Abstract:
The research below is essentially aimed at evaluating how effective the Equator Principles are when it comes to the mitigation or negation of community-related risks while ensuring that mining projects are feasible and therefore, worthy of being financed.
The Equator Principles constitute a risk management framework that aims to offer a benchmark for “due diligence and monitoring” processes. It was established to assist Equator Principles Financial Institutions with handling the identified environmental and social risks, appropriately. Furthermore, the Equator Principles are acknowledged globally and have the potential to significantly change the way in which mining companies engage with the communities they inhabit.
This research therefore proceeded to identify key mining activities that characterise each phase of the life of a mine. Within each phase, mining companies are faced with various community-related risks which could easily be prevented if they are identified at the onset of the project. Three brief case illustrations were considered in order to aid in the evaluation of both community-related risks as well as how the Equator Principles are and could be applied.
While there are ten principles, focus was drawn on five specific principles. Thereafter, a brief historic analysis was considered before evaluating how these five principles are currently being applied. This was done by taking their respective limitations into account in an attempt to recommend an alternative approach that would result in a mutually beneficial outcome for financier and mining company alike. The key resultant limitation identified was that despite the EPs being sound principles, their application and implementation appears to be the source of many of the associated failures. The key resultant recommendation was that while the EPs need to be approached differently in that mining companies need to incorporate the EPs into their policy framework so that their application becomes inherent and a way of doing business. If done correctly, the mining company stands to save money by avoiding unnecessary interruptions and financiers stand to have the peace of mind that their requirements have been satisfactorily met while the loans will be repaid.
