Social aspects of business risk in the mineral industry—political, reputational, and local acceptability risks facing mineral exploration and mining

Leena Suopajärvi (), Karin Beland Lindahl (), Toni Eerola () and Gregory Poelzer ()
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Leena Suopajärvi: University of Lapland
Karin Beland Lindahl: Luleå University of Technology
Toni Eerola: Geological Survey of Finland
Gregory Poelzer: Luleå University of Technology

Mineral Economics, 2023, vol. 36, issue 2, No 9, 331 pages

Abstract: Abstract Mineral exploration is an industry of uncertainties. Only 0,1% of exploration projects become mines, as the volume, content, and quality of a deposit all must be economically justifiable to find funding in the global financial market. However, the business risk of mineral exploration is not limited to geotechnical and financial risks, as social aspects are now considered the biggest risk facing the industry. Here, we identify three social aspects of business risk that may challenge the industry: political, reputational, and local acceptability. Political risk arises when sectoral authorities and the related legislation come into conflict, such as mineral versus environmental legislation. Reputational risk lies in the relationship between a company’s past and current operations in combination with the legitimacy of the entire industry. Local acceptability risk parallels the social license to operate, with poor corporate conduct, competition with other livelihoods, intrusion into culturally sensitive areas, and local values critical of mining all potentially evoking resistance. Companies must be aware not only of the nuances of each social aspect but also of the interplay between them to understand the full scale and scope of the business risks associated with exploration.

Keywords: Mineral exploration; Mining; Business risk; Political risk; Reputational risk; Local acceptability risk (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13563-022-00345-z

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