Shareholders speak up

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One of the biggest stories in recent weeks concerns a report produced by lobbyists opposed to the Pebble project in Alaska.

The latest report on the project by the group Earthworks targets potential investors and financers of the project, suggesting that any backers should be wary of the challenges the project faces if it ever to enter production. It even goes on to suggest potential questions would-be investors could pose to owners Anglo American plc and Northern Dynasty Minerals Corp’s about the project’s risks.

This seems to be the latest in a stream of activity currently being termed ‘shareholder activism’, a trend whereby shareholders are becoming increasingly vocal about environmental and ethical concerns relating to mining activities.

Two of the best known cases of shareholder activism within the mining industry have been ActionAid’s campaign against Vedanta Resources plc’s bauxite project in Orissa, India, and the Norwegian Pension Fund’s decision to divest from both Rio Tinto and Barrick Gold Corp because of concerns over mining operations.

But wether it is the investments of one shareholder or a national pension fund at stake, shareholder’s voices are becoming increasingly loud when it comes to environmental and ethical issues, and the way a company responds increasingly important.

Companies may have to devote more effort into engaging with sharehoders. Corporate strategies and practices need to be put into place, or further enhanced, to deal with grievances before they burst into activism.

The latest good practice guidelines from ICMM on handling and resolving local level concerns may help in nipping grievances in the bud before they have the potential to affect project or operation financing.