Clark - Socio-Cultural Due Diligence in the Mining Industry

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Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Clark, J.C., Socio-Cultural Due Diligence in the Mining Industry, in International and Comparative Mineral Law and Policy, Trends and Prospects, Bastida, E., Wälde, T., Warden-Fernandez, J., eds., (Netherlands, Kluwer Law International, 2005)

This paper takes stock of developments that are occurring in the extractive industries and in particular the mining sector with regards to liabilities that private entities are faced with in association to the impacts of their activities both socially and environmentally.

Citing the Doe v Unocal case, the author discusses the developing trends in the extractive industries towards a system which holds greater accountability to operators, financers, contractors and investors for such ramifications and in the midst of increasing public awareness of their effect. In this regard it is noted that if social or cultural problems arise or perceived to have arisen during such exploitative operations the parties involved should expect increased costs and increased liability for their roles. The novelty of this concept is in light of the fact that in the past virtually all such liability cases made against companies in the extractive industries alleging, environmental, social or of human right violations have been dismissed, the Doe case therefore presents a milestone.

The paper thus, looks into current trends and how investors and other third parties and even governments are seeking methods to reduce their exposure from such liability. In the mining sector for instance, there are constant efforts by companies to assure themselves that their mining activities are in compliance with all relevant laws and regulations. But the author argues that aside from the internal due-diligence assessments conducted by the companies, governments and contractors a third approach should be adopted in the form of an independent socio-cultural due diligence review of mining activities after a company has prepared their own environmental, socio-cultural impact assessment. The paper examines some of the features that should ideally be present in such a review and provides a checklist of best practices consistent with some international best practices standards.

In conclusion the paper examines the results such an independent assessment is likely to yield. At the outset it is believed that the exercise would create a system which looks at potential or actual liability from a cohesive and inclusive perspective. It will also ensure that operators undertake basic risk analysis as part of project development and that which can be reviewed by interested third parties and stakeholders. This might not only in the long-term reduce the adverse effects of mining and other exploitative operations in the long-term but might also guarantee a regime designed to be responsive to such effects. 

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