Miners need to learn how to navigate the political spectrum in Latin America, says Southern Pulse
Scenario: A profitable gold mine operator in faces a threat of work stoppage as local political leaders square off with the local union leader.
The protests are not organized by the union but by the local community leader, who holds more influence over the local labor force.
To solve the problem, the miner decides to investigate who influences who in the community.
The company learns that the union leader’s position was not in line with his boss’ position (at the state level). It also learns that the local community leader and the mayor were related through marriage and would likely not turn on one another.
The miner executives decide to sit with the state-level union leader, present their case, and ask him to bring the local union leader into alignment.
As a result, the state-level union leader diffuses the conflict at the local level by removing the local union boss and replacing him with someone who was more loyal to the state-level structure.
The mine is no longer threatened by a work stoppage.
The real case described here is one of many handled by Southern Pulse, a company focused on local networks and strategic relationships that supports Canadian and American companies to navigate the Latin American market.
The company works with different sources and methods to produce what it calls a ‘3D map’ showing the stakeholders involved in the community.
“We bring a more nuanced and granular understanding of the most influential stakeholders in their immediate operating area,” Southern Pulse founder Sam Logan told MINING.COM.
According to Logan, mining in Latin America presents an excellent opportunity for foreign direct investment, but at the same time, it has risks because of corruption and lack of regulation.
“The biggest challenge that miners have is at the moment when they realize that they’ve broken ground, beginning construction. And then they get a knock at the door from some local, highly influential, perhaps politically connected or criminally connected individual that comes in and says, okay, we’re going to have to work together,” said Logan.
“A lot of times, it’s the person who supplies the diesel, or the person who supplies the food. If you are a junior mining company and have a large enough camp in that operation, that’s a big deal.”
Political influence
With the high demand for critical minerals for the energy transition, countries like Chile, Mexico and Brazil have sought to review regulations and permitting.
That comes with concerns about resource nationalism.
With the return of Luiz Inácio Lula da Silva to Brazil’s presidency in January, Ecuador is now the only significant regional economy with a right-wing government.
Last week, representatives of the Argentinean delegation said at the annual PDAC convention that countries in the region are discussing the creation of a lithium cartel in South America.
For the Southern Pulse founder, miners need to learn how to navigate the political spectrum in the region.
“Mines, when operating successfully, represent the most stable and most important source of economic growth in the local environment compared to any other potential activity that could happen in that same place,” said Logan.
“This is where I think a lot of mining executives fall short of their potential. The political influence and the political voice that one has as a mining operator is, oftentimes, underutilized,”
Logan says it is possible for miners to have political influence in an ethical and lawful way.
“You don’t want to get into a situation where you are making agreements to give anyone money or do any sort of campaign financing,” he said. “But what you want to do is to be receptive, you want to let them (politics) come and tour your project. You want to have meetings with them where you go and you discuss the development of that community.”