Barrick Gold Corporation - Dealing with Local and International Stakeholders - Assignment Example

Name Instructors name Course Date Introduction Barrick Gold Corporation has been known as the world’s biggest gold mining company. It was founded in 1980 by a man known as Peter Munk. Barrick Corporation is based in Toronto, Canada and is based on the principle of responsible mining. For years Barrick has sought to improve the living conditions of the areas in which it practices mining. it takes social responsibility as a major backbone of its endeavors. Barrick, however, still faces attacks from community due to various societal issues. Regardless of everything Barrick has sought t9odofor society note very one has warmed up to the company. This will be shown in the discussion below. Q. 1&2(a). Primary stakeholders and handling of their concerns Stakeholders of the Barrick Corporation have all been affected by the company’s determination to grow and create an impact on society. We see that most of the problems that Barrick has faced over the years as Munk calls it,” a perfect storm” has been a result of its stakeholders and their reaction to most of the things that the company undertakes. There are many categories of stakeholders to the company, these are: suppliers, the government, employees, customers, owners, community and investors Margaret (2010). All of these have had a complaint against Barrick and have required affirmation of their needs by the company. We see that regardless of the roadblocks the stakeholders concerns create on the development of the Company Barrick has effortlessly continued to give this affirmation. It has continued to deal with each and every issue at its point of concentration. The government has raised concerns about the operation of Barrick. We see that before Barrick could begin the project at Pascua Lama it had to help to negotiate a treaty between the government of Chile and Argentina to allow the gold that would be mined to cross the border on conveyer belts into the country of Argentina. From this we see that Barrick knew that it had to be on the right terms will all stakeholders therefore had to participate in the making of this treaty. This treaty is a show of responsibility on the company’s side because without it there would have been rivalry which we see is avoided due to the company’s efforts Margaret (2010).Furthermore, we see that the Chile government had suspended pre stripping in their country in regard to workers health. We see that Barrick made an effort to improve and talk to its stakeholders on the measures being taken t5o ensure workers safety Pav (2013). Court proceedings were also in the equation that Barrick participated in and ensured were cleared in time. For the development of the company, specifically the Pascua Lama project Barrick did everything in its ability to ensure harmony with the government. Barrick also faced a challenge from governments that asked for a larger share of profit in the countries that seemed to be promising. However we see that Barrick was able to curve all these challenges by heeding to regulations and holding conferences to cumber misconceptions about its relation to the government. However, I feel that Barrick should have taken more measures, regarding workers safety to prevent the suspension by the Chile government. Another stakeholder of the company that had major concerns about the operations of Barrick was the community Pav (2013). At a high percentage, the most problem inducing stakeholders for the company was the community. We see that the community went to the extent of riots to stop Barrick from carrying out some of its operations. The company was based on a motto of responsible mining; it sought to be socially responsible in its areas of mining. However we see that some of these efforts were not appreciated Catherine (2013). Barrick Corporation practiced very careful community planning and invested a lot of money on community development. In fact, The Chile and Argentina government had initially been in support of the Pascua Lama project because they believed it would bring prosperity to an impoverished region and create economic benefit and job opportunities. This is what Barrick used to aim at in all its projects. Barrick used to spend a lot of money investing in hospitals, buying of medicine, development of education and water projects in communities. It was hence terms as one of the best companies in terms of corporate responsibility in North America. Pascua Lama Project was one of the main instances in which the communities concerns took a toll on the company’s progress. There were very many instances of friction such that Barrick was under attack from all corners. I tend to believe it must have been a very stressing time for the managers and share holders of the company. In Pascua Lama the company held information campaigns to educate the residents on what the company intended to partake in the region and how they would contribute to improve the community Reuters (2012). The company also held disclosure meetings and performed information from door to door. This was able to reach at least 40% of the total population of the region. In addition to this, the company created ads on radio and television. It also put up billboards to pass on the information. As an extremely beneficial action, the company also set up information offices all over the region. The company held 1000 meetings to respond to the concerns of the people in the community. This was a very important measure since it made the community assured that the company was keeping into mind their general welfare. For the community, Barrick put up a pediatric ward and funded school buses to take children to and from school. Jimmy (2006) it also built houses to accommodate the victims of an earthquake. Moreover, it collaborated with the company at Intel to provide laptops to schools. As if this was not enough, the company went ahead to provide a dental hygiene programs in the area and paid to create a book and educational program on the history of the valley’s local indigenous tribe. It also contributed a significant amount of money to improve the water system in the country. In addition to this, it ran programs to equip the local people with skills to work on the mines and supplier development Jorge (2013). All this was in favor of one of its primary stakeholders, which was the community. However, regardless of all the efforts the company put in impressing the community and creating opportunities that would only be of benefit to them, not everyone was impressed. Some insisted that the main aim of all the amenities the company had put effort in developing was to blind the community so that they would not speak of the many demerits caused by the development of the mine. In my opinion, the community was very ungrateful Allison (2010) .The Company had parted with m9illions of dollars yet they still insisted it was just to appease them to cast a blind eye at the destruction the company would cause. They continued to complain that the frequent appearance of the Barrick company logo on many amenities in the town was making the town feel like a company town Julie (2013). Some people even claimed that Barrick had tried to help candidates in the mayoral elections if they were supporters of Barrick. Opponents also said that the money poured into the water project was hush money. Meaning: money that had been used to shut the people who would be oppressed by the mining activities up. Some even insisted that the programs to educate people on the history of the indigenous language of the area were dividing the people of the area by teaching traditions that were not in harmony with those of the culture of the region. This took a major toll on Barrick, we see that these were concerns that had to be addressed else the company would face major opposition in its aim to develop grow. Barrick tried to look into these concerns in various ways. He held conferences to speak to the people and address their problems. More so, we see that Barrick even stopped some of its projects to move glaciers in favor of the people and what they wanted. We see that Barrick genuinely cared for community and worked to ensure that there was no environmental deprivation by the mining activities Julie (2013). Barrick handled the concerns of community by ensuring that he responded to every claim through public media so that any doubtful mind may receive answers. Moreover, we see that he ensured to ask for environmental permits and correct errors that were made to ensure safety of anyone in the region of Pascua Lama. I think that Barrick handled the communities concerns to the best of his ability Jorge (2013). The question of whether his attempts to improve society were a measure to win people into accepting its activities is debatable. However, whether to appease the residents or not the amenities were of great benefit to community. Shareholders and employees were also affected by the storm that surrounded Barrick. Many of them had concerns about the drop in the financial accounts of the company. Most of them also feared for their places in the company and their security regarding the sustainability of the company. Barrick, through Peter Munk, ensured that the concerns of these individuals were addressed to avoid any indignant feelings. This is shown during the annual meeting that was held at Metro Toronto Convention centre. He explained to the stakeholders and employees that the reasons that had made them develop mining areas in developing nations had changed after the beginning of the Pascua Lama project. He explained that he did not know that the company would face so much difficulty after beginning the project. He explained that everything that was happening to the company was a surprise Reuters (2012). Even in the whirlwind that was going around Barrick, it made sure to keep the shareholders up to date with what was happening. An example of these is shown when the president of Barrick Corporation told the shareholders that there had been no adverse effects caused on the water supply system or the glaciers. Q.3. Attaining a social license From the experience of Barrick we see that so much is required to attain a social consensus for a mining company. Very many people are opposed to mining companies. They are fixated on the amount of destruction it has to the surrounding. An example of this is vividly shown by the struggle Barrick has gone through over the years. We see that years have been put in negotiations only to ensure that everyone is comfortable with the presence of mining activities in a region. Barrick has also spent millions of dollars trying to improve the living conditions of the people around the Pascua Lama project in vain. Catherine (2012)Despite its endless efforts to show society that the presence of a mine in the region is of advantage to the people it still continued to face severe opposition. In fact Munk once said that the accusations against Barrick were exaggerated. This is true; mobilization of people against a certain organization is easy if it based on exaggerated accusations and these was severely experienced by Barrick. From this we see that it is very hard to come to a social consensus and get a social license for a mining company. According to the narration of the experience that Barrick suffered we see that it is almost impossible for accompany to go on with its operations without complete social approval. The strength of the masses is not to be trivialized. The masses once against a project are able to create a major stumbling stone Jimmy (2006). It is absolutely difficult to go on as planned while ignoring what the community has to say. For this reason we see that Barrick really tried to mobilize the masses. This was done by door to door discussions, ads and even direct consultations that were enabled by creation of offices in the region. We see that Barrick tried to equip the masses with information about what will be going on at the mines and how it will affect them. It also tried to develop the region by funding various programs that would be of benefit to society Catherine (2012). All this was mainly to gain support and show society that Barrick was not in favor of destruction .However, despite all these efforts and creation of awareness we see that Barrick still faced problems due to the few in society who were still opposed to the idea. We see that regardless of what Barrick had already achieved it had many other points to prove to those who were in opposition. It even came to a point where the founder of Barrick, Peter Munk, said that there was no need to concern themselves with all that was being said because some of the individuals were not genuine stakeholders but people who were just not welcoming to development. From this we see that it is almost impossible for a company to proceed without full support from the social setting. Q.2 (b) Dynamics of dealing with local and international stakeholders After critical analysis of the problems that Barrick Corporation was going through we see that the dynamics when dealing with local stakeholders are different from the dynamics of dealing with local stakeholders. We see that Barrick was familiar with its initial environment. The problems arising from the development of mines were less severe as compared to those that arose when it decided to pursue international mining. Policies and regulations are different for different countries. There are a variety of things that vary from country to country which thus made it difficult for Barrick to adapt to and have the ability to navigate. We see an example when Barrick enabled to develop a program that would educate the students on the history of the valleys indigenous people. We see that the people claimed that the program was dividing the people in the region because the traditions that were being taught were different from those of the people that occupied that land. Jimmy (2006) for one who is not a native of the land, the reasons behind these claims would be difficult to understand. If it were a local situation the problem would not only have been easy to solve but also would probably not have arisen. We also see that Barrick had to form ensure that the governments of two countries came to an agreement before the mining operations began. This is a clear example f the hustle a company has to go through to deal with international stakeholders than local stakeholders. Q.4. Environmental consequences Development has consequences. Some of these consequences are environmental. When development is carried take place out in a region we see that there are so many changes that take place that affect the environment. Some of these may involve cutting down of trees for example, in an area where a building has to be set up trees may have to be cut down in order to pave way for the construction. Jimmy (2006) We see that cutting down of trees is deforestation. This particular activity may affect the weather of a region. Biology explains how trees attract rainfall therefore deforestation may eventually lead to desertification of a region. Moreover we see that cutting down of trees is destruction of habitat of wildlife which thus results in their migration or death. This is an adverse effect on the environment. Moreover, lack of trees may lead to accumulation of carbon in the air that usually results in global warming: A situation that most environmentalists are trying to overcome. Another effect of development on the environment is introduction of new buildings and infrastructure that did not initially exist. An example of these is roads and buildings. The effect of these on the environment is the result of urbanization. In scenarios where development is taking place more communication and transport infrastructure is put up to facilitate the functionality of the various industries that are being set up in a region. For the transport of goods and services roads are required thus proving the need for transport infrastructure. Information is also required to be passed from one person to another thus telecommunication lines may be visible within no time. We see that these results in a region having a completely new face. In the examples above, we see that some effects to the environment can be positive while others are negative. Some are for the greater good of a region while others merely serve to facilitate the deterioration of a region. Even in the development of Barrick Company we see that there were effects some of which were positive while others were negative, this is as discussed below: The main worry of the people as Barrick was taking action in their regions is contamination. In the region around the Pascua Lama project we see that the people’s main concern was the contamination of their water supplies. Initially their water supplies were not also very conducive for use therefore they feared that with the mining activities the supplies would become intolerable. Reuters (2013). These concerns arose from the fact that mining of gold required tones of explosives in the mountains, cyanide and a lot of water for the extraction. A lot of water would be required to leach the cyanide in preparation of the mining. If this was not properly handled the residents feared that their water would all be contaminated with the cyanide and not be conducive for use. However, we see that Barrick was able to device a method to ensure that this did not happen. The Chile government had once suspended pre striping because it felt that the excessive dust was hazardous to the workers. Reuters (2013)Mining is generally hazardous to community. The dust and chemicals used are capable of severe pollution. Pollution ultimately results in global warming. Pollution may also cause illnesses among workers which is mainly the reason why Chile government had suspended pre stripping. Environmental effects resulting from Barrick mining were mainly harmful and adverse. We therefore see that some environmental effects are acceptable: Those that are of general benefit to society. Catherine ( 2012) However, some are completely unacceptable; those which are harmful to the well being of the environment and of those who reside in it. There are extremes to which environmental consequences can be affected such as cutting of trees in order to improve transport infrastructure. However, if the demerits outweigh the merits then development activities should be prevented. There are however those who are just an obstruction to development rather than tools to protect the environment. Q. 5. What I would Recommend Barrick may have problems convincing people in a different locality of the benefits of a gold mine in their region. The war that rose after the Pascua Lama project was aired on various forms of media and was witnessed all over the world. Moreover, the issue of pollution caused by pre-stripping and the suspension imposed on Barrick was also a major issue of discussion. This made it evident to the world that mining of gold was not safe. It would be difficult for Barrick to mobilize enough support for a gold mine. The problems that Barrick has had have adverse effects to its growth. For a company of its size, such a scandal would negatively impact its standing in the business space in which it operates. I would recommend that Barrick hires an environmental expert to conduct studies on the best ways in which the damage that has been done could be reversed. A public relations expert would also be very helpful in trying to repair the reputation of the company. 6. Long term Implications The long term implications for Barrick’s future are that the company may find it hard to obtain licensing for future developments. The future may also be in jeopardy since the consumer market may perceive the company as anti-environmentalist making it lose market share. The industry in general may also suffer from stricter regulations which may be passed as a result of the pollution scandal. The industry may find that adhering to new rules and regulations results in diminished profits since they may call for more regulation and monitoring that they may have to pay for. The standards for environmental responsibility should not be lowered for any reason regardless of whether the company is for human vanity. We see that the environment affects everyone even those who may not directly benefit from. For this reason all companies should ensure that social and environmental responsibility is important. In fact the standards should be higher for companies that derive profits from human vanity since the activities of such companies do not add much socio-economic value to society. Environmental and social damage is not justified for the reasons of vanity given that the implications of environmental degradation far outweigh the economic and social benefits which accrue from the benefits of the golf industry. Works Cited Catherine, S. (2012) “More than just cost are a concern at Barrick Gold’s. Pascua Lama Megamine. Montreal Gazette, December, pp. 14-16 Reuters, “Chile environment permit for Barrick mine was flawed----President” (2013) June, pp. 6-10 Barrick Pascua Lama Chilean Water Management System Factsheet (2009).pp 12-14 Barrick “Pascua Lama FAQ’s” (2010) http://www.barrick.com/operations/projects/pascua-lama/faqs/default.aspx (last accessed June 4 2010) Catherine, S. (2012) “In Arid Chile, Villagers Farmers divided over benefits of Water fund” Montreal Gazette December, pp 24-30 Benefits to the community summarized from Borders beyond Barrick blog posts (2007-2013) http://www.barrickbeyondborders.com / (last accessed March 3 2012) Catherine, S. (2012) “Clean Capitalism gets mixed results in Andes. Montreal Gazette. December, pp. 17-21 Jimmy, L. (2006) “Pollution: Losing some luster; With gold prices skyrocketing environmentalists are taking an aim at one of the worlds dirtiest industries” Newsweek April, pp 1-25 Barrick Stakeholder outreach activities summarized from Barrick’s “Pascua Lama FAQs” (2006) prepared by ERM November, pp 67-69 Barrick Pascua Lama Project Description (2010) http://www.barrick.com/operations/projects/pascua-lama/faqs/default.aspx (last accessed June 22 2013) Barrick’s Newsletter , Beyond Borders “Training helps fill local skills gap at Pascua Lama” http://beyondborders.com/2013/02/training-helps-fill-local-skills-gap-at-pascua-lama/ (Last accessed April 24,2013) Margaret, W. (2012), Our World needs more Peter Munks” Toronto Globe and Mail, June, pp, 1-3 Barrick Corporation annual report (2012) pp. 21-24 Historic details summarized from International Directory of Companies Histories (2000) Vol 34. St. James Press. http://www.fundinguniverse.com/company-histories/barrick-gold-corporation-history (last accessed January 14 2006) Peter Munks comments to Barrick’s Annual Meeting. (2013) http://www.gowebcasting.com/events/barrick/2013/04/24/2013-annual-meeting-of-shareholders/play/stream/7102 (last accessed April, 24 2013) Barrick Gold Corporation Pascua Lama Summary (2010) http://www.barrick.com/operations/projects/pascua-lama/faqs/default.aspx (last accessed February 28 2012) Julie, G. (2013) “Barrick shows progress on costs, cuts spending” Reuters April, pp. 24-28 Pav, J. (2013) “Peter Munk confronts Barrick’s Perfect Storm” Toronto Globe and Mail, April, pp.80-84 Jorge, D. T. (2013) “Barrick’s Glaciers, Technical Report on Barrick Gold on Glaciers and Periglacial environments at Pascua Lama and Veladero” Centre for human rights and environment, October, pp. 34-37 Allison, M., Euan R (2013) “Gold mine face new challenge in plummeting gold price,” Reuters, April, pp. 67-69 Read More