May 7, 2012 7:34 pm
Randgold looks to engineer local support
In the Democratic Republic of Congo, close to the border with Uganda, Randgold Resources is pressing ahead with work on its Kibali mine in the latest example of how mining companies must juggle local concerns with larger production goals.
A successful ramp-up of operations at the mine, which is expected to yield its first gold by the end of next year, should help lift the FTSE 100 group’s annual gold production from about 700,000 ounces to more than 1m by mid-decade. It also involves the tricky issue of relocating more than 15,000 people from in and around a gold field first developed under Belgian colonial rule.
In an area scarred by bloody post-colonial conflict that persisted into the past decade, Mark Bristow, Randgold’s chief executive, insists the project has not just won the support of the DRC’s government, but local people who are being relocated into newly built villages. Engineering such support is a delicate matter for major mining companies who are often accused of callously disregarding the welfare of people forced out by mine development.
As Kibali proceeds, concerns over the fate of a sacred mountain worshipped by the 8,000 strong Dongria Kondh tribe in India’s Orissa state has stalled plans by Vedanta Resources, the mining and metals group, to develop a bauxite mine aimed at meeting India’s growing demand for aluminium.
Elsewhere, protests by Andean farmers in Peru late last year saw the destruction of equipment at the Conga gold mine project, backed by Newmont of the US and its local partner Buenaventura. Opposition there has forced suspension of the project amid concerns on water supplies and the broader environmental impact of the venture. A decision to push ahead with that mine’s development is still to be taken.
Yet Kibali work remains on schedule on a project which is 45 per cent owned by Randgold, 45 per cent by AngloGold Ashanti, with the remaining 10 per cent owned by state-controlled Sokimo.
Speaking as Randgold delivered first-quarter results last week, Mr Bristow said a key aim of the Kibali development hds been to secure a “social licence” among local people, on a field that “we rent, rather than own” from the state. As well as winning government support through taxes and investment, Randgold is keen to demonstrate the principle that people who are moved should be better off than before.
Beyond painstaking engagement with the population affected, Randgold as operator of the project has also carefully cultivated support from the Roman Catholic church that is the dominant social institution in the area.
Construction plans for model town of Kokiza, being build to provide new homes for 14 settlements being cleared for the mine project, were unveiled last year.
More than 3,500 houses – built of brick with zinc roofs – are planned to accommodate 15,000 or more. In addition, a Catholic church complex with additional places of worship, along with schools, seven medical centres, public market places and a government office are being built.
People being moved can expect 50 per cent more floor space than their former accommodation, water and electricity connections and full title deed to their new homes, says Mr Bristow.
Building progress has not been entirely smooth, with roofing work needing to be remedied after poor installation. But Mr Bristow estimates construction of the relocation settlement is 40 per cent complete as houses are being built at the rate of 60 a week. That rate of construction, though clearly at a far lower specification than UK homes, has transformed Randgold into one of the FTSE’s leading housebuilders by volume.
Randgold’s approach to Kibali goes beyond many other commitments made by western natural resources companies to win the battle for local support. Such examples include the $50,000 by White Nile Petroleum in social spending in 2006 as it sought to develop disputed oil fields in Southern Sudan ahead of independence. Among items then supplied to garner community support were fish nets, maize grinding machines, brick making machines, generators, and sewing machines.
However, dealing with conflict and disputes over the sovereign ownership of assets, as well as engineering local support for projects, remains a key issue for many natural resources companies.
Randgold remains heavily exposed to Mali, where a return to full civilian rules following a coup in March is still being resolved. Its other main asset is in Ivory Coast, which was hit by a forced suspension of gold sales in 2010 for several months following a disputed presidential election.
A successful ramp-up of operations at the mine, which is expected to yield its first gold by the end of next year, should help lift the FTSE 100 group’s annual gold production from about 700,000 ounces to more than 1m by mid-decade. It also involves the tricky issue of relocating more than 15,000 people from in and around a gold field first developed under Belgian colonial rule.
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As Kibali proceeds, concerns over the fate of a sacred mountain worshipped by the 8,000 strong Dongria Kondh tribe in India’s Orissa state has stalled plans by Vedanta Resources, the mining and metals group, to develop a bauxite mine aimed at meeting India’s growing demand for aluminium.
Elsewhere, protests by Andean farmers in Peru late last year saw the destruction of equipment at the Conga gold mine project, backed by Newmont of the US and its local partner Buenaventura. Opposition there has forced suspension of the project amid concerns on water supplies and the broader environmental impact of the venture. A decision to push ahead with that mine’s development is still to be taken.
Yet Kibali work remains on schedule on a project which is 45 per cent owned by Randgold, 45 per cent by AngloGold Ashanti, with the remaining 10 per cent owned by state-controlled Sokimo.
Speaking as Randgold delivered first-quarter results last week, Mr Bristow said a key aim of the Kibali development hds been to secure a “social licence” among local people, on a field that “we rent, rather than own” from the state. As well as winning government support through taxes and investment, Randgold is keen to demonstrate the principle that people who are moved should be better off than before.
Beyond painstaking engagement with the population affected, Randgold as operator of the project has also carefully cultivated support from the Roman Catholic church that is the dominant social institution in the area.
Construction plans for model town of Kokiza, being build to provide new homes for 14 settlements being cleared for the mine project, were unveiled last year.
More than 3,500 houses – built of brick with zinc roofs – are planned to accommodate 15,000 or more. In addition, a Catholic church complex with additional places of worship, along with schools, seven medical centres, public market places and a government office are being built.
People being moved can expect 50 per cent more floor space than their former accommodation, water and electricity connections and full title deed to their new homes, says Mr Bristow.
Building progress has not been entirely smooth, with roofing work needing to be remedied after poor installation. But Mr Bristow estimates construction of the relocation settlement is 40 per cent complete as houses are being built at the rate of 60 a week. That rate of construction, though clearly at a far lower specification than UK homes, has transformed Randgold into one of the FTSE’s leading housebuilders by volume.
Randgold’s approach to Kibali goes beyond many other commitments made by western natural resources companies to win the battle for local support. Such examples include the $50,000 by White Nile Petroleum in social spending in 2006 as it sought to develop disputed oil fields in Southern Sudan ahead of independence. Among items then supplied to garner community support were fish nets, maize grinding machines, brick making machines, generators, and sewing machines.
However, dealing with conflict and disputes over the sovereign ownership of assets, as well as engineering local support for projects, remains a key issue for many natural resources companies.
Randgold remains heavily exposed to Mali, where a return to full civilian rules following a coup in March is still being resolved. Its other main asset is in Ivory Coast, which was hit by a forced suspension of gold sales in 2010 for several months following a disputed presidential election.
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