Communities as a risk in mining: managing community legitimacy

Using three cases from mining multinational enterprises (MNEs) in
Armenia, this article conceptualises community risk, providing an alternative
framework to conventional risk management approaches when
managing local community relations. These approaches have been
struggling to capture the increasingly complex risks originating from
communities – both those who are directly affected by mining activities
and the ones who have a vested interest in mining. The article defines
two types of community relations which mining companies manage:
communities of place (CofP), who live near the mine and are directly
affected by its operations, and communities of interest (CofI), who are
outside interest groups either opposing or supporting a given project.
Community risks arise when CofPs create meaning about the legitimacy
of the changes introduced into their physical and social environment,
leading them to take action that affects the MNEs’ risk exposure to political,
cultural or financial risks. The CofP can present these types of risks
by acting alone or in cooperation with the CofI, who often have the
resources and knowhow to affect corporate decision-making. The article
contributes by defining community risk as an increasingly salient source
of uncertainty for mining companies and MNEs in particular.
Conceptualising community risk as the lack of legitimacy with these
important stakeholder groups enables MNEs to strategise and adopt
practices which are adapted to the local context. At the same time it
assures investors, political and cultural stakeholders that the communities
who have a specific interest in the project accept its impact.