The Social Licence to Operate (SLO) refers to the acceptance within local communities of both mining companies and their projects. In order to obtain an SLO it is necessary to develop good relationships with all stakeholders, especially with local communities. The credibility of mining companies is based on mutual respect, honesty, open dialogue, transparency, timely responses to community concerns, information disclosure, and constancy and predictability in the companies’ ethical behavior.  Obtaining an SLO is essential for reducing the risks of social conflicts and for enhancing a company’s reputation. Many mining companies now consider gaining an SLO as an appropriate business expense that ultimately adds to the bottom line. The costs of not having an SLO include higher financial costs, increased difficulties in hiring skilled labour, loss of machinery due to vandalism, costly delays of mine operations, and possible mine shutdowns due to community opposition to the mine.
The Social Licence to Operate (SLO) refers to the acceptance within local communities of both mining companies and their projects. Social acceptance is granted by all stakeholders that are or can be affected by mining projects (e.g. local communities, indigenous people) and other groups of interests (e.g. local governments, NGOs).  An SLO is based “on the degree to which a corporation and its activities meet the expectations of local communities, the wider society, and various constituent groups.” 
The SLO does not refer to a formal agreement or document but to the real or current credibility, reliability, and acceptance of mining companies and projects. The SLO is granted by stakeholders based on the credibility of a mining company and the type of relationship that companies develop with the communities. The SLO is dynamic  because stakeholders’ perceptions can change over time for different reasons including the success of CSR programs, (dis)satisfaction with the fulfillment of promises and obligations, unforeseen environmental damages, and the release of new information. The SLO can be revoked and it should never be taken for granted.  Obtaining and maintaining an SLO is only possible when communities feel they are consulted and receiving a fair share of benefits from mining projects. [5-8]
In order to obtain an SLO, mining companies must develop good relationships with all stakeholders. The World Bank recommends that governments, mining companies, and local communities undertake trilateral negotiations from the onset of mining projects. 
There is no one unique formula for mining companies to gain and maintain an SLO. However, some principles are necessary, including the establishment of good relationships. Good relationships are based on mutual respect, open communication, inclusion of all stakeholders, honesty, plain disclosure of information, and transparency of mining exploration and exploitation processes.  They also require mining companies to be sensitive to local cultural norms, create realistic expectations, be consistent and predictable regarding their ethical behavior but flexible enough to accommodate the needs of the community, and start the engagement process as early as possible. [10, 11]
The SLO is only secured when good relationships are established. This type of relationship cannot be based on providing material benefits to local communities (although this might be important in some cases). The Prospectors and Developers Association of Canada warns mining companies that providing material goods “is not necessarily what communities want or need to meet the objectives of long-term sustainability”[10, p.94] and advises them to “engage the community in a discussion of the risks, costs, and benefits, to recognize needs and opportunities and discuss trade-offs.” [10, p.94] It further recommends that mining companies “interact with communities, indigenous peoples, organizations, groups and individuals on the basis of respect, inclusion, and meaningful participation.” [12, p.6]
To maintain an SLO mining companies must keep their promises and commitments, respond to the community’s concerns and requests, ensure that information is not only delivered but also understood by all stakeholders, be accountable to the communities at all stages of the project cycle, and not engage in dishonest or irresponsible behavior.  Formal written agreements can help companies gain trust from local communities and set realistic expectations, but it should be clear that an SLO should never be taken for granted and that social trust does not depend on documents. 
Obtaining an SLO is essential for reducing the risks of public criticism, social conflicts, and, in general, damage to a company’s reputation.  It also improves the effectiveness of a company’s resources, particularly its CSR budget. 
By contrast, lack of an SLO is associated with social conflicts, project delays, loss of machinery due to vandalism, and mine closure. Damage to a company’s reputation may hamper its ability to obtain necessary workers for current and future projects. These negative impacts also come with high costs for mining companies. While completely shutting down a mine is rare, delays can occur and can cost up to two-thirds of the mine project’s initial value.  According to Boutilier and Thomson, “a social licence is worth 75% of the top speculative price of a world-class deposit when it is in the ground and presumed to be development ready.” 
Higher costs of projects due to lack of an SLO also increase the interest rate for financing these projects. This may jeopardize the company’s ability to obtain financing and it also diminishes shareholders’ profits. Mining companies therefore have financial and operational reasons for ensuring that their projects run free of interruptions and, thus, the SLO can be seen as a type of insurance. 
The importance of gaining and maintaining an SLO is now widely recognized in guidance and recommendations provided by a number of industry and international organizations. For example, 74 financial institutions have adopted the Equator Principles, which are “a credit risk management framework for determining, assessing, and managing environmental and social risk in project finance transactions.”  These 74 financial institutions have committed to not providing loans to projects where the borrower will not comply with the Equator Principles’ social and environmental policies and procedures. The International Finance Corporation (IFC), Rio Tinto, and Deloitte have also developed a Financial Valuation Tool (FV Tool) to help decision makers have a clearer idea of how much of a return different social investments make; and to help companies choosing the best social investments portfolio. [15-18]
1Boutilier, R. and I. Thomson. Establishing a Social Licence to Operate in Mining. EduMine [Online course] 2009 Version: 03 November 2009 [cited 2012 January 26]; Available from: http://www.edumine.com/xutility/html/menu.asp?category=xcourse&course=Xlicence. 2Gunninham, N., R. Kagan, and D. Thornton, Social License and Environmental Protection: Why Business Go Beyond Compliance. Journal of the American Bar Foundation, 2004. 39(2): p. 307-341. 3Nelsen, J.L., Social License to Operate. International Journal of Mining, Reclamation and Environment, 2006. 20(3): p. 161-162. 4Kemp, D., R. Boele, and D. Brereton, Community Relations Management Systems in the Mineral Industry: Combining Conventional and Stakeholder-driven Approaches. International Journal of Sustainable Development, 2006. 9(4): p. 390-403. 5Clark, A.L. and J.C. Clark, The new reality of mineral development: social and cultural issues in Asia and Pacific nations. Resources Policy, 1999. 25(3): p. 189-196. 6Sethi, S.P., et al., Freeport-McMoRan Copper & Gold, Inc.: An Innovative Voluntary Code of Conduct to Protect Human Rights, Create Employment Opportunities, and Economic Development of the Indigenous People. Journal of Business Ethics, 2011. 103: p. 1-30. 7Atleo, S., Resource Development and Indigenous People: Finding the path to co-operation, in Republic of Mining, S. Studol, Editor 2011: http://www.republicofmining.com/2011/09/14/resource-development-and-indigenous-peoples-finding-the-path-to-co-operation-by-assembly-of-first-nations-national-chief-shawn-a-in-chut-atleo/ 8de Soto, H. The Peruvian Amazon is not Avatar. 2010. 9World Bank and International Finance Corporation, Large Mines and Local Communities: Forging Partnerships, Building Sustainability, 2002, International Finance Corporation. 10Prospectors & Developers Association of Canada (PDAC), Excellence in Social Responsibility e-toolkit (ERS), 2009. 11Browne, A.L., D. Stehlik, and A. Buckley, Social licences to operate: for better not for worse; for richer not for poorer? The impacts of unplanned mining closure for “fence line” residential communities. Local Environment, 2011. 16(7): p. 707-725. 12Prospectors & Developers Association of Canada (PDAC), Principles and Guidance, in e3PLUS: A Framework for Responsible Exploration: http://www.pdac.ca/e3plus/English/pg/pdf/e3plus-pg-full.pdf. 13Humphreys, D., A business perspective on community relations in mining. Resources Policy, 2000. 26(2000): p. 127 – 131. 14The Equator Principles Associations. About the Equator Principles. 2011 [cited 2012 March 6]; Available from: http://www.equator-principles.com/index.php/about-the-equator-principles. 15Jones, V.N., et al. How to Value Returns on Sustainability Investments in Emerging and Frontier Economies: Linking Community Outcomes and Business Value. Reflections from Practice - International Finance Corporation, 2011. 16Jones, V.N., et al., Measuring Returns on Community Investments in Mining in First International Conference on Social Responsibility in Mining 2011, SRMining2011: Santiago, Chile. 17Ednie, H., Tool means greater rigour for sustainability investment planning. CIM Bulletin, 2011. 6(6). 18Tomlinson, A., Measuring where it counts, in HighGrade - Drilling Deeper for the News 2011. 19The Mining Association of Canada, Towards Sustainable Mining - Guiding Principles, 2004. 20The Mining Association of Canada. Towards Sustainable Mining. 2011 [cited 2012 March 6]; Available from: http://www.mining.ca/site/index.php/en/towards-sustainable-mining.html.
The mining industry provides communities with jobs, economic growth, and improvements in people’s lives. However, communities may also need to balance competing interests, manage resources sustainably, and protect aboriginal and marginalized groups.
This page will explore how mining affects communities and answer common questions about sustainable communities and the various social, economic and environmental impacts on mining communities.
Does Mining cause social conflict?
On Common Ground Consultats Inc and Robert Boutilier and Associates - Social License in Action (Case Study).
Mining Association of Canada - Towards Sustainable Mining (TSM).
Prospectors and Developers Association of Canada.
Mining Association of Canada's TSM- Protocol for Assessing Aboriginal and Community Outreach Performance.
The Prospectors & Developers Association of Canada - e3 Plus Framework.
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