Measuring the social license to operate of the mining industry in an Amazonian town: A case study of Canaã dos Carajás, Brazil

Abstract

Mining projects may affect the quality of life in surrounding communities due to environmental, economic, and social impacts. Social dissatisfaction towards such activities can harm the production and shipment of minerals. Communities' perceptions are reflected in the concept of Social License to Operate (SLO), which its assessment can be qualitative or quantitative. In Brazil, few studies have analyzed the SLO of industrial activities. We assessed the SLO in Canaã dos Carajás town, Pará State, Brazilian Amazonia, where the world's largest iron ore project locates. We used the SLO scale method (Boutilier and Thomson, 2018) to measure its level, and the Integrative Model (Moffat and Zhang, 2014) to test the extent to which the license appeared to be influenced by a set of control variables, including economic and environmental impacts. We conducted structured and in-person interviews based on a questionnaire with a sample of 190 people stratified from 14 social groups that reflect the town's community. We found that the SLO level of the S11D Carajás Iron Ore Project and the Mining company is Acceptance (average score of 3.63 ± 0.87, Likert scale), the second in a four-leveled scale. Procedural fairness, company-community interactions, and improvements in social infrastructure were positively related to the community's trust in the company, whereas negative impacts on the economy and environment negatively affected community acceptance and approval of the company and its project. Our findings suggest that governance and confidence in institutions can influence the SLO, as the interviewees reported low trust in local government's management of royalties and taxes from mining. The fundamental stakeholders - government or industry - should estimate and disclose the SLO since it is essential to appropriate assessment of the public opinion about industrial impacts. Thus, companies can establish effective sustainability strategies to improve the standard of living of the population. This study confirms findings from previous studies, supplement the literature and may encourage companies to invest more in social responsibility and sustainability.