Mining, Corporate Social Responsibility and the "Community": The Case of Rio Tinto,Richards Bay Minerals and the MbonambiAuthor(s): Paul KapelusSource: Journal of Business Ethics, Vol. 39, No. 3, Resource Extraction Industries in theDeveloping World (Sep., 2002), pp. 275-296Published by: SpringerStable URL: http://www.jstor.org/stable/25074842 .
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Mining, Corporate Social
Responsibility and the
"Community": The Case of
Rio Tinto, Richards Bay Minerals and the Mbonambi Paul Kapelus
ABSTRACT. Mining companies have long had a
questionable reputation for social responsibility, espe
cially in developing countries. In recent years, mining
companies operating in developing countries have
come under increased pressure as opponents have
placed them under greater public scrutiny. Mining
companies have responded by developing global cor
porate social responsibility strategies as part of their
larger global business strategies. In these strategies, a
prominent place is given to their relationship with
local communities. For business ethics, one basic issue
is whether such an approach
to corporate responsi
bility is likely to effectively address the development concerns of local communities in developing coun
tries. This paper addresses this question by investi
gating how the corporate social responsibility agenda
Paul Kapelus is a co-founder of the African Institute of
Corporate Citizenship (The views presented in this
paper are personal). Paul has been working in the field
of social responsibility for the past ten years. Initial
research began in the migrant workers hostels of
Johannesburg and continued whilst working on platinum mine in Organisational Development. Consultancy in
the field of social and environmental impact assessment
allowed Paul to work in a number of African countries on projects ranging from greenfields exploration through to privatisation. Paul undertook a BA (HONS) in social
anthropology at the University of the Witwatersrand, South Africa, and a Masters in the Anthropology of
Development at Sussex University, UK. On his return
from the UK he co-founded the African Institute of
Corporate Citizenship, a consultancy and advocacy
organisation. His work has focussed on corporate citi
zenship strategy, social management plan development, tri-sector partnerships and socially responsible investment.
of a major minor company has been implemented by one of its subsidiaries in South Africa.
KEY WOPJDS: corporate social responsibility, mining ethics, Rio Tinto
At the Rio Tinto head quarters in St
James Square, London, an anthropology
professor and his research assistant advise
the Rio Tinto mining operations around
the world on community affairs. They comment on the company's relations
with "the community", scrutinise five
year community development plans and
provide direction for engaging with the
community on sensitive cultural issues and
advice on resettlement. On their desks sit
various reference books including James
Ferguson's "The Anti-Politics Machine", "Civil Society" by Hann & Dunn and
literature dealing with mine ? aboriginal
relations in Australia, as well as internet
web site printouts from the British
Institute for Development Studies library.
They maintain files for storing articles
from the media about the operations at
different mine sites and actively "surf the
web" examining sites that campaign
against Rio Tinto.
On the northern KwaZulu Natal coast in
South Africa, Richards Bay Minerals
(RBM), a Rio Tinto subsidiary, is busy
preparing to relocate a number of house
holds situated within the demarcated
100 m mining zone. The team of com
-^g- Journal of Business Ethics 39: 275-296, 2002.
r" ? 2002 Kluwer Academic Publishers. Printed in the Netherlands.
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276 Paul Kapelus
munity development workers goes out
each day to support community develop ment projects in the adjacent Mbonambi
community. The projects are displayed to
the world in the Rio Tinto corporate
reports and magazines, on the RJBM web
site and on billboard signs next to the
development projects.
Enlightened corporations, including those in the
mining industry, have long been aware that it
may be in their interests to address issues of
concern to the local communities in which they
operate. The pragmatic logic involved in this
notion is quite simple. Local communities are
often in a position to impose costs on corpora
tions, with their ability to do so being a function
of the resources they command and their ability to organize themselves. What this has meant his
torically is that corporations have tended to pay more attention to those communities which have
more resources. More specifically, corporations have paid more attention to the concerns of
communities in developed countries in which
they operate than to those in developing coun
tries.
With recent processes of economic globalisa tion this simple truth has become more compli cated. For one thing, as corporations increasingly shift their production to developing countries,
they are finding that they are not the only ones
who are going global. Civil society, and more
specifically, environmental and corporate watch
dog groups, are also globalising and collaborating with civil society groups in developing countries.
As a result, corporations are facing increased
surveillance and criticism of their activities in
developing countries, as well as increased pressure to operate in a socially responsible fashion. For
their part, corporations are responding. As
the vignettes above indicate, large transnational
mining companies are changing as a result of bad
press, production delays and campaigns instigated
by civil society groups. By way of response, these
corporations are developing global corporate social responsibility (CSR) strategies
? which
employ the vocabularies of business ethics, human rights and development
- as part of their
larger global business strategies.
For business ethics, one basic issue that arises
in this context is whether such an approach by
corporations to this situation is likely to effec
tively address the development concerns that the
local communities in developing countries have.
It is this question that this paper investigates. I
examine this issue by way of a case study.
Specifically, I look at the global CSR agenda set
out by the mining giant Rio Tinto and how it
has been implemented by its subsidiary Richards
Bay Minerals (RJiM) in the Mbonambi Tribal
Authority of South Africa. The case study
analysis is based in part upon a series of inter
views with key figures in Rio Tinto, BJBM and the local communities in and around Richards
Bay conducted in 1999.1
In adopting a case study analysis in this paper,
my goal is primarily heuristic, that is, to explore the tensions that appear in the process and
the concerns that arise (rather than providing a
definitive evaluation of the effectiveness of the
particular policies and their implementation and
concrete steps to be taken to address shortcom
ings). Key aspects of the analysis involve the
investigation of how the company conceptualizes and employs the notion of "community" and
how its approach to these tasks is contested by stakeholder groups.
I. Context - transnational mining
corporations and their critics
The transnationalization of (the mining) industry
Over the last couple of decades transnational
corporations (TNCs) have experienced unprece dented growth. While in 1970 there were
approximately 7000 TNCs, by 1994 the count
had risen to some 39 000 parent TNCs and
20 000 affiliate TNCs (Nelson, 1998). Various
technical, organizational and political factors have
provided the opportunities for the increased
financial investment across the globe. These
include privatisation policies, liberalised invest
ment policies, the reregulation of mining activ
ities, new technology for global operations, traditional concerns about spreading financial
risks and more effective production processes.
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Mining, Corporate Social Responsibility and the 'Community' 277
Like TNCs generally, mining TNCs have
also been growing in recent years. As Reed doc
uments in his paper in this issue, the transna
tionalization of the mining industry is not
new. Commercial mining has been expanding
throughout the globe for more than 150 years, a
process that has largely been linked to the dom
ination of colonial powers. In recent years,
however, mining companies have stepped up their operations in developing countries. The
primary reasons for this are the liberalizing ten
dencies in the new global economy, noted above, as well as depletion of resources in developed countries.
The transnationalization of opposition
The mining industry has always provoked reaction to its operations, especially from local
communities. While this is true in both devel
oped countries and developing countries, oppo sition groups in developing countries have
typically enjoyed advantages in making their
demands heard due to greater resources, better
organization and more effective political repre sentation. The organizational advantages in
developed countries have included more active
and better resourced social movements and
NGOs (operating around such concerns as
human rights, the environment, the rights of
indigenous people, corporate responsibility,
etc.).
As mining TNCs are increasingly becoming
global corporations, so has opposition to them
become increasingly global. While many estab
lished NGOs in the developed world have long been international in perspective, they have been
taking a greater interest in issues related to
mining. As well, many new NGOs have been
established over the last couple of decades,
including a variety with a specific focus on
mining concerns. Both newer and more estab
lished NGOs have shown a strong propensity to
collaborate, not only amongst themselves, but
with organizations and local communities in the
developing world. The result has been the estab
lishment of networks of opposition to mining firms.
Particularly significant among the opposition to mining TNCs in developing countries has
been the emergence of increased activism by
indigenous communities, who are frequently
among the groups most directly and adversely affected by mining activities. Large numbers of
indigenous peoples are entering into conflict
with mining companies (Fabig and Boele, 1999;
Burger, 1987). Indigenous communities are chal
lenging mining companies on a wide range of
issues including profit-flows, headquarters' decision making procedures, representation on
the company board, rights to extract minerals,
compensation measures, reporting procedures and long-term strategies. Almost every aspect of
a business is scrutinised from a social responsi
bility perspective. These indigenous communities have benefited
greatly from the globalisation of opposition to
mining TNCs. In recent years a global network
of indigenous peoples organisations has emerged as a result of this larger opposition movement.
Members of the larger movement provide impor tant services, such as reporting on negotiations between mining firms and local (indigenous) communities. Such negotiations are often
relevant for other indigenous groups, even if they are being held on another continent, as deals
struck between one group and a mining
company can be used as reference points or
benchmarks for other groups (Broad, 1997).
Reports on such negotiations help to ensure
indigenous communities the best possible price
(in both financial terms and other considerations) for their granting of mining rights (Crowson,
1998). The efforts of indigenous peoples to organize
have been paying off in other ways, as well.
Indigenous peoples are starting to have more of
their land claims officially recognized, as in
the 1992 "Mabo ruling in Australia" (which
provided for native title of land if historical and
continuous links with the land could be demon
strated). Indigenous people are also having their
rights recognized in other fora. In 1989 the
International Labour Organisation (ILO) adopted Convention 169, "Concerning Indigenous
Peoples and Tribes in Independent Countries."
For its part, the United Nations Human Rights
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278 Paul Kapelus
Commission has formed a Working Group on
Indigenous Populations and developed a draft
Declaration of the Rights of Indigenous Peoples. The UN has also been active specifically with
respect to indigenous peoples' relations with the
mining industry, promoting the concepts of free
and informed consent, participation in the
benefits of development, compensation, and mit
igation of adverse impacts.
II. Corporate social responsibility
(mining) and the community
CSR as a programmatic response to critics
While corporations have always been involved
with CSR programs to some degree in one form
or another, the last couple of decades have seen
an explosion in terms of the effort and resources
that corporations have been expending on CSR.
Mining and other resource sectors have been in
the forefront of this new surge of interest. There
are a couple of overlapping reasons for this new
emphasis on CSR. Perhaps, the major factor, as
discussed above, is the fact that NGOs, social
movement and indigenous peoples have increased
their organizational capacity and cooperation
tremendously over the last twenty years or so.
This has allowed them to exert much greater
pressure on corporations, both directly (through actions against their production facilities and
campaigns directed at shareholders and con
sumers) as well as indirectly (through the polit ical system).
In addition the pressure from civil society
organizations and indigenous peoples, TNCs are
also encouraged to become more responsible and
take up CSR programs by pro-business organi
zations, such as the World Business Council for
Sustainable Development (WBCSD), the Prince
of Wales Business Leadership Forum (PWBLF), the Centre for International Private Enterprise
(CIPE), etc. A recent initiative by the WBCSD,
for example, is directed specifically at the mining
industry and represents an effort to confront the
poor ethical reputation of the mining industry and the resultant pressure placed on the industry
to transform. Entitled "Mining Minerals and
Sustainable Development" (MMSD), this global
programme is being administered by the
International Association of Environment and
Development (IIED). The stated intention of the
project is "to identify how mining and minerals
can best contribute to the global transition to
sustainable development" (IIED, 2000). The
WBCSD hopes that the project will help to
publicize the serious attempts of the mining
industry to construct an agenda for CSR and
encourage all members of the industry to live
up to the highest standards. Major research
themes of the project include human rights issues
(conflict, abusive practices, corruption), concerns
of indigenous peoples, access to markets, world
trade and globalisation and finally designing a
sustainable future. The findings of MMSD will
be presented to the Rio +10 World Summit on
Sustainable Development (WSSD) in 2002 in South Africa.
In addition to civil society pressures, there are
numerous international treaties and agreements that attempt to promote more responsible activity
by TNCs with respect to their social and envi
ronmental impact.2 Environmental awareness in
particular has intensified in recent years, espe
cially after the convening of the 1992 Earth
Summit in Rio. One key issue that has emerged with respect to international regulation is how
TNCs might be encouraged to apply their home
standards abroad, when they move to locations
with lower labour costs and less stringent envi
ronmental regulations. Mining companies, in
particular have been an object of concern, as they have not only not fulfilled their promises of being
engines of local economic growth, but frequently adverse social and environmental impacts of their
activities have far outweighed the economic
benefits that have accrued (Anderson, 1996, cited
in Carter, 1997). A final source of pressure has to do with the
pragmatic interests that firms have with respect to operating with a minimum of government
regulation. The problem is that as TNCs have
shifted their investment more to the developing world in recent years, they have opened them
selves up to criticism for not maintaining
adequate minimum standards. Underlying this
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Mining, Corporate Social Responsibility and the 'Community' 279
charge is the notion that either existing standards
are not adequate or that they are not effectively enforced. Such charges potentially pave the way for more stringent regulation of TNCs (either at the national level or internationally). CSR pro
grammes represent one possible method for
TNCs to dampen any pressure for increased reg ulation that may arise as the result of such
charges.
In taking up CSR programmes and responding to concerns about sustainable development,
mining companies readily acknowledged that
they are responding to social pressure and that
such a response is no longer optional. Marc
Gonsalves, the Corporate Affairs manager of the
Billiton mining group, for example, states that
in the future, "undertaking corporate social
responsibility programmes will be the same as
having to print annual corporate reports. It is
what business is about" (Gonsalves, 1999).
Similarly, the Canadian mining company, Placer
Dome has come to accept that "its ability to
work within the sustainability framework will be
the key to getting good projects and developing successful mines in many parts of the frontier
zones of the world" (Wilson, 1999, p. 48).
Forging a CSR agenda
TNCs have taken up the CSR agenda in a major
way recently. One aspect of the CSR agenda involves TNCs publicly proclaiming their values.
This may be done through any or several of a
number of types of documents produced by the
firm (e.g., mission statements, code of ethics, code of conduct, etc.). Increasingly, TNCs have
also been signing on to statements produced by other groups, including: business organizations,
e.g., WBCSD, PWBLF; multilateral bodies, e.g., the OECD (principles of corporate governance), the UN (Global Compact) and; human rights organizations and NGOs, e.g., Transparency International. There has been a proliferation of
such codes and statements over the past decade, much of it embracing the language of "sustain
able development." A second related aspect of
CSR involves TNCS establishing appropriate standards to operationalise their values in their
business activities. This may involve such areas
as labour standards, environmental standards, etc.
A third key aspect, and the one probably most
closely associated with CSR, involves designing and implementing social-economic development
programs and services.
In undertaking CSR initiatives, TNCs have
engaged a variety of non-business experts to help
develop their initiatives, including explicating their values and principles developing standards, and designing programs. These include anthro
pologists, ethicists, health professionals, develop ment workers, etc. They have not forgotten,
however, to also hire a range of business profes
sionals, especially in the media and publishing world. Their function is to ensure that the world
knows what the values and commitments of the
firm are and how these are expressed through their CSR projects. Indeed, the intensity of the
agenda and the number of policies and pro
grammes in place has contributed to the CSR
global agenda becoming a business in its own
right. Consultancy groups, public-relations com
panies, management and accounting firms are
employed in generating a virtual flood of paper work in the form of conference material, brochures and reports and, as Fabig and Kapelus
(2000) argue, are beginning to set the agenda and
define the discourse of CSR.
The prominence of the "community" in CSR
As corporations have taken up CSR programs, one theme has tended to dominate. That is the
commitment of the firm to the local communi
ties in which they operate. The corporate liter
ature on CSR is permeated with references to
how corporations perceive themselves to be part of the community. Such commitments are typi
cally fleshed out both in terms of principles that
define the basis of the relationship and guidelines that provide more practical instructions for
managers on how to establish good relations with
"the community."3
It is not only the corporations themselves that
provide the community a place of prominence in
the CSR agenda. International financial organi zations also highlight the importance of rela
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280 Paul Kapelus
tionships with local communities. The World
Bank, for instances, hosted two conferences in
1998 entitled "Mining and the Community," the
first in April in Quito, Ecuador and the second
in July in Madang, Papua New Guinea. The
Bank is concerned that as a result of the rapid
globalisation of the mining industry and increased
investment in developing countries conflicts
between indigenous communities and the mining
industry are likely to increase. In line with this
situation, the Bank joined with the mining
industry in expressing the belief that "proper
management of relations with communities is
going to be the biggest challenge in the next
ten to twenty years" (McMahon, 1998, p. 10). Discussions at the conference highlighted the fact
that the rights of indigenous people and local
communities are increasingly being recognised around the globe. It was urged that consultation
by communities be recognized as a right and that
traditional values and customs of the community be taken seriously in the decision-making
processes.
That the "community" has emerged as the
distinctive narrative in the strategy of the mining sector for promoting CSR should not be sur
prising. An emphasis on community in the devel
opment literature extends back to the British
colonial office, whose approach reflects an
organic conception of the state - widely held in
the nineteenth century - as being composed of
social parts (Strathern, 1992). As noted above, communities have always been important to the
mining sector to some degree. In the mining
industry, the narrative of community has
commonly been associated with the category of
"culture." Usually, this category had a negative connotation for the industry as traditional
cultures were seen as an impediment to devel
opment generally and a potential constraint on
mining activities, as it could lead to opposition to mining by the community and raise concerns
(by others) about the impact of mining on the
local community.4 Typically, to get around the
situation, the industry would undertake "cultural
appraisals" to ensure that projects could proceed without adversely impacting the culture and the
community. In recent times, the role of the "community"
has become even more prominent. From a prag matic perspective, the reason for this would seem
to be quite obvious. The operations of mining firms almost inevitably adversely affect (some
members of) the local communities (e.g., by
degrading the environment, diminishing liveli
hood prospects, displacing people form their
homes, etc.) in ways that are likely to evoke
opposition. While adverse effects and opposition are not necessarily limited to the local commu
nity, especially in our current global context (e.g.,
regional, national and foreign politicians, NGOs,
social movements, shareholders etc., may all raise
concerns about firms' activities), it is the local
community that is most directly affected and it
is their claims that have the most credibility. If,
for their part, companies can convincingly make
the claim that the local community is benefiting from their operations (e.g., though community
development programs), then it provides them
with a cloak of legitimacy that serves to protect them from charges by other groups (e.g., envi
ronmentalists, labour organizations) and enables
them to continue on with their activities (with a minimum of disruption and cost).
Defining the community ? a complex and
controversial task
Increasingly firms want to be able to claim that
local communities are benefiting from their
presence (and that where there are negative
impacts on communities these are under control). The logical first step in making such a claim is
to "identify" the community in question. As
noted above, the understanding of this need to
identify a community is not new. One way or
another mining firms have been identifying the
community ever since they first began to spread
through the "frontier" zones. Typically, the key
step in identifying the community involved
requesting permission to mine from "the chief"
or other traditional authority, an act that implic
itly set the boundaries of the community along the lines of the (de facto) authority of the chief.
More recently, the process of identifying the
community has become much more explicit in
nature, being designated a key task of CSR. It
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Mining, Corporate Social Responsibility and the 'Community' 281
has also become much more sophisticated,
involving the entire machinery of CSR,
composed of community affairs, public relations,
social impact assessments, and public involvement
programmes.
Identifying a community, however, is a
complex and contested task, especially in con
temporary societies. There are several reasons
why this is so. For one, communities can be
identified on the basis of any number of shared
traits such as geographic territory, religion,
culture, history, kinship, etc. For another, people can have multiple, overlapping identities and
these identities can change overtime.5 This means
that any definition of a community is always a
construct, an imposing of order that does not
necessarily fit the lived experience of the people in question. For this reason, it is also the case that
definitions of community are necessarily open to contestation, both in terms of the limits and
the structure of the community.6 With respect to the limits, different definitions based upon dif
ferent criteria include and exclude different
people. As the choice of criteria is largely a
subjective matter, any one choice is inevitably
going to be challenged, especially when excluded
individuals feel they should be included. With
respect to the structure, the key question is
who (if anyone) can represent the community.
Historically, it was generally assumed that tradi
tional leaders could represent the community, both de facto and in terms of having some degree of (moral) legitimacy. It is much more problem atic to make these assumptions today, as tradi
tional authorities have frequently lost much of
their decision-making power (to democratically elected representatives), while their moral legit
imacy is also increasingly under attack.
CSR, ethics and the community
CSR programs can have either of two functions
and, correspondingly, may be undertaken for
either of two forms of motivation. From the per
spective of business ethics, CSR programs can
help corporations to discern and fulfil their oblig ations to stakeholder groups. From the perspec tive of business strategy, however, CSR programs
may be viewed as a method for minimizing costs.
With respect to motivation, TNCs can under
take CSR programs either because they have a
strong moral commitment or because they have
pragmatic interests in doing so (as indicated
above). These two forms of motivation are, of
course, logical extremes. In actual practice, due
to the wide variety of people and issues involved,
both forms of motivation are likely to come into
play.7 Generally, however, it is possible to talk
about corporations as operating closer to one
pole than the other.
The function of CSR and the motivation of
firms would not be an issue (at one level)8 if it
were universally true that being socially respon sible is good for business. Under these circum
stances, TNCs would always be socially
responsible (except when they make errors in
strategy), as this would help them to maximize
profits (and shareholder value). It seems na?ve,
however, to assume that this condition always holds.9 This is only likely to be the case to the
degree that stakeholders can effectively impose costs on the firm.
The function and motivation underlying CSR
programs have practical implications with respect to communities. If firms tend to be more morally
motivated, then they will employ CSR as a tool
of moral discernment. Under these circum
stances, firms will be willing to live up to their
obligations to stakeholders, even when it involves
costs in terms of shareholder value. If, on the
other hand, firms are primarily guided by
pragmatic interests (i.e., profits), then CSR can
become exclusively a business tool rather than an
approach to discerning moral responsibility. Under these circumstances firms will be inter
ested more in the appearance of social responsi
bility than actually being socially responsible. In
this scenario CSR programs are ultimately con
cerned with minimizing disruption to the firm's
(processing, transportation, marketing, etc.) activ
ities and, thereby, minimizing costs. This has two
basic implications with respect to the definition
of communities.
The first implication of firms adopting a prag matic approach to CSR relates to how they are
likely to understand the structure of the com
munity. For purposes of maximizing profits, it is
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282 Paul Kapelus
in the interest of firms to be able to present the
community as having an uncontested, legitimate
authority. When such a legitimate authority
exists, and is in agreement with the firm, then
the firm's plans can proceed in a smoother
manner (and responses to any objections that may arise by dissenters can be more effectively devel
oped and implemented). The need for agreement
by authorities, in turn, can lead to a tendency to designate local (economic and traditional) elites as the legitimate authorities or the com
munity. Typically, it would not be in the inter
ests of firms to raise the question of the criteria
by which such authorities could be considered
legitimate. Nor is it generally in their interests to
note any disagreements within the community
(unless the dissenters can impose significant
costs), as this may undermine the legitimacy of
the leaders of the community and the firm's claim
to be socially responsible. Similarly, firms might not want to investigate the distribution of
benefits deriving from their activities among local
communities.
Second, to the extent that the firm is inter
ested in limiting costs, it will want to limit the
size of the community as this will limit the claims
that can be made upon it. What restricting the
size of the community means practically can be
understood with reference to the concept of an
"ecological footprint" (Wackernagel and Rees,
1996). The ecological footprint, a device which
ecologists commonly employ to investigate the
range of effects of the firms' operations, is impor tant in pointing out that many of the (adverse) effects of firms are diffuse, wide-ranging and fre
quently not immediately evident. When firms
use the community as their basic unit of analysis, then the more they restrict the notion of com
munity, the more they restrict their vision of
their "ecological footprint." More specifically,
they limit the number of people who they will
see as affected by their operations and the fail to
acknowledge the different ways in which people
might be (adversely) affected. Such a restriction
on their vision will function to limit their
responsibilities and costs.
The CSR agenda -
global and local
In the contemporary economy, TNCs in the
mining sector are inevitably both global and local
in their organization. As multinational, their
operations around the globe are becoming
increasingly integrated (e.g., in terms of strategy,
marketing, etc.) and subjected to centralized
control. As mining operations, however, their
operations are inevitably local. They must extract
resources from specific sites with specific char
acteristic in specific contexts that generate
specific problems. This global-local dynamic is
also at play with respect to the CSR agendas of
mining TNCs. At the level of the global head
quarters, CSR agendas get worked out in terms
of abstract principles and general guidelines, which are to apply to the firm's operations worldwide. At the level of individual projects and
sites run by subsidiaries, however, the CSR
agenda of mining TNCs becomes much more
concrete. Here, actual projects must be developed and implemented in accordance with the guide lines. Similarly, the notion of community at the
level of the global agenda can remain rather
abstract, which at the local level actual commu
nities need to be defined in concrete ways. As was noted above, there may be a strong
tension between firms maximising profit and
being socially responsible. This potential tension
can be reflected in different ways and to different
extents at the global and local levels. At the
global level, it may be more possible to pave over
the tension. Here it is easy for firms to make the
assumption of a harmony of interests between
the company and local communities.10 At this
level of the global CSR agenda, where firms
embrace general principles (e.g., participation, human rights, etc.) and guidelines for CSR activ
ities (e.g., community economic development
programs) and do not identify specific commu
nities, they do not have to make concrete oblig ations or calculate the costs of being socially
responsible in individual locations. Moreover,
they can easily portray (past and current)
problems primarily in terms of misunderstand
ings and organizational problems at local levels.
From this perspective, the challenge of CSR is
primarily to translate global commitments into
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Mining, Corporate Social Responsibility and the 'Community' 283
the specific contexts of individual communities.
Nelson (1998, p. 11) refers to this as "the art of
being local world-wide," a process whereby "the
community" becomes an all-important focus of
attention which verifies the global firm's status as
a good local corporate citizen.
At the local level, firms do have to make
specific obligations with specific communities
and confront specific claims about their behav
iour. It is here where CSR principles and guide lines are implemented that the potential costs of
being socially responsible can be measured against the potential profits of operations. In situations
where the costs of being socially responsible do not help keep total costs down, then local
managers will have to confront the tension
between being socially responsible and increasing shareholder value. Here it is not as easy to facilely state that, "good ethics is good business." From
a pragmatic perspective, local managers will want
to find some way to (at least appear to) ease this
tension. Probably the most effective method they have for doing this is to shape the definition of
the community in ways that restrict the number
of claims upon them. As noted above, this may
help firms to limit costs and proceed in a more
expeditious manner - if they are not effectively
challenged.11 Such assumptions about the community,
however, can be challenged (both by members of
the community and their allies). In what follows, we will examine how a company like Rio Tinto
develops its CSR agenda around the notion of
community - both at the global level and at the
local level through its subsidiary Richards Bay Minerals
- and how its account of CSR and the
community is contested.
III. Rio Tinto's global CSR agenda
We did not just give help as we thought fit but consulted with the community who
decided what the priorities were. The
community also worked to achieve our
joint objective. We are now members of
the community - for mutual benefit.
- Leader of Ecuador exploration
team
(Rio Tinto, 1999, p. 6).
Rio Tinto's story
Rio Tinto was originally founded in 1873 to
mine copper in Spain. Over the years it has been
restructured several times through mergers and
acquisitions. In 1954, two thirds of the Spanish
operations were sold, with the remaining one
third being divested later. In 1962, the Rio
Tinto-Zinc Corporation (RTZ) was formed
through the merger of two British firms, the Rio
Tinto Company and the Consolidated Zinc
Corporation. At the same time an Australian
firm, Conzinc Rio Tinto of Australia (CRA) was formed through the merger of Australian
interests of the Rio Tinto Company and the
Consolidated Zinc Corporation. In 1995 RTZ
and CRA were unified through a dual listed
companies structure. In 1997, RTZ became Rio
Tinto pic and CBJV became Rio Tinto Limited.
The dual listed company is based in the UK and
in Australia, with control being exercised by the
parent company in London.
Over the course of its history, Rio Tinto has
not only grown substantially, but has also diver
sified. In the period immediately after the 1962
merger, its diversification was limited to the
mining sector, as it opened up new operations in uranium, tin and borax. Between 1968 and
1985, however it moved beyond mining into
such areas as cement, oil and gas, chemicals and
even manufacturing parts for the automotive
and construction industries. Following a review
of the companies operations in 1987-1988,
however, the decision was made to refocus the
firm's efforts on mining and related industries.
This led not only to the divestment of its non
mining operation, but a whole new series of
acquisitions within the mining sector. As a result, Rio Tinto is now one of the world's largest
private mining company with assets of over ?1 billion.
Throughout its history, but in particular in
recent decades, Rio Tinto has been the subject of criticism with respect to a range of environ
mental, social and labour issues. In response to
the accusations and activities of its critics, Rio
Tinto has undertaken steps to become (critics would say "appear") more socially responsible.
It has developed, in effect, a global corporate
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284 Paul Kapelus
responsibility strategy. This strategy has two basic
components: a declaration of its values and the
elaboration of policy guidelines for the imple mentation of these values. These values and
guidelines are set forth in policy documents that
were produced by the company, and its anthro
pology advisor, at the head office in London.
They are intended to provide each of the
parent firm's operating companies, subsidiaries
and contractors with a programme for becoming
socially responsible enterprises. The company
emphasises that because it operates in diverse
cultural and social environments, each location is
required to design a unique social responsibility
programme.
Conceptually, the first part of Rio Tinto 's
strategy is to clearly state the company's values
and principles. The primary place where this
happens is in a document entitled "The Way We
Work" (1998). Rio Tinto affirms a commitment
to widely accepted norms such as human rights. It looks to the United National Universal
Declaration of Human Rights as well as the
human rights provisions of the countries in
which they operate to guide them in their
responsibilities. It also identifies other values to
which it is committed. Most notable in this
regard are three principles that it proclaims will
provide the basis for its relationships with local
communities, viz., mutual respect, active part
nership, and long-term commitment. Mutual
respect, it is argued, is essential if relationships are to be lasting, beneficial and interactive.
Mutual respect entails "continuing and effective
two way communication and realistic expecta tions on both sides" (1998, p. 8). Active part
nership defines the way Rio Tinto hopes to work
with local communities, regional and national
governments and other affected parties. The aim
of such partnership is to seek "mutual commit
ment and reciprocity based on trust and openness so as to reach agreed objectives and shared
involvement" (1999, p. 8). Finally, long-term commitment is "sought so that social and
economic well being is safeguarded and, where
possible, enhanced throughout the mine's life and
beyond" (1999, p. 8). The second aspect of Rio Tinto s strategy is
to develop practical guidelines that can facilitate
the implementation of its values. This task it
primarily takes up in an internal corporate document entitled "Community Policy Guide
lines" (1997). The goals of these guidelines are
to help the firm to build long-term relationships of mutual benefit between the operations and
their host communities, to enhance access to
existing and new opportunities and to avoid
costly disputes, higher project financing and
insurance costs. The reason for having company
wide-guidelines is not only to ensure that stan
dards are maintained throughout the company, but also to facilitate that lessons learned can be
shared and the company can build on the suc
cesses of its individual components. In line with the discussion in the previous
section, several points need to be highlighted. First, Rio Tinto clearly defines its CSR com
mitment in terms of its relationships to local
communities. This emphasis not only runs
throughout its documents, but is the organizing
principle of many key documents such as the
"Community Policy Guidelines".
Second, Rio Tinto seems to allow for a broad
understanding of community and a diversity of
forms of community. The former characteristic
is indicated in its definition of "community" as
"anyone who is impacted in any way, socially,
economically and environmentally by the oper ations of the mine" (Pettifer, 1998, p. 3). The
latter trait is reflected in its recognition of a wide
variety of possible bases for communities,
including "the nature of attachment to a terri
tory; self identification by others as members of
a distinct group; the culture or common beliefs, attitudes and work interests of the group; a
language or dialect, which may be different from
the national language; the presence of unique
religious, political or cultural beliefs" (Rio Tinto,
1997, p. 8). In principle this broad, flexible
approach to defining community would seem to
allow for wide ranging responsibilities on the
part of the corporation and might be taken to
imply that the firm views CSR more in terms
of moral commitment than as a pragmatic business strategy.
In other places, however, the documents
suggest a narrower understanding of community and more limited responsibilities. Thus, for
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Mining, Corporate Social Responsibility and the 'Community' 285
example, when the company proclaims its com
mitment to protecting the dignity, well-being and
rights of people with whom they are "directly"
involved, it identifies these people as employees and their families and people in "neighbouring" communities. Such passages reflect a more prag
matic approach to CSR, as do passages empha
sizing the firm's aims of enhancing access to
existing and new opportunities and avoiding
costly disputes, higher project financing and
insurance costs. Such pragmatism is also
expressed by the non-business experts Rio
Tinto hires. Professor Glynn Cochrane, the com
munities and anthropology advisor to Rio
Tinto, for example, states that the relationship between the company and the community has to
be business-like (rather than philanthropic). The
situation is one in which, "Rio Tinto is under
a microscope and if we screw up we cannot
access goods. The time taken to license, insure, secure and finally start production has increased
by 300 per cent. Good relations can cut down
on lead time, disputes and delays" (Cochrane,
1999). The ambiguity over community in the docu
ments makes it unclear whether the firm views
CSR primarily in terms of moral responsibility or business strategy. The fact that there might be a tension between these two approaches is
never addressed. Rather the firm seems to assume
a harmony between its moral responsibilities and
its business interests. This assumption is stated
quite clearly in passages where the firm asserts its
conviction that its "competitiveness and future
success depend not only on our employees and
the quality and diversity of our assets but also
on our record as good neighbours and partners around the world" (Rio Tinto, 1998, p. 1). This
assumption of harmony also gets expressed less directly, such as in the strong emphasis that
Rio Tinto places on the "value" of mutual
benefit.
The counter-narrative: international trade unions
Rio Tinto has come under criticism over a
wide variety of issues (e.g., human rights, the
environment, labour relations, treatment of
local communities, etc.) from a range of
groups including environmentalists (e.g., The
Earth Times), corporate watchdogs (e.g.,
Corporate Watch), mining activists (e.g., Project
Underground), human rights groups (e.g., Asia
Pacific Human Rights Network) and labour
organizations.12 Here I focus on the criticisms
about Rio Tinto 's CSR agenda. I will limit my
investigations to criticisms made by labour orga
nizations, in particular the Belgium based
International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) and
the International Confederation of Free Trade
Unions (ICFTU), as these are representative of
the nature of the claims brought against Rio
Tinto.
As labour organizations, ICEM and ICFTU
are obviously concerned about Rio Tinto's
approach to industrial relations. The ICEM has
targeted Rio Tinto as a special object of concern
due to "the extreme actions of the company in
seeking to de-unionise its operations and to
restrict the bargaining rights of its workers"
(ICEM, 1998a, p. i). In response to this situation, ICEM affiliates met in South Africa in February 1998 to form the Rio Tinto network of trade
unions with the aim of pressuring Rio Tinto to
improve its standards with respect to human
rights, workers' rights and environmental pro tection. Part of the ICEM's concerns, however, relate directly to the CSR agenda of Rio Tinto,
which it tends to see as a somewhat cynical
attempt by the firm to gain legitimacy by
claiming to represent the interests of local com
munities. This skepticism about Rio Tinto's
intentions and concern about their practices is
clearly expressed in the titles of two documents
that the ICEM has released on the firm, viz., "Rio Tinto - Tainted Titan" (1998a) and "Rio
Tinto - Behind the Fa?ade" (1998b).13 The unions have two basic criticisms of Rio
Tinto's global CSR Agenda. First, with respect to its principles and guidelines, the ICEM
believes that Rio Tinto does not go far enough. More specifically, "The Way We Work" is
criticised as being too weak to be able to effec
tively bind the company to responsible behav
iour. Apart from making reference to the
UN Declaration on Human Rights, the ICFTU
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286 Paul Kapelus
(1998) argues, "The Way We Work" does
not refer to the two most authoritative interna
tionally agreed definitions of responsible behav
iour. These are the International Labour
Organisations' (ILO) Tripartite Declaration of
Principles Concerning Multinational Enterprise and Social Policy, and the OECD Guidelines for
multinational enterprises. ICEM suggests that the
omission of the international treaties and guide lines from "The Way We Work" discredits Rio
Tinto s claim that "their processes aim to provide the required level of control, transparency and
accountability in line with worldwide best
practice" (1998b, p. 9). The second basic criticism that the labour
organizations put forth is that Rio Tinto is not
adequately accountable for the implementation of its principles and guidelines. The ICEM
argues, for example, that there are no clear lines
of responsibility between London and the local
operating companies with respect to the over
sight of the guidelines, a situation that leads to
inconsistencies in the implementation of Rio
Tinto's global CSR agenda. The ICEM (1998b, p. 8) states that "Rio Tinto itself knows that
implementation may most certainly not be uni
versal," the implication being that Rio Tinto
either does not care about or actually prefers this
state of affairs. ICEM's position is that, while
some of its subsidiaries may live up to the
global CSR agenda, this is not sufficient. Until
all of its operations (including both wholly and partially owned subsidiaries) are managed in a socially and environmentally responsible
way, Rio Tinto is a valid target of criticism
and can rightfully be judged to be socially
irresponsible.
IV. Richard Bay Mine's local CSR agenda
Just as the end products which come from
the minerals extracted from the sand
enhance the lives of millions of people
throughout the world, so the fruits of
mining are enhancing the lives of the
people who walk that ground. -
Managing Director, RBM 1999.
Context - CSR and the political
economy of South Africa
CSR in South Africa has in the past been
restricted to the domain of paternalistic gift
giving, making charitable donations to various
organisations, and securing patronage from
traditional chiefs (with the metaphorical bottle
of whisky). This situation began to change with
the crumbling of "apartheid" in the late 1980s
and early 1990s. Many analysts consider the
speech made by former President De Klerk on
February 2 1990 to be the watershed for
more responsible business in South Africa.14 The
country was pushed into a new environment in
which the old rules and norms no longer applied.
Initially, without any set of rules or norm to
conform to, business was a bit lost. It had to
design a new strategy for engaging with the new
social order and shift from a "racial capitalism"
(policies based on racial ideology) to a "social
capitalism" (policies based on development
ideology). Business had to rethink how it was to
behave responsibly. A shift from corporate giving to a total
social and political strategy was engaged, with
business starting social upliftment programmes and poverty alleviation and supporting the polit ical negotiation process. Since the 1994 elections,
legislation has forced business to start working
differently on many fronts. New labour relations, environmental management, affirmative action, black empowerment and corporate governance have become the accepted standards rather
than exceptional practices that go beyond "the
call of duty." International standards and decla
rations have also become integrated, especially by
leading business sectors, a process that has served
to help integrate South African business into the
global economy (Innes, 1992; Botha, 1994). Within the mining sector, the CSR initiatives
have been impressive in some quarters (although it could still be argued that they are insufficient
compared to the profits generated, especially in
the most profitable sectors such as platinum and
titanium). One of the more impressive examples is the Anglo American and De Beers Chairman's
Fund, which has an annual budget of R50
million (?5 million). The Fund has adopted an
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Mining, Corporate Social Responsibility and the 'Community' 287
"interactive partnership approach," where "own
ership" and "choice" are the two fundamental
principles driving all initiatives (Keaton, 1997b,
p. 17). The Fund operates across the spectrum of CSR - from being a charity and donor
through to acting as an implementing agency. The Billiton Development Trust, established
by the Billiton company (now BHP Billiton), provides another example of a substantial devel
opment programme. The Trust understands itself
as a development catalyst or facilitator rather than
an implementing agent of development. The
Trust provides funds to NGOs so that they may, for example, "go and promote women's issues
under the Billiton banner" (Sepeei, 1999). While social intervention has always been
a practice of mining companies in South
Africa and elsewhere, such assistance largely remained within the confines of the immediate
"mining community," namely employees and
their families. In South Africa, such a practice has been fraught with racist policies underlined
by the laws of the apartheid government, which
regulated among other things social infrastruc
ture, housing, transport, separate amenities and
education. For a number of years before the new
democratic government came to power in 1994, various mining companies began to acknowledge their role in the socio-economic hardships expe rienced by both urban and rural communities.
Recognising that the labour sending areas in the
homelands suffered through migrant labour
policies, companies such as Anglo American,
Johannesburg Consolidated Investments (JCI) and
Gencor (now known as BHP Billiton) instigated social investment programmes. Subsequently, the events leading up to the first democratic
elections, the election victory of the African
National Congress (ANC) and the instatement
of Nelson Mandela as President of South Africa
would lay the foundation for a more concerted
CSR drive on the part of mining companies. After the elections, the new Reconstruction
and Development Programme (RDP), the
platform from which the government launched
their poverty alleviation drive, quickly became
seen as important programme for business to
support, in part due to the government's active
encouragement of private sector participation. In
1994, Godsell wrote in an article in the South
African Labour Bulletin "[bjusiness is ready to
participate in the reconstruction and develop ment of South Africa," suggesting that social
investment could contribute to the growth of
South Africa which "ultimately is the engine of
poverty relief" (1994, p. 7). But working with
the new government required shifts in attitude
with respect to managing development programs - a shift from a heavy-handed, controlling
approach to engaging with multiple stakeholders
with different interests. In 1997 the mining
industry presented their official commitment to
community development to the South African
Parliament in Cape Town. In an effort to high
light the shifts that mining companies have gone
through with regard to environmental and devel
opment challenges Margie Keeton of Anglo American stated:
Mines and their communities are confronting
together, in a spirit of common purpose and
resolve, many of the country's critical development
challenges. Their efforts are making a real contri
bution to the search for effective interventions
bringing new hope and opportunity to those mar
ginalised from the mainstream of growth and
advancement (1997, p. 6).
Mining companies recognize that there is some
legitimacy to be gained in South Africa today from being involved in social and economic
reconstruction. This is due in large part to the
government's plea for assistance from the private
sector,15 including a greater emphasis on public
private partnerships. Yet, understanding how
to engage in such co-operation is not always easy for an industry that historically has not set
participation with diverse actors with different
ideologies as a top priority. Mining companies have generally wielded the power to implement
community development policies (within limits
set by government) that allowed them to get on
with their core business, namely the extraction
of minerals. Now, having to undertake more
participatory, democratic approaches to develop ment, which demand a more professional and
consultative approach, companies are adopting different models. Some mining companies have
handed over their CSR to non-profit organisa
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288 Paul Kapelus
tions to manage, others have established an inde
pendent trust, while others retain the initiative
within the company structures. The basis for
these individual decisions in not entirely clear.
Nor, given the complexity of factors involved in
determining CSR performance, is it yet certain
that any one model is to be preferred over the
other.
RBM's story
Richards Bay Minerals (RBM) is a leading producer of titania slag, high purity pig iron,
rutile and zircon. Jointly owned by Rio Tinto
pic. and BHP Billiton pic, FJ3M is situated on
the coast of the Indian Ocean in northern
KwaZulu Natal province, approximately 20 kilo
meters from the town of Richards Bay. The town
is host to at least five major industries, including fertilizer manufacturing, aluminum smelting and
paper and pulp manufacturing. The immediate
area in which BJBM is situated, the Mbonambi
Tribal Authority (MTA), is considered a rural
area. Mining, commercial forestry, subsistence
farming and basic retail activities dominate the
economic landscape (URC, 1999). The larger
region surrounding Richards Bay, including the dunes in Mozambique to the north and
Madagascar to the east, is rich in mineral
resources and host to a number of exploration
companies assessing the feasibility of opening new mines.16
For its part, RBM has also been seeking to
expand its operations. In particular, RBM hoped to establish a new mine at St. Lucia, just north
of Mbonambi. This plan was halted however, as
the South African government -
after months of
negotiations, studies and consultations -
decided
to exploit the eco-tourism potential rather than
the heavy mineral sands. This decision by the
South African government may have been related
to the tremendous amount of attention that the
proposal for mining drew from environmental
lobby groups, NGOs and activists (Solomon,
1997). This attention placed not only the
South African government under the spotlight,
however, but also RBM and forced RBM to
realign its CSR strategy.
FJ3M first became involved with community issues shortly after the mine was established in
1976. This initial engagement came about as a
result of the introduction of the Sullivan
Principles (the forerunner of the Sullivan Code).
Developed by the Rev. Leon Sullivan - an
African-American Baptist minister, a civil rights leader and a member of the Board of Directors
of General Motors -
these principles were
designed to ensure that American companies
improved the conditions of their black workers
(and their families) both at work and in the home
environment (O'Brien, 1998, p. 110). RBM's
involvement with community affairs at this time,
however, can be best described as limited and ad
hoc in nature.
It was only during events around the St. Lucia
proposal that RBM came to pay more system atic attention to CSR. The reaction surrounding the St. Lucia proposal demonstrated to the
company that undertaking community social
investment was good for business and reputation
management. The St. Lucia episode highlighted the need for PJBM to professionalise and market
its CSR initiatives. O'Brien states:
[T]he company tried to convince its detractors of
the fact that RJ3M would invest in the underpriv
ileged St Lucia communities ... as it had done in
the Richards Bay area . . . [an] advertising and pub
licity campaign launched [but] it was too late. The
tide of public opinion had swung firmly against RBM and ultimately the battle for St Lucia was
lost by RBM (1998, p. 190).
It is hoped that successful marketing of the CSR
projects will help to encourage the government to revisit the issue of allowing mining operation in St. Lucia and to ensure RBM is well placed to take advantage. Investing in "the community"
through CSR programs is viewed as investing in
the financial future of the company. A key step that RBM took in the wake of the
unsuccessful St. Lucia proposal was to work more
closely with the local community through the
Community Development Council (CDC). The
stated goals here were to help ensure not only an effective co-ordination of development ini
tiatives in the MTA but more local participation. RBM now organizes their efforts around a five
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Mining, Corporate Social Responsibility and the 'Community' 289
year plan, which claims to embed the notion of
"partnership" in its approach to consultation and
to stress a "bottom-up" approach to develop ment. These principles are supposed to enable
the community to dictate the pace of efforts and
promote community ownership and long-term
self-sufficiency of projects. For its part, the
eleven-member RBM community development team engages with the surrounding community on a constant basis about development projects and negotiations over resettlement of homesteads
and graves and expropriation of grazing and
farming land. RBM now prides itself on the
partnerships that it has established with the local
community through its community affairs oper ation and sees itself as exemplifying the global
policies of Rio Tinto on CSR.
RJiM's pride is not without foundation. RJBM
supports a variety of CSR projects in such areas
as education (e.g., assisting local schools, pro
moting, technical education, teacher training,
promoting life skills), health care (e.g., rural
clinics, a 24 hour clinic for employees, an
HIV/AIDS program) and community develop ment (e.g., gardening and cooking clubs, support for small businesses, support for a Rural
Development Centre). In 1999 it funded its com
munity projects to the tune of RIO million (?1
million), a sum that dwarfs the funding that the
government has been able to provide. As a result, FJ3M is the primary agent of development in the
MTA.
RJ3M has not been shy about publicizing its efforts locally. The Mbonambi community
projects are easily recognisable by large signs indi
cating that RJ3M either sponsors or assists the
project, whether it be a school, cr?che or clinic.
FJ3M also has a share of local supporters who
praise its efforts. Prominent among these is Inkosi
(Chief) Mthiyane of Mbonambi, who has fre
quently expressed his strong appreciation of the
efforts of RJ3M, whom he sees not only "as a
neighbour, but also as a friend" (Titania, 7 May
1999).17
The counter-narrative - dissenters and the larger
community
While RBM undoubtedly contributes to local
community development through its CSR
projects, it is not without its detractors, both
within and beyond the Mbonambi "community." While within the Mbonambi community oppo
sition is probably muted to a significant extent
by the relatively generous levels of spending that
the company provides, there are still concerns.
The major concerns can perhaps be best under
stood in terms of how the company operates its
CSR programs. While institutions like the World
Bank, picking up on the vocabulary or recent
development thinking, advocate a "partnership" model for CSR (e.g., the "Business Partners for
Development" programme), developing partner
ships requires trust, learning and an ability to
hand over control in a flexible manner. This
approach typically goes against the normal
problem solving approach employed in mining firms like RBM, e.g., establishing what the
problem is and solving it in a technocratic, linear
manner. As a result, local communities like the
Mbonambi can feel alienated, even when they are enjoying relatively generous benefits.
Outside of the Mbonambi community, RBM
also has its detractors. As noted above, RJ?M is
located in the Mbonambi Tribal Authority. The
MTA, however, is but a small part of the Imfolozi
sub-district, which comprises sixteen tribal
authorities (see Figure 1). The Imfolozi sub
district, in turn, is but a fraction of the larger
Uthungulu district, which comprises a total of
sixty-nine tribal authorities (Uthungulu Regional
Development Plan, 1998). While each tribal
authority is the legal authority in its own local
area, it is the Uthungulu Regional Council
(URC) that is responsible for development
planning in the Uthungulu district.
With regards to regional development
planning and activities, its relationship with
RBM has placed the MTA in a unique, and
somewhat tense, position vis-?-vis its neighbours. In effect, its relationship to RBM, which serves
as the de facto development agency for the MTA, has made the Mbonambi community an "island
of development" in a URC sea of underdevel
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290 Paul Kapelus
opment. It is an island in two senses. On the one
hand, it is much better funded, as is evident
when one compares the RBM budget of RIO
million (?1 million) for community projects in the MTA with the budget of the URC (approx imately ?4.6 million), which has to be spread out over 69 tribal districts. On the other hand, the MTA has few external linkages and networks.
Most significantly, perhaps, is the fact that
FJ3M does not share its community development
plan with the URC. As RBM states, they "have nothing to do with the URC unless it is
requested" (O'Brien, 1999). For its part, the URC feels somewhat frus
trated with (and a bit resentful of) the MTA and RBM. As they do not have the community
development plan from PJBM, they cannot inte
grate the MTA into its regional development
plan (For its part, RBM has not seen the URC
regional development plan.) The council officials
interviewed suggest that the council "takes a
hands off approach to Mbonambi" (Marais,
1999). Accordingly, the URC, which commonly refers to the Mbonambi as the "PJBM commu
nity," does not take the MTA into account when
it comes to the allocation of funds. There is a
strong feeling that greater integration of RBM
and the MTA into the URC would make for
more effective regional development policy. The
URC, however, has no way to force such par
ticipation, nor does such participation seem to
be of interest to the RJ3M or the leadership of
the MBA (which is provided with a great deal
of local autonomy and political influence by its
relationship with RBM).
V. Conclusion - two tales of CSR
Rio Tinto and its subsidiaries such as PJ3M
have committed themselves in recent years
through their CSR agendas to being more
socially responsible. They have expressed this
commitment primarily in the language of rela
tionships with and responsibilities to local com
munities. Rio Tinto, however, is not without its
detractors. Such critics differ with the firm at a
number of different levels, viz., basic assump
tions, the understanding of community, local
development practices and the approach to public
policy and development strategy. Their differ
ences around these various points, discussed
below, constitute two different tales of CSR.
Basic assumptions. It is commonly held that
business has an obligation to maximize share
holder value. To the extent that business
has obligations to stakeholder groups (e.g., local communities) as well, a tension may arise
between it meeting these two forms of obliga tion. There are two basic dimensions to this
tension. At a moral theoretical level, the basic
tension is one of competing moral claims (e.g., between shareholders and stakeholders), which
must be resolved on the basis of moral arguments and analysis. At a practical level (when stake
holder claims are deemed to take precedence), the tension involves the ability of the firm's board
and management to exercise their moral will to
take decisions that go against their own interests
(and those of shareholders). For their part, Rio Tinto and FJ?M seem to
make assumptions that deny the existence of any tension. At the moral theoretical level, as we have
seen, they tend to assume a harmony between
good ethics and good business. At the practical level, they also seem to assume that the company is committed to the values that it expresses and
that their managers can act upon them.
These assumptions contrast with those of
their detractors. Such opponents argue that Rio
Tinto 's efforts to maximize shareholder value do
impinge on its obligations to stakeholders. They also raise the question of whether Rio Tinto has
the moral will to implement decisions that are
not in the interests of its shareholders. Rio
Tinto 's failure to effectively implement its global CSR agenda across its subsidiaries, for example, could be interpreted as such a failure of will.
The understanding of community. As was noted
above, defining the notion of community is a
complex and controversial task. It is also the case
that different definitions of community can serve
different interests. We have seen that at the level
of its global corporate agenda, Rio Tinto does
allow for some flexibility in defining communi
ties which could, in principle, allow for a wide
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Mining, Corporate Social Responsibility and the 'Community' 291
range of stakeholder obligations. In the case of
RBM, however, we have seen how a Rio Tinto
subsidiary adopts a notion of community that
tends to restrict the firm's obligations. In terms
of boundaries, as we have noted, BJ?M defines
the community as the MTA rather that the larger sub-district or district in which it operates. In
terms of structure, BJBM tends to make simpli
fying assumptions about the community (e.g., that the local authority is legitimate, that there
are no significant conflicts of interests, etc.). These assumptions about the nature of the com
munity serve to reduce BJBM's costs (by allowing them to streamline decision-making, not take
into account certain issues and claims, etc.). In contrast to Rio Tinto's definition, it is
possible to understand community more broadly
(e.g., as the Uthungulu community). It is also
possible to acknowledge that the community is
at times divided by different interests, values and
strategies. This is the approach that is taken by the various opponents of Rio Tinto. Doing so,
however, is likely to increase the demands on
PJ3M and Rio Tinto and, thereby, increase their
costs (and decrease profits).
Local community development. As noted above, cor
porations can engage in CSR programs (and local
community development projects) either out of
moral or pragmatic motivation. These two moti
vations, however, are not necessarily compatible and do not necessarily lead to the same results.
To the extent that corporation are primarily motivated by pragmatic considerations, they are
seeking to reduce costs (related to disruptions,
protests, shareholder action, etc.). To reduce costs
they need to target different audiences. One is
the local community, which may be both a direct
source of costs (by initiating lawsuits, demon
strating, etc.) and an indirect source of costs
(when portrayed by others as being adversely affected by the firm's operations). Another
audience is comprised of potential financiers
(e.g., shareholders, banks, multilateral lending
agencies, etc.), which may be reluctant to invest
for either moral or pragmatic reasons (which
might involve issues of costs, fiduciary responsi
bilities, etc.). Another possible audience that may need to be placated is made up of NGOs and
social movements. In order to promote their
ultimate goal of profit maximization, firms will
have to take into account the costs and benefits
of addressing the concerns of each of these
groups, in the process ignoring the interests and
claims of some (e.g., small NGOs) and paying close attention to those of others (e.g., multilat
eral financial institutions). As we noted above, Rio Tinto and RJ3M tend
to make the simplifying assumption that being a
"good neighbour" is good for business. In doing so, they do not have to address the issue of whose
interests they need to address and what the costs
of doing so are. Similarly, by supposing a limited
and undifferentiated concept of community and
the legitimacy of local elites, they can claim that
their projects are promoting the form of devel
opment that the local community wants and
that they are fulfilling their responsibilities. If
NGOs or other groups disagree with them, then
Rio Tinto can always point to its support from
the local community (as Rio Tinto/FJ3M has
defined it). Rio Tinto's detractors, on the other hand,
have a different story to tell. They argue that to
the degree that companies like Rio Tinto are
operating on the basis of pragmatic motivation
(i.e., profits), they are basically engaging in a
public relations program. As such, they will
generally want to finance high profile projects
(which will put them in good stead with poten tial financiers and local elites) and to maintain
significant control over the nature of the projects
(so as to be able to choose and promote them
effectively). However, firms like Rio Tinto are
constrained (for PR reasons) by their "commit
ment" to good development practices (including such values as participation) and their need to
get cooperation from local elites and passive
acceptance by the local population. Under these
circumstances, the most logical options for a firm
are to: 1) try and restrict the number of its
projects and the area over which it operates, so
as to make its impact appear more impressive (on a per capita basis); 2) to try and retain control
over the projects selected (to make certain that
they are high profile and provide good PR value
for the money spent); 3) to limit participation to symbolic participation (so as not to impose
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292 Paul Kapelus
excessive costs) and; 4) to ensure that the inter
ests of the local elites (in terms of selection of
projects, public acknowledgment, etc.) are met.
This, critics will argue, is what Rio Tinto has
done. This is not to claim that Rio Tinto's -
and in particular RBM's - efforts have not had
any positive development impact, as they clearly have. Rather, it is to claim that Rio Tinto has
not fully lived up to its responsibilities (i.e., it
should be providing more resources to more
people, it should be respecting labour standards) and that it has not effectively promoted devel
opment (i.e., the resources that it has used could
have been allocated more efficiently, albeit in
ways that probably would have had less PR value
for the firm).
Public policy and development strategy. Rio Tinto's
and RBM's CSR agendas operate in a larger
political economy context. This is constituted by different programs of economic liberalization
(e.g., trade, financial markets, etc.) as well as a
reduction in the various roles of the state (e.g., as economic agents, as providers of health, social
and educational programs, etc.) in countries
around the globe. In addition to being sceptical about the wisdom of this liberalisation for the
promotion of economic development generally,
many critics of economic liberalization have a
more specific concern that relates directly to
CSR. The concern is that the CSR agendas of
TNCs do not only serve to help local commu
nities (and reduce TNC costs), but also function
to justify liberalization policies. By taking over
functions that have traditionally been seen as the
role of the state, CSR programs may operate to
legitimate government cutbacks and the privati sation of social programs. This in turn, it is
feared, is resulting in decreased social spending,
inappropriate priorities and the creation of
"islands of development" (centered around cor
porate sites) in a larger sea of underdevelopment
(as it could be argued is the case of the MTA and
the Uthungulu district). While there is little reason to doubt that CSR
can function to legitimate liberalization and the
privatisation of government functions (Crooke and Manor, 1998), it could be argued that this
is not necessarily the case. While Rio Tinto does
not address this claim directly, others have devel
oped conceptualisations and languages that allow
for alternative explanations of the role of TNCs
in providing services vis-?-vis the state. Ferguson
(1998), for example, believes that the position stated above involves a conceptualisation of
TNCs as typically operating "below" the state,
but at times (and more and more) entering the
state's domain. He suggests that an alternative
would be to view TNCs as an "integral part of
a new transnational apparatus of governmen
tality" (1998, p. 21). In this new apparatus, the
lines between business and government may become more blurred, but it does not necessarily
mean a withdrawal by the state. Rather, if
business takes on a larger responsibility than
it previously had, this would allow the govern ment to target it's development programs more
effectively. These two stories of CSR (and the concep
tions of community that underlie them) are
clearly contradictory. The story that Rio Tinto
tells, is obviously the one that works to its advan
tage. This is not to say, however, that it could not
also be the one that works to the best advantage of local communities. Rio Tinto s case remains
shaky, however, weakened by its own failure to
effectively and consistently implement its own
global CSR agenda. While some of its operations like FJ3M have served as "showpieces," others
continue to lag much further behind (not only with respect to local development projects, but
also in terms of human rights, environmental
issues and labour relations). More consistent (and
timely) implementation would go a long way in
making Rio Tinto's story more convincing. Whether this would result in a practical refuta
tion of the alternative story is unclear, however.
These narratives collide in the context of the
larger disputation about processes of economic
globalization. Yet, while it may not be possible to envisage any resolution between the com
peting sides in this debate, companies like Rio
Tinto can (and should) continue to take steps that
at least make their stories more consistent inter
nally.
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Mining, Corporate Social Responsibility and the 'Community' 293
VI. Epilogue
Since the research for this paper was done (in
1999), there have been some developments. Most
significantly, perhaps, RJ3M has taken some steps to try and work more closely with regional
planning authorities. I have not yet been able to
try and evaluate the reaction by local communi
ties to these recent efforts, nor do I know of
other attempts to do so. For its part, Rio Tinto
continues to refine its global CSR Agenda. This
has included the publication of "Human Rights Guidance: Guidance for managers on imple
menting the human rights policy in 'The Way We Work'
" (2001), efforts to ensure that its non
managed companies also comply with appro
priate CSR principle and practices, expanding
partnerships (e.g., with Earthwatch), as well as
signing on to the United Nations' "Global
Compact." To this extent, it is attempting to
make its own story more consistent.
Despite its on-going efforts, Rio Tinto con
tinues to come under criticism. In 2000, for
example it was sued in a US court by residents
of Bougainville, Papua New Guinea (who allege that the firm is responsible for environmental dis
asters, toxin exposure, and the murder or resi
dents committed in complicity with the local
defence force). Rio Tinto 's operations in Brazil
have also come under attack for human rights, environmental and health and safety violations.
Similar complaints continued to be launched
regarding Rio Tinto 's PT Kelian Mine in
Indonesia (Drillbits and Tailings, 2000). Such
practices, critics claim, are not only unacceptable, but constitute violations of the commitments
that Rio Tinto made when signing on to the
UN's Global Compact (Kennedy, 2001). Nor is
it only stakeholders who are concerned. Senior
management has also come under criticism
by (some) shareholders, who are upset, among other things that management did not support shareholder resolutions at the March 2000
Annual General Meeting, which called for Rio
Tinto: 1) to become more accountable to share
holders through the appointment of an inde
pendent Deputy Chairman, and; 2) to implement a code of labour standards "based on the inter
nationally agreed core human rights conventions
of the United Nations' International Labour
Organisation" (Asia-Pacific Human Rights
Network, 2001). Both resolutions were easily defeated. Thus, while Rio Tinto's story may be
becoming internally more consistent, it would
seem that it is still far from convincing its critics
that this is the proper story to be told.
Acknowledgements
The author would like to acknowledge the
support and assistance offered by Richards Bay
Minerals, Uthungulu Regional Council and res
idents of Mbonambi, which made the research
for this paper possible. He would also like to
express his appreciation for the support provided
by the Mining and Energy Research Network
(MERN), University of Warwick and Dr. Ralph Brillo at Sussex University.
Notes
1 These interviews and this paper are based on
an MA Dissertation at the University of Sussex
(Kapelus, P., 1999. Mining and the Community: An
Ethnography of Transnational Corporations and
"Corporate Social Responsibility"), written with
support from MERN. 2
Among these are the Universal Declaration of
Human Rights, International Labour Organisation (ILO) conventions and Tripartite Declarations of
Principles concerning Multinational Enterprise and Social Policy, the International Covenant on Civil and
Political rights, and the Organisation for Economic
Co-operation and Development (OECD) Guidelines for Multinational Enterprise. Various environmental
guidelines such as Agenda 21, International Standards
Organisation, certification standards and environ
mental and social impact assessments have emerged out of international conferences and environmental
agreements. 3
Despite all the time and resources put into building
community relations, it would appear that the mining
industry is still struggling in its efforts. A vice presi dent of Orvana Minerals put the situation this way, "The point of contact and potential conflict between
communities and mining interests over social, socio
economic and environmental issues has been drawn
forward from the mining phase into the exploration
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294 Paul Kapelus
phase . . . the industry collectively is ill equipped to
handle this reality" (Thomson, 1997, p. 1). 4
For a discussion on culture as a constraint to devel
opment, see Grillo (1997) and Crewe and Harrison
(1998). 5
Societies charcacterised by refugee movements may be particularly susceptible to having their traditional
identities questioned and having to take on multiple identities. 6
For their part, corporate leaders are certainly not
unaware of the contested nature of "the community.
Marc Gonsalves (1999) of Billiton pic (one of the co
owners of Richards Bay Minerals) states the situation
this way, "the community is like a wheelbarrow
pushed around by different political forces." 7
This is a complex question as firms are themselves
complex organizations and operate within a larger business system. In such a system, business firms have
to operate within the constraints of profitability. As a
result, CSR projects and budgets also have to operate under constraints. Insofar as firms have obligations to
shareholders and other stakeholders (e.g., consumers,
employees) as well as stakeholders commonly associ
ated with CSR programs (e.g., local communities), then discussion about the constraints that have to be
placed upon CSR programs do not necessarily indicate only a pragmatic motivation (although they
may), but may also have a strong moral component. 8
It would, of course, be an important issues for
deontologists, virtue theorists and others who place a strong emphasis
on motivation in moral analysis. 9 Cragg et al. (1995) have argued that if firms only
operate out of pragmatic motivation, they are not
likely to act in a responsible fashion. 10
Not only firms, but pro-business groups like the
PWBLF also readily make this assumption. The
PWBLF, for example, declares that being responsible to communities and cultures will "add value" to both
shareholders and society (Nelson, 1998). 11
Another argument that may help to ease this
tension, relates to the notion of "dependency."
Companies and their CSR experts may express moral
concerns that in undertaking CSR there is some risk
of creating dependency on the company and local
authorities. This could relate to situations in which
firms are fulfilling legally required or voluntary oblig ations (e.g., ensuring workers have adequate
access
to health and education services, community devel
opment projects, etc.). Such dependency, it could be
argued is not good for the "beneficiaries" of these
services in the long run. As well, from the perspec tive of the pragmatic interests of firms, such depen
dency may also be undesirable as they may increase
long term liabilities and undermine shareholder
value. 12
Among the areas in the developing world where
Rio Tinto has come under harsh criticism are Papua New Guinea, Indonesia and Namibia. In Papua New
Guinea, Rio Tinto's Bougainville mine has become
synonymous with environmental damage and associate
problems. In Indonesia, the company's operations
(e.g., the Kelian mine) during the time of the Suharto
dictatorship were not only charged with extensive
environmental and labour abuses, but also with major human rights abuses, including
numerous murders
involving paramilitary organizations. During the
apartheid era in South Africa, Pdo Tinto was violating basic international standards by illegally mining uranium in Namibia. In direct violation of UN
resolutions, the company extracted uranium,
according to the United Nations Council for
Namibia, "by virtual slave labour under brutal con
ditions" (Asia-Pacific Human Rights Network, 2001). 13
It is interesting to note that the layout, type face,
pictures, paper quality and cover images of these
documents reveal the same attention to aesthetic
considerations as the Rio Tinto corporate documents,
brochures and magazines. 14 This speech indicated that there would be a
handover of power through democratic elections and
that Nelson Mandela would be released from prison after 27 years of incarceration. 15
Such appeals have been made by various members
of government as well as during the Truth and
Reconciliation Commission (TRC), where Bishop Tutu called upon business to recognise it's role in
apartheid and participate in the development of South
Africa. 16
These include Kenmare (Irish), Billiton (South
African), Southern Mining (South African) and QIT
(Canadian), among others. 17
It is interesting to note that some PJBM officials
clearly express their commitment in moral terms.
Mr. Jabu Khubeka (General Manager, Public &
Community Affairs), for example, states that the
various CSR projects are being undertaken because
"what we believe in is human rights" and "we cannot
sleep if our neighbour is dying of hunger, we have
got to look in our cupboard" (interview, Mr. J. Khubeka, 23/06/99).
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