risk.
Without successful community engagement a company can face increased operating costs, schedule delays, reputational damage, and in extreme cases the shutdown of the mine. Research from Harvard Kennedy School shows that community conflicts over environmental and social concerns can incur costs up to US$20m a week in lost value for large-scale operating mines.
Communities that benefit from the mine pose less risk to these three. To benefit from mining, communities need to see improvements in the basics: food security, water, health care, infrastructure, education etc. They also need to be able to benefit economically. This is where many mining companies struggle with their being limited jobs for unskilled people.
Creating shared value through a sustainable non-mine dependent economic and livelihood opportunities is increasingly what mining companies are striving to achieve as part of their community development program, however, it is difficult. Mining is often conducted in challenging and complex social, political, economic and geo-physical conditions.
This paper focuses on the potential role that inclusive agribusiness can play in the mining industry’s community development programs in creating shared value. It explores:
What’s the opportunity for mining to facilitate agricultural development?
Why do you need to design the project based on community need?
How do you develop ownership of the project with the farmers?
Why is it important to utilise a well thought-out financial model when designing an Inclusive Agribusiness?
Why is it important to start the business small and then monitor and evaluate before scaling up?
Who you should consider partnering with?
Why is it integral to link any agriculture project to reliable markets?
Why is it important to create good governance?
And, finally, why should a mining company start as early as possible?
There is a need to shift mining companies from purely an extractive company to one that generates shared value through inclusive and sustainable economic activities. Shared value ensures the local community know they are benefiting from the mine and thus building social license, while also ensuring shareholders receive a return on their investment.
One of the most important legacies a mining company can leave a local community is a sustainable, productive Inclusive Agribusiness that is linked to a commercial market, independent from the mining company, with a strong governance structure to be scalable and self-sustaining.
An Inclusive Agribusiness creates shared value by assisting subsistence farmers by providing access to markets, services and products in ways that improve farmers’ livelihoods, while being a profitable commercial venture. It is Smart Development because it’s a business, not a project, and the business is designed to stand the test of time. Read more here.