Does Eagle Mine Have Social License to Operate?

Lundin Mining CEO Paul Conibear hit all the right notes when he announced last week that Eagle Mine is now in production. Completed ahead of schedule and on budget, the new nickel and copper mine on Michigan’s Upper Peninsula marks “a tremendous achievement”:

The Eagle Mine is a significant new, high-quality, low-cost mine, that has been constructed to the highest of safety, environmental and social responsibility standards.

Our team has done an exemplary job in bringing the mine into production, and we look forward to the operation becoming a significant cash flow generator for the Company and a significant contributor to the local and regional economy. We would like to thank all employees and contractors for their dedication and excellent work in addition to all local stakeholders for their ongoing support.

Analysts and investors seemed pleased as well, and happy to take Conibear at his word. The company’s share price, which had been trending downward, ticked up the day after the announcement. Lundin Mining is “hitting the ground running,” declared one enthusiast, who goes by the pseudonym The Investment Doctor and published his report right on the heels of the company’s press release; “and it’s rare to see a large scale project being completed ahead of schedule. The production is starting just in time to benefit from a strong nickel price.”

Those inclined to follow the Doctor’s advice may wish to consider that his analysis focuses solely on nickel production, and makes no mention of what’s happened to copper prices lately: they’ve plummeted (though, to be fair, they now seem to be rebounding slightly).

In any case, the whole picture may be a little more complicated than the mining company and its boosters would have us believe. Eagle will count as “a significant contributor to the local and regional economy” only if you overlook the effect the mining operation is bound to have on tourism (which currently makes up around 20 percent of the Marquette area’s economy) and the many other detrimental and distorting effects mining will have on the economic life of the Upper Peninsula. Economist Thomas M. Power has run these down. For one thing, he observes, mining operations can hinder entrepreneurship and innovation, and drive away creative professionals and knowledge workers. They prefer not to live around a mine, or on the haul route from mine to mill; nowadays even the miners would rather commute. It remains unclear, too, how the region will benefit in the long term, after the accessible ore runs out and Eagle shuts down.

So one has the feeling that the tepid term “contributor” in Conibear’s statement about the broad economic benefits of the new mining operation was chosen with care: it positions the mining company as a social benefactor, but it reserves any talk of wealth generation for the “flow” of cash into the company coffers. Some will trickle down: the contribution Eagle makes to the economy will be “significant”; but even saying that leaves wiggle room to back away from stronger and more specific language about job creation that was used to promote the project in the first place. The main object here is to reassure Lundin’s creditors.

To bring the bigger picture into focus, we also have to take into account the social costs and environmental risks associated with this new mining operation. When Conibear says that Eagle Mine was built to “the highest of…standards,” I guess he’s talking about mining industry standards. At least some environmental and community groups have different and even higher standards, and they are not satisfied with DEQ enforcement to date or with the Community Environmental Monitoring Program established by Rio Tinto and the non-profit Superior Watershed Partnership (for which Lundin Mining will pay $300,000 annually). For local stakeholders like the Keweenaw Bay Indian Community, who opted out of the Superior Watershed Partnership deal, the new mine falls short on many important counts. Together with the National Wildlife Federation, the Huron Mountain Club and the Yellow Dog Watershed Preserve, the KBIC sued, only to lose in the Michigan Court of Appeals in August of this year; but that loss hardly means the concerns that motivated the twelve-year legal challenge to the mine were without merit.

The stark fact remains that like Rio Tinto before them, Lundin Mining cannot point to a single example of copper and nickel mining in the United States or Canada that did not pollute surrounding waters or groundwater. Questions raised by Jack Parker about the geological stress field of the Yellow Dog Plains — and the risk of “sudden collapse” he alleges was covered up by regulatory collusion — continue to be “studiously ignored.” Haul road construction has been mired in controversy: it took corporate wrangling of the County Road Commission and exercise of eminent domain to push through the the current route; and that road work has already violated the Natural Resources and Environmental Protection Act.

The point is not to multiply examples or revisit all the controversies that still surround Eagle Mine. Now that the mine is in operation, some of these issues may even be “moot,” as a writer in Crains suggested after the decision by the Court of Appeals in August. But taken together, they raise the question whether Lundin Mining has done enough (since purchasing the Eagle operation from from Rio Tinto) to earn the trust, let alone gain the support, of local stakeholders who were not already in the mining camp or the mining company’s pocket. So far, Lundin has demonstrated that it can bulldoze ahead and get stuff done. Its claim to social license remains unsettled.

5 thoughts on “Does Eagle Mine Have Social License to Operate?

  1. Pingback: A Postscript on Weird Timing and Pending Collapse | lvgaldieri

  2. Kathleen Heideman

    Short answer to your question: NO. Social license is not the same as a permit, which can be had by paying minor fees, submitting paperwork, and lubricating regulatory and governmental wheels with regular squirts of cash.

    Reply
    1. lvgaldieri Post author

      Spot on. Social license is also not something the business entity can achieve on its own, through outreach, public relations campaigns, staged community meetings, etc.. I think that’s the approach Rio Tinto took. Nor is it a negotiated settlement — as if the business can sit down with the community and reach some kind of deal. It’s much more fluid than all that.

      By the way, there’s new book on social license by John Morrison called Social License: How to Keep Your Organization Legitimate. It’s on my reading list.

      Reply

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