1. EXTRACTIVE INDUSTRIES & SUSTAINABILITY:
CHALLENGES AND OPPORTUNITIES IN SOUTH AMERICA
Sandra Carrillo Hoyos
Pontificia Universidad Católica del Perú, Communications Department
Columbia University, New York, USA
September 17-18, 2014
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2. THE EXTRACTIVE INDUSTRIES DEVELOPMENT IN SOUTH AMERICAN COUNTRIES
The extractive industries have acquired increasing importance as an engine of macro-economic growth for the region
abundanceof natural resources
governmental policies to incentivize foreign investment
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3. 1°copper
3°molybdenum
7°silver
7°niquel
3°silver
3°copper
3°tin
3°zinc
4°lead
4°molybdenum
5°gold
While the performance of extractive industries has allowed these countries to become the top producers in the world…
What is happening with the social license from local communities?
THE EXTRACTIVE INDUSTRIES DEVELOPMENT IN SOUTH AMERICAN COUNTRIES
3°iron
5°tin
4°tin
6°silver
6°lead
9°oil
CHILE
BRAZIL
PERU
COLOMBIA
BOLIVIA
VENEZUELA
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4. MACROECONOMIC SUCCESSVS. LOCAL POVERTY
Community Union Matosoin Cordoba, Colombia (800 mtsfromCerro Matoso, 4°worldbiggestmine of niquel)
The revenues derived from extractive industries have not necessarily improved the quality of lifein local communities affected.
Productionperformance
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5. Asymmetries
Power relations
Mistrust
Misinformation
Uncertainty
EXPANSION OF SOCIAL RESISTANCE TO EXTRACTIVE INDUSTRIESPeruChileBolivia
Socio-environmental conflicts
These conflicts involve stakeholders, with a completely different access to information and resources.
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6. HIGH COSTS FOR COMMUNITIES, GOVERNMENTS AND COMPANIES
Newmont Corporation –Minas Buenaventura consortium lost about $ 750 millionduring 2010 due to a delay of 9 months due to social conflicts in the process of building the Minas Conga project in Peru.
Social conflicts and the eventual temporary interruption of operations are causing effects on the international prices of metals and hydrocarbons, due to the regional participation in global commodities trading.
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7. UNDERSTANDING THE BUSINESS CHALLENGE
Extractive industries are encouraged to prioritize the development of effective relationship mechanismsthat timely allow prevent or manage social conflicts.
New way of doing business in the extractive industry
A reactive response in crisis conditions generates a significantly higher costs than managing social risks through effective daily relationship with local stakeholders.
viability
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8. MAIN
SUSTAINABILITY
CHALLENGES
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-Low credibility on environmental regulation efficacy
-Lack of participatory mechanisms and communication efforts
-Ineffective actions to achieve social license to operate
-Low capacity to address social conflicts
-Dependency on exporting raw materials, low economic diversification
-Distrust of revenue distribution
Dissatisfaction with the low impact on local development
Social mobilization against extractive activities
Concerns about environmental impact on resources necessary for subsistenceIneffective communicationEconomicEnvironmentalSocial

9. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social interventionmodel
Internalskillsto promotestakeholderdialogue
Internalalignmentand response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participation mechanisms
throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoring and participation efforts
Ensure the cumpliance and sustainability
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HOW TO MAKE IT POSSIBLE?

10. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social intervention model
Internal skills to promote stakeholder dialogue
Internal alignment and response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participation mechanisms
throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoring and participation efforts
Ensure the cumpliance and sustainability
10
HOW TO MAKE IT POSSIBLE?

11. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social intervention model
Internal skills to promote stakeholder dialogue
Internal alignment and response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participation mechanisms
throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoring and participation efforts
Ensure the cumpliance and sustainability
11
HOW TO MAKE IT POSSIBLE?

12. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social intervention model
Internal skills to promote stakeholder dialogue
Internal alignment and response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participation mechanisms
throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoringand participationefforts
Ensurethecumplianceand sustainability
12
HOW TO MAKE IT POSSIBLE?

13. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social intervention model
Internal skills to promote stakeholder dialogue
Internal alignment and response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participation mechanisms
throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoring and participation efforts
Ensure the cumpliance and sustainability
13
HOW TO MAKE IT POSSIBLE?

14. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social intervention model
Internal skills to promote stakeholder dialogue
Internal alignment and response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participation mechanisms
throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoring and participation efforts
Ensure the cumpliance and sustainability
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HOW TO MAKE IT POSSIBLE?

15. EXTRACTIVE INDUSTRY CONTRIBUTION TO LOCAL DEVELOPMENT
Social intervention model
Internal skills to promote stakeholder dialogue
Internal alignment and response capacities
Addressinginformationgaps
Enhancelocal capacities
Dialogue and participationmechanisms
Throughout the value chain
Local developmentplanning
Builda commonlong- termvisiton
Strategicpartnerships
Greater impact and avoiding duplication
Stregtheningof local capacities
Discussionaboutthelocal priorities
Monitoring and participation efforts
Ensure the cumpliance and sustainability
15
HOW TO MAKE IT POSSIBLE?

16. •The extractive industry in South America has shown significant positive impacts on development and macro-economic stability.
•The increasing resistance to the industry is outlined in principal sustainability challenges at three levels: economic, environmental and social.
•The social intervention model presented aims to enhance the contribution of extractive companies in local development by acting as a catalyst for economic growth and social change.
•This proposal could reduce dissatisfaction with extractive activities and as a consequence reduce their risks and costs associated with social conflict.
CONCLUSIONS
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17. Questions? Comments?
sandra.carrillo@pucp.pe
pe.linkedin.com/in/sandracarrillohoyos
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