DEVELOPMENT AND APPLICATION OF STAKEHOLDER AND COMMUNITY RELATIONS POLICIES IN THE DEVELOPMENT OF A NEW MINING PROJECT IN ARGENTINA

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development and Investment
(Apr 2009)
CHAPTER 2A
DEVELOPMENT AND APPLICATION OF STAKEHOLDER AND COMMUNITY RELATIONS POLICIES IN THE DEVELOPMENT OF A NEW MINING PROJECT IN ARGENTINA
Kevin Fox
Rio Tinto
Buenos Aires

Kevin Fox was until March 2009, Project Director of the Potasio Rio Colorado on behalf of Rio Tinto, owners of the project from 2003 until the transfer of ownership to Vale in February 2009. The project is located in the Malargue Department of Mendoza province, Argentina. Kevin Fox graduated with a BA Honours degree in Geology from Trinity College Dublin in 1982 and obtained a Masters in Mineral Production Management, from Imperial College London in 1989. He has worked on numerous mineral exploration and development projects in a variety of countries in Europe, Africa and South America. His background is in geology, mineral exploration, resource evaluation and project development across a broad range of commodities. In working with Rio Tinto for over 20 years he has been involved in the development and application of Company principles and Standards in the area of Community and Stakeholder Relations in many projects, including those requiring relocation of communities in order to allow development of mining projects. Development of Community Standards in Rio Tinto has been driven by a need to provide guiding principles for project implementation staff which would allow the development of long term, mutually beneficial relationships characterized by transparency and respect, while providing a business basis for Rio Tinto to allow a sustainable approach to be maintained in mining projects development. As a geologist and later as a project development manager he has often been in the forefront of community liaison and engagement meetings, negotiation of agreements and implementation of policies. These have included interaction with nomadic pastoralist tribes in Namibia and Botswana as well as negotiation of re-settlement agreements with tribal leaders in Zimbabwe. In Brazil, he has been involved in negotiation of exploration permits in the Amazon Region with Federal, State, and local regulatory agencies. In PRC, one of the challenges facing the team charged with implementing Community relations and stakeholder engagement is the geographic span of the project across 5 provinces, and the diversity of stakeholders, some many hundreds of kilometers from the mining operation. This has required the project team to develop new approaches to stakeholder mapping, engagement and initiative building. The paper describes some of the approaches and actions taken and plans currently being implemented by the new project owners, Vale.

Introduction

The Potasio Rio Colorado Project is potentially, one of the largest ever foreign investments in Argentina and with an estimated initial Capital cost of greater than US$ 2.5B will allow Vale to develop a potash production facility of up to 4.3 million tonnes per annum, making Argentina the fifth largest producer of this key fertilizer mineral. The project has an expected life of at least 50 years and will require the construction of considerable infrastructure, in the form of transportation requirements and power generation. Project implementation will require establishment of the mining operation, using solution mining, a new mining technique in Argentina, and Processing plant at the mine site, as well as new transportation capacity in the Provinces of Neuquen, Rio Negro and La Pampa and a new port facility in the city of Bahia Blanca in Buenos Aires Province. Thus the project "footprint" extends across five provinces and one thousand kilometers and therefore touches a great variety of stakeholders across a huge geographic area.

The project is located in the Malargue Department of Mendoza Province, in a sparsely populated area with a semi-desert climate. Very low rainfall means there is little capacity for agricultural development and the main economic activity in the area is oil and gas production. The Potash resource is at a depth of approximately 1000m and occurs in a stratigraphic sequence which is well known as an oil and gas producer.

The project is currently in the Permitting stage and Construction is scheduled to start in early 2010, with a three year construction schedule. In anticipation of the development, the PRC project team has been working since the inception of the evaluation stage work in 2003, in order to put in place community and stakeholder relations programmes which would provide for sustainable and mutually beneficial relationships. Although the project will naturally be involved in the royalty and tax regimes as defined in the Mining Investment Law (MIL), the project management team recognized that in order to obtain the "social licence to operate" that would be required for such a large, long life operation, the PRC...