MAC: Mines and Communities

Sustainable Development Unsustained: A critique of the MMSD project

Published by MAC on 2002-04-17

Sustainable Development Unsustained: A critique of the MMSD project

Prepared for the Society of St Columban by Nostromo Research

London, April 17 2002

In one of those tales which used to be called "moralities" - and may have originated in India or Sri Lanka - a posse of philosophers gathers in a cave. Each invites the other, just by touch, to examine the object in the centre of the darkness, then say what it is. Touching a leg, one of the wise men promptly declares it an ancient mango tree. Another, fondling the trunk, is convinced he's located a python. A third - who's reached for an ear - loudly announces discovery of a new variety of lily pad. And so it goes on. Not one of our Wise Men takes either the time, or has the insight, to identify the animal for what it really is - a bloody big white elephant.

Just as this critique was being finished, the Mining Journal published comments on the MMSD report from one of mining's most eloquent aficionados. [Philip Crowson's letter, published in the Mining Journal of April 12 2002, was co-signed by David Henderson of the Westminster Business School, London].

Philip Crowson works for the Centre for Energy, Petroleum and Mining Law Policy (CEPMLP) at the University of Dundee, Scotland. For several years he was Rio Tinto's chief economist and is the author of a large number of works on metals markets, pricing, and mine viability. Crowson was the only mining industry representative of any note to intervene at the UN conference on the environment and development (UNCED) in 1992. Here he argued that patterns of mineral discovery, along with improved extractive technologies, would always yield new supplies of essential metals; those who claimed sources were running scarce due to the profligacy of the industry had got it hopelessly wrong. He has since modified his views, but is certainly no friend of liberal mining critics.

Little surprise, then, that he has now trashed MMSD as the "flawed outcome of a flawed process". He finds its introductory pages "…no more than a recycling of currently fashionable ideas and phrases, preceded by an alarmist sketch of the world today and laced with some crudely misleading economic history." Crowson cannot stand the idea that the MMSD team has now "dignified" NGOs as "civil society". He deplores the "working assumption" that miners would need a "license to operate" through "multistakeholder engagement" before they can lift a sod of other peoples soil. "Disproportionate weight is given to [the arguments of] participants other than national governments, while the problems that may arise from accommodating interest groups such as NGOs and local communities are not squarely faced". If implemented, the MMSD's current recommendations would be "less effective, not more, in contributing to the general welfare".

It's worth quoting Crowson's arguments for several reasons.

First, he undoubtedly represents the views of many executives in his industry. But these are opinions they will be reluctant, if not foolhardy, to publicly divulge at this time. The prime reason for Rio Tinto, AAC, Western Mining and six other companies launching their Global Mining Initiative (GMI) three years ago, was that their credibiilty had sunk to an all-time low. Opposition - specifically from communities on or around exploration and mining sites - had reached an all-time high. This had not only lengthened - sometimes to breaking point - the lead times between conceiving a project and constructing an actual mine. It had also contributed in the previous few years to a reduction in institutional funding for some projects and in particular for exploration.

This is not the place to go into detail on how the architects of the GMI saw the MMSD process encapsulating their own agenda. But the choice of the International Institute for Environment and Development (IIED) in London, as the project initiator, was no accident. It was certainly not just because this NGO knew lots about "development" but almost nothing about mining, and could therefore be relied on to be "neutral": Rio Tinto's hand (or more accurately those of its chairman Robert Wilson) can be seen, not only throughout the process, but well before its official launch. During the late nineties, Rio Tinto had been the first big miner to attempt to engineer "engagement" with its critics, part of the avowed object being to winnow out those agencies and NGOs with whom the company could work from those they needed to marginalise. The chosen process was a series of social and environmental forums (and at least one closed meeting with a few leading development agencies), held in London and Australia. Richard Sandbrook and other colleagues at IIED collaborated with Rio Tinto to try and refine these forums, making them acceptable to a broad band of British NGOs. But the experiment died when the forums were boycotted by almost every knowledgeable critic of the company. Soon afterwards, Rio Tinto enlisted the World Business Council for Sustainable Development (WBCSD) to formally recruit the IIED as head of the Mining, Minerals and Sustainable Development project. (The WBCSD's own progenitor was the Business Council for Sustainable Development, set up at the UNCED conference of 1992, partly to dislodge the UN Center on Transnational Corporations).

At this year's (2002) Rio Tinto annual general meeting, Wilson formally welcomed the concluding stages of the MMSD project, commended the draft report as a job well done, and promised an eager industry response to it at the GMI meeting, to be held in Toronto during May.

He could do little else, since the entire exercise has not only relied overwhelmingly on finance from the industry, but also on data and contacts from within mining circles and some NGOs which already had forms of engagement underway with companies. If industry were to reject the MMSD process at this late stage - let alone in language resembling Philip Crowson's - the other key "actors" on which its viability depends (notably institutional funders, government Export Credit Agencies (ECAs), investment banks, the World Bank and UN agencies) might be more inclined to look for solutions to mining's "hard line" NGO critics. The growing fear of conventional mining companies is that they now really do face the sunset of their years; that, however much they clamour for the opening up of new areas, they won't get the finance to turn a deposit into a working mine. This is why their spokesmen have sought so strenuously to identify, in the public mind, mineral extraction and processing with generic sustainability. That the MMSD itself accepts the equation, virtually without debate, is its greatest single flaw.

So the GMI will not throw the MMSD per se out with all its bilge water. Company executives can quote any of its "findings" with self-satisfaction and self-congratulation. What mining CEO would dispute MMSD's claim that "[mining] companies can help strengthen society's ability to solve environmental problems of all kinds (sic)"? (As the German philosopher, Hans Magnus Enzensberger, pointed out three decades ago, this is the compensatory role which extractive multinationals - he instanced Royal Dutch/Shell - have been carving-out for themselves since the rest of us discovered they were seriously polluting the planet). However, MMSD has refined this formula even further: one example being its spurious claim that an inventory of flora in West Papua (which it calls "New Guinea") "would [not] have been created (sic) if not for the support of PT Freeport Indonesia" [MMSD Daft Report, London, Chapter 10, page 40]

A goodly chunk of the report's Chapter 10 discusses who should bear the responsibility for clearing-up past or abandoned wastes. Clearly the industry cannot do so and remain economically viable. MMSD is in no doubt that the rest of us will have to bear these costs (if they're met at all) since "we" have reaped the rewards of falling metal prices - presumably in fast cars, microwaves, deep freezers - over many years. ("Those who benefited from failure to internalise environmental costs in the past were, in economies based on competition, past consumers who got lower prices for what they consumed" [Chapter 10, page 23]) This type of market-based "solution" gratifies capitalism's apologists no end, while completely failing to redress the structural inequalities that the poor have inherited over many generations.

The second reason Crowson's views should not be peremptorily dismissed is that, in short compass, they cut to the quick of the myth that sustainable development - as defined by Brundtland and embellished by UN development agencies and "civil society" - is compatible with current modes of mineral exploration, excavation, processing and waste disposal. If MMSD had acknowledged from the outset that mining, as opposed to minerals usage, was incompatible with sustainable development, it would have risked being left - if not without a project, then certainly without corporate sponsors.

But others could then have taken up the much more coherent and comprehensible task of identifying those mining methods which are clearly unacceptable, as well as ones which could be open to negotiation. Before bounding uncritically into "multi-stakeholder" forums, they could also have critically analysed the goals of different modes of engagement and exchange. Above all - and from project conception - they should have been able to identify the crucial designers of the process: local communities, workers, small-scale miners and women.

The MMSD spectacularly flunked these issues. Above all it drew Indigenous community representatives into its process only towards the end, having spectacularly ignored them at the outset.

The only truly practical environmental recommendation it now comes up with is that riverine disposal of tailings should be banned [Chapter 10, page 27]. (It's reasonable to speculate that, unless BHP - now BHPBilliton - had renounced the practice thanks to the costly expensive disaster of its Ok Tedi, mine in Papua New Guinea, MMSD might not have ventured even this modest proposal).

The report completely fudges what, for a growing number of Asian-Pacific Indigenous communities, is the equally harmful practice of deep sea tailings disposal, and simply parrots the industry's position: "[T]here is little agreement or evidence about [STDs] long-term effects…In some circumstances deep-sea mine disposal might be an option deserving serious consideration - when the mineral deposits are on islands that have little spare land, when available space is at risk of flooding or when the stability of land disposal facilities is uncertain because of high rainfall or seismicity".

In addressing other dubious extractive techniques - SX-EW, heap leaching, and HPAL (High Pressure Acid leaching) - the MMSD is equally complacent. For example, HPAL is commended for its lower capital and operating costs and superior metal recovery which "may have a significant effect on the location and nature of nickel mining in the future" [Chapter 6, page 29]. There is absolutely no recognition that - as recently dramatised in Mindoro, the Philippines - this "new location" factor may sound the death knell for some traditional farming or fishing communities.

Are these lacunae (some critics may call them betrayals) the result of pandering to individual companies or consultants (including those on the MMSD's Assurance Group)? Perhaps. More likely they derive from implicit, yet untested, assumptions lying at the core of MMSD. One is that new technologies, by ostensibly reducing some unsustainable inputs (notably energy and land), must be allowed much more field experimentation before they are written off - even if they sacrifice specific community and environmental values. A second is that greenfield projects are implicitly less dirty and dangerous than brownfield ones (even when revived and overhauled). A third is that small and medium sized companies are inevitably greater socio-environmental vandals than the likes of Rio Tinto, BHPBilliton, Anglo American, Freeport, Phelps Dodge or Coal India Ltd. Not only are these assumptions highly suspect, they are nowhere tested to instruction in the report.

We therefore find MMSD endorsing some of mining's worst endeavours, while waving the banner of "best practice". Its report, as it stands, is one which captains of the industry will welcome for what it licences, disregard for what it challenges in their basic thinking, and hold up - all five hundred pages - as an earnest of their readiness to consider (while not actually implementing) fundamental changes.

It is not really surprising that Philip Crowson should attack MMSD in terms strikingly similar to ones employed by those who have learned to mistrust almost every promise made by mining companies in recent years. Ironically, both parties to this longstanding conflict have got what they expected from the MMSD process: confirmation that it was and is "fatally flawed". It was a project neither of them really wanted but for diametrically opposite reasons. Regrettably, now that MMSD reaches obsolescence, those who may suffer worst loss of influence are the groups which did go along with its ill-conceived premises and parameters - such as around 150 Indigenous persons, several major NGOs (including WWF and Conservation International), a roll-call of disparate "experts" and some trade union bodies.

Sprinkled through the report are references to numerous multilateral initiatives. It's difficult to tell what individual weight MMSD gives to these. However, eight "candidates" for a Declaration on Mining, Minerals and Sustainable Development are listed. Except for the ILO and the UN Rio Declaration of 1992, all of them are corporately led or influenced. [Chapter 16, page 10]

Of perhaps more concern, however, is the report's recommendation for the formation of new bodies and new initiatives. When the MMSD first outlined its agenda critics warned it would be drawn inexorably into approving a greater role for "actors" which had failed to comprehend Sustainable Development, specifically as defined and implemented by rural and Indigenous communities. Where would the World Bank/IMF end up in the rank of MMSD proposals? After all the Bank has played the major role in undermining sovereign state regulation of the industry through imposition of Structural Adjustment Programmes (SAPs). For more than two decades it had savaged many protective national mining codes in favour of increased foreign penetration, influence and resources plunder. The MMSD ignores all this disturbing history. (At one point it gratuitously dismisses all opponents of "globalization" as if they were confined wholly to the North). Nor does it anywhere critique the World Bank's recent proposals to dilute its already weak guidelines on Indigenous Peoples.

Having defined the Bank's permitting process as the global standard for other funders to follow [Chapter 6, page 34], it is hardly surprising that profound doubts about the Bank's integrity, objectivity and procedural capacity, play no part in the report. The Bank's current EIR (Extractive Industries Review) is mentioned, but those strident criticisms of it, made recently by a raft of environmental and human rights NGOs, receive no acknowledgment.

What of the United Nations? Many consider this the second multilateral development agency to have blotted its copybook by snuggling up (through Kofi Annan's Global Compact) to multinationals with appalling reputations. Some claim that the UNEP has also compromised its integrity (for example, by sealing a deal with Rio Tinto). But MMSD greets the Global Compact without reservation; the UNEP Declaration (on sustainable development practices) is also commended [Chapter 3, page 14].

Having said that, we don't find MMSD unequivocally recommending that these two agencies should lead the mining industry towards sustainable development. Some observers will view this with concern: they still place faith in the reform of the World Bank and its vetting procedures, or are attracted by the concept of an Ombudsman (such as already employed by the World Bank-IFC-MIGA, or working for the Australian development agency, Oxfam-CAA). There are also some who believe the UN can be brought back from the brink of hopeless surrender to corporate influence. But even those who don't have confidence in the World Bank or the UN should be concerned at the "scatter gun" effect of setting-up new bodies as recommended by the MMSD. Won't this deter, rather than encourage, radical analysis of the roles of extractive multinationals? Would these groups not be forced to compromise their function as "standard setters" by reducing their demands to the lowest common denominator ? Surely, the greater the number of new initiatives, the less likely that any of them will be accepted as a regulatory body with the capacity to investigate and police the violations of an enforceable code?

And here is perhaps the final irony in Philip Crowson's damning of the MMSD. He complains that the project has wilfully undervalued the role of governments compared with that of "other participants". Crowson doubtless sees "stable" governments as the natural ally of corporate mineral expansion; his own organisation (the CEPMLP) has been at the forefront of forging such relationships. Yet the point is one which even his most implacable critics can partially concede. They would argue that it is only governments - however ill-equipped, insensitive and sometimes downright destructive they have proved with regard to safeguarding the rights of their own peoples - which can protect against the industry's worst violations. However, the draft report spends more time elaborating on the weaknesses of governments, than it does asking what can be done to strengthen democracy and substitute the voluntarism beloved of the companies for the mandatory role which elected officials should fulfil.

The mining industry and the World Bank/IMF have been able to write many of their own rules, of entry into land, tax breaks, and other concessions, for around a hundred nation states. To continue along this route suits the industry to a tee, because the process already weakened much opposition to mining in several nominal democracies (such as Papua New Guinea, pressured by BHP and Rio Tinto; or the USA's OPIC agency succumbing to the threats of Freeport). Governments have been corrupted (notably in west and central Africa, but also in the North) and forced to privatize crucial state assets (as in Peru, Brazil or Zambia). Increasingly they have become over-dependant on fickle private financing, or been exposed to tariff dissolution (as in India). Instead of dissecting and exposing these malign new factors, or proposing radical antidotes, the MMSD pitches the role (and rules) of state mining governance at the level of a miscellany of all the other "actors". Ostensibly the report places a high priority on honest, open and democratic administration. It is therefore all the more remiss when it fails to comprehend the history or present dangers of corporate influence on lawmakers and politicians.

The MMSD timetable has, from the start, been primarily determined and constrained by the mining industry. The forthcoming Toronto GMI-ICMM conference in May will succeed the official demise of MMSD and see official lift-off for the International Council on Mining and Metals (though this has been in existence for some months already and has itself absorbed the International Council on Mining and the Environment). Whatever miners and the ICMM do with the report - and they, above all others, will be able to "cherry pick" it - both the report's occasional objective analyses and its rare condemnations of current practice are fated to be ignored or dismissed. (Guess who's coming to dinner to personally launch the final MMSD report in London? None other than Robert Wilson, Rio Tinto chair, founder of the GMI and vice-chair of the ICMM).

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