Community Development in Mining Firms: A Case Study of NuevaUnion and Mt. Arthur Coal Mine

This report explores how mining firms differ in their approach to community relations through a case study of NuevaUnion and Mt. Arthur Coal Mine. It covers their project descriptions, host communities, nature of relationships, community projects, and structuring of community relations.

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Community Development
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Course
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Introduction
While organizations continue to generally generate growth in the economy and
opportunities in communities that take the form of procurement and jobs, there has been a
growing concern for firms to address issues such as water and air quality. There has been
increased pressure for businesses to incorporate community input such as by demonstrating the
value of their activities, including contributing to sustainable development.
While engaging the community may be viewed as an ordinary part of conducting
business for the mining firms, the need for enhancing support from the community for operations
and projects continue to evolve and increase. Conflicting interests between the firm and the
community may result in delays in the projects, projects disruptions, as well as increases costs.
Among the top business risks that face the mining firms and the metals sector is maintaining
their social license to operate. In order to mitigate negative impacts and increase the positive
impacts, it is important that the mining companies maintain trust by engaging the community
effectively.
The environment and the social impacts that result from mining have a high possibility of
affecting the community. This may include air emissions, water, and energy competition, as well
as stress on the public service. Additionally, there can also be essential opportunities that are as a
result of proper management of the impacts by collaborating with the community. These
opportunities include benefiting from enhanced infrastructure and local economic benefits. By
recognizing the risks and opportunities associated with the mining firms, the International
Council on Mining and Metals (ICMM) developed the engagement of the stakeholder as one of

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their ten principles. The purpose of this report is to explore how the mining firms differ in their
approach to community relations.
2.0 NuevaUnion
2.1 Project Description
Project NuevaUnion is among the biggest undeveloped copper-gold-molybdenum
projects that have been initiated in America. This project is a combination of Teck and
Goldcorp’s Relincho and El Morro projects into one single project.1 According to Preliminary
Economic Assessment (PEA), the NueVaUnion focuses on a conveyor that will transport ore
from El Morro site to a single line mill and concentrator facility that is located at the Relincho
site with an approximate production of 190,000 tonnes of copper and 315,000 ounces of gold
annually over the first 10 years.
As indicated in the Preliminary Economic Assessment (PEA), this phased development
allows for future expansions that will be funded by the cash flows that are obtained from the
project, hence greatly minimizing the initial funding requirement. This project aims at reducing
its environmental footprints through various ways such as having a common infrastructure, a
network of roads, a single concentrator plant, a single port, and a single transmission line.2 The
adoption of the project will translate to several benefits that include reduced environmental
footprint, increased community benefit, enhanced capital efficiency and lower costs, improved
1 Banks, et al., Conceptualizing mining impacts, 493.
2 Bonye, et al., Community development, 337.

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returns, and optimized mine plan. The project is estimated to last for almost 38 years with a
potential for expansion.
2.2 Host Communities
Huasco Province is the region which the Teck mining company carries out the
exploration activities. The province is among the three provinces of the northern Chilean region
and is made of communities that are directly involved in Teck’s operations. This involvement
includes offering casual labor through employment and procurement.3 According to the 2012
statistics that were conducted by the National Statistics Institute, the community was made up of
72,145 individuals, with a population density of 10/square mile. Of the total population, 80.7%
live in urban areas while 19.3% live in the rural areas. The community’s most population is
found on the coast which is found in Antofagasta and Mejillones, the mining industry’ hub and it
is home to the largest part of the company’s workforce. Nonetheless, it is observed that there are
immigrants in the region that came from Europe and settled in the region. These people consist
of the Spaniards, French, English, Italians, Portuguese, among others while there are Arabs as
well, and a small population from China, Japan, and Korea.4 The immigrants have joined with
the culture of this region thus creating North Chile’s modern culture.
2.3 Nature of Relationship
Teck’s annual objective includes enhancing community relationships, particularly in
relation to the firm’s HSEC performance. Using its HSEC Management Standards, including its
3 Eversole, et al., Social enterprises, 253.
4 Green and Terrance, Leading for urban, 681.

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SMART framework, Teck’s exploration activities and projects are focused on engaging the
community and the stakeholders in addressing raising issues and to maximize earnings. The
organization also carries out several consultation processes.5 The nature of the relationship
between the company and the communities has translated to several benefits. For instance, the
company values local hiring and procurement because it helps in gaining support from the
community for their project, improves their local knowledge, develops capacity, and is helpful in
mitigating both social and business risks. Additionally, in making sure that local hires possess
the necessary skills for advancement, the project also supports the community to access the
relevant training opportunities within or near the Teck’s project. However, the company has
experienced certain issues with its host community. For instance, there was an outrage when a
resident at Atacama region was not noticed in advance about the cancellation of their on-site job
interview, resulting in expenditure on significant travel costs.
2.4 Description of Community Projects
Nueva Union does not have any running water, paved roads, or even a connection to the
electrical grid. However, the community has got something that makes their life more bearable,
and this is the soccer field.6 The residents within the mining region have carved a clearing that
they use as their soccer playing field. Nueva Union is home to many hard-working families that
struggle to build a bright future for themselves with less assistance from the authorities. Lacking
access to basic public services, the community around the Nueva Union mining have to pay a
premium for water which is sold from privately-owned trucks, which often suspend the
deliveries when the roads become slippery to climb during the winter. Electricity is also charged
5 Jenkins and Katy, Women, mining and development, 333.
6 Kamlongera and Justice, The mining boom, 389.

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at higher rates.7 The Nueva Union soccer field, which is a community project for the Nueva
Union is among the things which keeps the residents happy and healthy despite the difficult
living conditions. It is observed that from Monday to Saturday as men work, the women play
soccer or volleyball in this field, while men play on Sunday.
2.5 Structuring of Community Relations
The Board of Directors through the Safety and Sustainability Committee is tasked with
the duty of overseeing the health, environment, health, environment as well as community
policies, performance, auditing, systems, and auditing, as well as the implementation of the
company’s Health, Safety, Environment, and Community (HSEC) Management Standards.8 Teck
has got staffs at all levels of its operations who are responsible for undertaking a regular and
significant engagement with the host communities to help n bringing their concerns and interests
into light using the SMART framework. Some of the leaders that are involved in the
implementation of community relationships include: the Senior Vice President, Sustainability
and External Affairs report directly to the CEO. He is mandated to deal with health and safety,
community, sustainability, indigenous affairs, and the environment. Also, the Vice President,
Community and Government Relations are responsible for leading activities that are related to
community investment, engagement, social responsibility, and management.
2.6 Reporting on Community Relations Activities
7 Liu, et al., Ethnic enterprises and community, 569.
8 Long, Michael and Murray, Ethical consumption, 368.

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In reporting on the firm’s approach to social management, the site community teams
contact the community stakeholders through the annual opinion surveys to obtain feedback. The
acquired information is used by the firm to check its activities and at the same time it improves
its social management activities continuously and adapt to its most crucial primary risk.9 The
firm uses an independent company to carry out surveys and report on the involvement with the
community. Additionally, the company has got a direct feedback mechanism in all the stages of
its operations, exploration region, and project to particularly make sure that the individuals who
intend to give feedback about community relations are able to do that easily, and if they so
intend, they can do that anonymously.10 The company’s feedback process at every stage of its
operation is supported by its corporate guidance, expertise, and tools. This feedback is then used
in reporting on community relations activities.
3.0 Mt. Arthur Coal Mine
3.1 Project Description
In the Hunter Valley region of the New South Wales, Australia, Mt Arthur is the largest
coal mine. The project is located near Muswellbrook town and the mine is involved in the
production of thermal coal that is used in generating power which sold both in the domestic
market and the export markets. This project is a wholly-owned subsidiary of BHP Billiton, with
the project’s full production capacity being 20Mtpa (million tons per annum) of raw energy coal.
This project is an open-cut coal mine that has got all its mining operations being based on 21
9 Lyons and Thomas, Entrepreneurship and community development, 459.
10 MacLeod, Anne and Emejulu, Neoliberalism with a community, 445.

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unique seams.11 The discovery and identification of these seams were undertaken by the firm
during its initial exploration operations. Mt Arthur’s coal mine and the exploration area include
Bayswater no. 2 lease, Mt Arthur north lease, including the Bayswater no. 3lease. Currently, the
organization has become more focused on Mt Arthur North lease area. BHP Billiton produces
three products from this mine for exports and they comprise MA-12, MA-14, and MA-16.
3.2 Host Community
Muswellbrook’s township is made up of population totaling to over 10,000 people. The
rest of the community lives either in Denman, making a total of almost 1,400 people or the
neighboring rural areas. LGA’s current population is approximately16, 000.12 According to the
Hunter Valley Research Foundation (2003), a total of around 3.6% of this Shire population is
self-identified as Indigenous, compared to the average of 2% of that in New South Wales.
Traditionally, Muswellbrook was a rural-based economy. However, mining, the generation of
power, inclusive of the mining-based activities have become primary industries. The 2006 census
revealed that Muswellbrook Shire’s employed workforce was employed in the black coal mines
while another 3% was employed in electricity supply. According to ABS (2006), the host
community’s rural sector that is made of beef cattle and dairy farming, as well as horse and wine
production, account for about 10.5% of the direct employment.
3.3 Nature of Relationship
It is evident that the Mt. Arthur Coal Mine is an essential part of the Muswellbrook's
economy. The project’s main objective is to involve the local community and make sure that
11 Munoz, et al., Processes of community-led social, 482.
12 Niehoff, et al., Mesozooplankton community development, 1398.

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their needs are met. Of the total population at Muswellbrook Shire, there are over 1, 102 people
who are directly employed in the mines, thus translating to approximately 16% of the local
employment. Nonetheless, the mining activities at this site as well as the employees contribute
several million that take the form of expenditure on the goods and services to the local economy
annually.13 The project has also been a primary ratepayer and it provides the Council with almost
one-fifth of its overall rates revenue. The project also funds some of the essential improvements
in the community facilities. However, there has been community outrage regarding the coal
mining and the power stations’ effect on the community’s health especially trough respiratory
infections and cancer. The community was outraged with the 12-hour shifts that apply to
individuals employed in the mines, thus translating to increased family stress.
3.4 Description of Community Projects
BHP operations in Mt Arthur have made it a norm build on their existing industry’s good
practice by actively exploring the opportunities that are aimed at improving the livelihood of the
local communities. To achieve this, the project managers have reviewed their purchasing
policies as well as the policies to ensure that they greatly contribute to the utilization of the local
businesses. Additionally, the firm has sought to work in collaboration with the Musselbrook
Shire Council, along with other organizations that include the Chamber of Commerce to come up
with different ways of creating more opportunities for the local businesses.14 The Upper Hunter
Community Services (UHCS) in collaboration with Muswellbrook Council (MSC) have
developed a Community Building Project, created new positions at the UHCS, including the
13 O’Faircheallaigh and Ciaran, Social equity and large mining projects, 99.
14 Owen, John and Kemp, Mining and community relations, 17.

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MSC. This has been facilitated by the funding from BHP Billiton Mt Arthur Coal in
implementing development strategies as well as offering new community program.
3.5 Structuring of Community Relations
As an extractive firm, BHP Billiton is aware that their operations have a lot of effects on
human rights and they owe to the community. The firm addresses all these issues through their
core business practices.15 These practices comprise of local community programs and the labor
conditions. The company’s sustainability committee is responsible for the issues related to
sustainability and community relations. The firm has got a formal structure that is headed by a
senior public affair manager and has got representatives from the staff functions, including the
operations for assuring public relations.
3.6 Reporting on Community Relations Activities
BHP Billiton Mt Arthur Coal is concerned with the effects of the coal mining in the
Upper Hunter region. Responding to their concerns, the company began the Sustainable
Communities Project that was intended to understand the cumulative coal mining impacts on the
community, the environment, as well as the economy. Generally, the intention of this project is
to report on the community relations activities.16 This project covers the entire Upper Hunter
region that mainly focuses on Muswellbrook, the location of Mt Arthur Coal. The information
sources for reporting on community relations activities comprises of the community’s inputs,
previous studies that include the social impact assessments, among others. The gathered
15 Sadler, et al., Community development, 485.
16 Vitiello, Domenic and Wolf-Powers, Growing food to grow cities, 519.

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information is then integrated and assessed to make predictions on the likely future effects and
develop opportunities that can be used to respond to these effects.
Conclusion
There has been concern that has organizations generate profits, they should also be
concerned with the community relations activities. Firms have been pressured to incorporate
community inputs that display their value for the involved communities. For instance, in the case
of the mining companies, there adopt different ways in contributing to the community’s
sustainable development. The communities stand a high chance of being affected by the
environment and the social impacts that result from mining. NuevaUnion, for instance, is a
copper-gold-molybdenum project that is located in Relincho. This company has deployed
executives at every point of their operations who are responsible for making sure that public
relations activities are beneficial to the communities. For instance, the project came up with a
soccer field that would help the surrounding communities to have a sense of belonging.
Nonetheless, the Mt. Arthur Coal Mine in Muswellbrook have developed a Community Building
Project. This has been made possible by the collaboration between the Upper Hunter Community
Services (UHCS) with the Muswellbrook Council (MSC). The team responsible for
sustainability and community relations is Mt Arthur Coal Mine’s sustainability committee.
Hence, it is evident that the two companies have different approaches regarding community
relations activities.

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