Gold industry

The gold mining industry’s response to a growing reputation problem has been corporate social responsibility (CSR).

John Childs travelled to Ghana to investigate the reality behind the CSR rhetoric.

A short walk across an abandoned tailings dam of a Ghanaian mine is an attack on the senses. Initially, there is a mysterious stench in the air – a disquieting cocktail of chemicals and desperation. Then, there is a visual assault of the utter desolation of the landscape before me – a lunar beach that is punctuated by sparse clumps of stubborn grass clinging to its barren wasteland. And that’s exactly what a tailings dam is – waste land. 

It is both a waste of the land on which people once lived and worked, and the waste from a land previously mined for its hidden treasures, now a residue of crushed rock bound together by a complex compound of arsenic, cyanide, mercury and other chemicals. This is only one of the many effects of large-scale mining in Ghana; a necessary by-product of AngloGold Ashanti’s mining activities. Activities that earned the company $278 million in 2007.1



This is the Obuasi gold mine in Southern Ghana. AngloGold Ashanti’s mining activities here have incurred widespread condemnation from the NGO community for a variety of alleged human rights and environmental abuses. Polluted drinking water, a local school fooded with run-off water contaminated by cyanide and military sweeps where unregistered miners have allegedly been shot 2 have all compounded to ensure that AngloGold Ashanti’s public image shines less brightly than the 5.5 megaounces of gold the company produced in 2007.

However, such criticism from civil society is neither a recent development nor is it directed at AngloGold Ashanti alone. Responses to the pressure now being placed on the mining industry have been nothing if not dynamic. Mining companies in Ghana, for example, have committed to putting more focus on, and providing more funding for corporate social responsibility (CSR) promises. Promises which aim, at least rhetorically, to address the accusations levelled at mining companies of alleged human rights violations and negligence of social development concerns. There has also been a welcome movement towards independent third party verifcation of the mining sector through multi-stakeholder partnerships – such as the Initiative for Responsible Mining Assurance (IRMA).

IRMA is a voluntary initiative which brings together mining companies, jewellery retailers, NGOs and trade associations to develop standards on environmental, social and human rights issues and monitor compliance with these standards at mines (see the Ethical Jewellery article in EC113).

But the stench of that abandoned tailings dam in Obuasi is a visceral reminder of the shortcomings of CSR – and the lightweight nature of the multi-stakeholder approach.


Who is CSR really for?

In 2002, Newmont Mining became the world’s largest gold producer.3 It developed its frst mine in Ahafo, Ghana, in 2006, with Ghana having now become “the company’s next core operating district”.4

Alongside this recent development, the company has pledged that “$1 of every ounce of gold and 1% of annual net proft from the Ahafo mine” will be used as designated funds for local sustainable community development projects. Through this commitment, Newmont envisages itself as the leader in CSR – as the “Gold Company of Choice”. However, by casting a critical eye over their development claims, the motives behind Newmont’s CSR commitments become a little clearer.

Unsurprisingly, there is a strong capitalist logic that runs throughout their CSR directives. Are these community-level promises carried out primarily to address the development challenges that the company’s activities themselves have created? Or rather, to add value to the company’s product; to give the company a competitive advantage over its rivals in the sector – namely  a good reputation for CSR. Is CSR just a useful marketing tool that makes it attractive for potential investors looking to create more ethical investment portfolios? No, it does more than that. According to the company’s managing director, it serves to “decrease social resistance to new projects”.5

In short, are Newmont (and other gold mining companies) less focused on the ‘social responsibility’ element of CSR than on the ‘corporate’?


Policies in practice

A closer examination of Newmont’s CSR achievements calls into question the validity of the company’s ‘successes’ in addressing the negative effects of its mining activities.Despite Newmont’s public claim that resettled residents in the region experienced a “pride of ownership” in their new properties,6 residents with whom I spoke reported that their lives were better before Newmont had arrived.

It should be pointed out that affected communities were given the choice of two designs for their new home; designs that were created in Scandinavia, not Ghana. These houses are constructed in uniform rows that resemble the kind of replica town usually reserved for theme parks. Residents have complained that these settlements lack a focal point, such as a market, around which the community can interact – instead they form linear rows of generic housing. Accommodation can be built-by-numbers – a sense of community cannot.

One of the centrepieces of Newmont’s elaborate CSR policy is the so-called Agricultural Improvement and Land Access Program (AILAP) that aims to assist and encourage farming among affected communities. Newmont promotes itself as having helped to improve agricultural output for over 2000 farmers through the provision of training and farming inputs such as seedlings and fertilizer. However, even a crude mathematical examination of the quantity of inputs provided to farmers by Newmont reveals that on average each farmer receives just over one 50kg bag of fertilizer, about 300ml of weedkiller and the equivalent of around ten packets of various seeds, including cocoa, oil palm and maize.

The paltry quantities involved would barely cover the needs of a basic vegetable garden, let alone the requirements of a family whose entire income rests upon the sale of these crops. When you add to this that for many farmers the nearest market is two hours away, the AILAP programme begins to look like little more than a rhetorical response to consumer pressure for corporates to behave socially responsibly.


A place at the table

The more I talked with the communities displaced by Newmont’s mine, the more additional problems with the effectiveness of this company’s CSR package became apparent. Of particular concern was the extent to which these communities had been properly consulted and represented in the decision-making processes that affected them.I sat talking to a farmer and his heavily pregnant wife. Last year, they told me,there was little rain. They relied on farming for their livelihood, but last year’s crops were disappointing. The farmer had been employed by Newmont as a line cutter at the Ahafo mine while it was being constructed and had been promised a job there following its completion. The promise of employment failed to materialise.

The Ahafo mine is an example of the company’s most elaborate CSR package to-date. When Newmont had held initial meetings to determine the hopes and needs of people such as these who would be affected by the mine, neither he nor his wife had been able to attend due to working commitments. Instead, they had been represented by their cousin who lived four hours away and who had little idea of their future requirements.

This exchange highlighted an even bigger problem – who represents the poor when the CSR programmes are being decided? For all the talk of ‘participatory’ decision-making processes, it is Newmont’s dialogue with western civil society that sets the CSR agenda, not Newmont’s dialogue with the Ghanaian farmer and his wife.Often the kind of dialogue that takes place between NGOs, who are keen to promote ethical standard setting, and large mining companies, such as Newmont, leads to deleterious results. For example, a leading international NGO expressed repeated concerns over the levels of dust pollution generated by heavy machinery and traffc on the access roads to the Ahafo mine. The dust, they argued, directly caused crop failure and human respiratory problems for farmers located in the immediate surrounding area.


Newmont Response

Newmont responded by regularly spraying the roads with gallons of rain water collected in vast storage containers. The results were extremely successful and the newly dampened roads ceased to throw up the dust that the NGO had deemed to be so problematic. At the same time, however, local farmers were experiencing widespread crop failure due to the extremely low levels of rainfall. Upon asking a Newmont offcial whether rainwater used for watering the roads would not be better used for irrigating local farmer’s crops, the response was that it was the NGOs’ pressure that frst needed answering. And so we return to the question – who represents the poor when the CSR programmes are being decided?

Newmont is not alone in having to face up to pressures increasingly demanded by ethical consumerism – indeed, other foreign mining companies have attracted far more damaging coverage. They have been used here to demonstrate how such companies respond dynamically to lobbying. With another Ghanaian mine due to commence in Akyem before the end of the decade, the company’s CSR practices are likely to be replicated.

The constant monitoring of the shortfalls in these packages means that Newmont, along with other large mining frms, have become signatories to third-party-verifed processes such as IRMA or the World Bank-endorsed ‘Extractive Industries Transparency Initiative’. However, the extent to which these assurances guarantee improvements in a company’s ethical performance should be treated with the utmost caution. A look around the decision-making table of these multi-stakeholder initiatives highlights one noticeable absentee.The largest companies are present; so too are the major NGOs; as are selected retailers and associations; yet where are the affected communities themselves?  Who is speaking for them?

1 AngloGold Ashanti Results for the Fourth Quarter and Year Ended 31 December 2007 
2 War on Want report: “Fanning the Flames: The role of British mining companies in confict and the violation of human rights”. 
5 Bill Zisch , MD, Newmont Ghana Gold “A New Model for Developing Social Responsibilites and Good Community Relations”. 
6 “Managing the Transition and Impacts of Resettlement” Newmont, 2007