The secret of Lundin Gold’s success in winning community support

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    Canada’s Lundin Gold claims a success story of gaining community support at its Fruta del Norte (FDN) underground mine in Ecuador.

    Together with Equacorriente’s Mirador copper operation, FDN is the only industrial-scale mine in the country.

    According to the company’s statistics, in 2021 Fruta del Norte accounted for 0.50% of Ecuador’s GDP, the Amazon state of Zamora-Chinchipe, where the mine is located, accounted for 37% of GDP, and Yanzaza state accounted for 85% of GDP.

    Lundin Gold began operations at the mine in November 2019, with an estimated useful life of until 2034. However, thanks to the quality of the deposits and exploration, the company aims to remain in the South American country for about 50 years.

    BNamericas spoke to Lundin Gold Ecuador’s Business Sustainability Manager, Juan José Herrera, about how the company was able to gain support from the surrounding community.

    BAmerican: How did you balance the needs of the community with the economics of the project?

    Herrera: Since Lundin Gold arrived in this country, a strong foundation of trust has been established with communities, local authorities and, of course, national authorities.

    Kinross, owners of Fruta del Norte, decided not to proceed with the project in 2013, but local purchases and labor hiring are already underway, as well as several ventures and social investments. It’s important to remember what happened.

    But for almost two years after that, there was minimal activity to sell the assets. It was also felt at the local level, and a kind of local economic recession began.

    This situation differs from other projects in Ecuador, and even internationally, in Peru and Colombia, for example, where companies face opposition from local communities when they arrive.

    There was a welcoming atmosphere in Ecuador when Lundin arrived. The community wanted to develop Fruta del Norte because they saw the positive impact of the project and the possibilities it offered.

    BAmerican: There were many expectations regarding the benefits Lundin would bring. How did you deal with it?

    Herrera: Yes, there were a lot of expectations from local players and the community. Along with the expectations, there were also questions, concerns, and uncertainties about what the arrival of large-scale mining in this country would mean.

    For six months, we talked with members of the community, basically members of the Diocese of Los Encuentros, and listened to everything they had to tell us.

    It was a process of participatory dialogue at so-called thematic dialogue tables.

    Of the set of topics discussed, we prioritized eight issues, but the top priority for citizens was always the direct and indirect It was job creation. There were also environmental concerns regarding water, flora and fauna, agricultural issues, tourism promotion, and how royalties were to be used, among others.

    This participatory dialogue process has helped us build a strong foundation of trust and contributed in particular to the creation of our education and training strategy, local purchasing and contracting and community investment strategy, along with our sustainability model. .

    The dialogue table is still in operation today and is a very interesting success story.

    BAmerican: How did you balance mining with environmental considerations and local living?

    Herrera: Sector leaders and decision makers, as well as the company’s VP of Business Sustainability, were present throughout the process and were aware of all advances on environmental issues, including biorecovery.

    There were company representatives at each table depending on the topic, which was an important point. For example, the environment table provides an overview of progress over the past six weeks, with information about land clearing, plant and animal restoration campaigns, water management issues, road infrastructure advances, and how they worked together. It was shown. Things like environmental management let the community know how the construction meets the highest international standards.

    Regarding the construction part, progress was also reported according to the schedule. What the labor demand will be over the next six weeks, the number of buyers and the amount of future purchases.

    There was even an agricultural productivity table that defined how our social investments could enhance some agricultural and livestock operations.

    BAmerican: Successful concentric circle strategy. What did it consist of?

    Herrera: With no one in Fruta del Norte’s direct sphere of influence, Lundin prioritized local purchases and contracts according to their proximity to indirect spheres of influence.

    The rings are arranged according to the country’s administrative and political divisions, such as parishes, cantons, states, and other regions of the country. And the closer people and businesses are to Fruta del Norte, the higher the priority.

    After a long process, the ring was defined. One corresponds to the parish of Los Encuentros and two additional communities located on the old road to Fruta del Norte, which are part of our closest sphere of influence. Ring 2 is the rest of Yanzaza province. 3 for other parts of the state and 4 for other parts of the country.

    These rings are considered for local employment, purchasing and social investment. Priority is ring 1. Due to the Zamora-Chinchipe movement, the Shuar and Saraguro indigenous peoples are considered Ring 1, regardless of their location.

    We are pleased to see that many mining companies have adopted this approach and are already calling the closest area of ​​influence the ring.

    BAmerican: What economic impact did Fruta del Norte have?

    Herrera: Mining projects have enormous potential to generate economic and social impacts at both local and national levels, which can be measured in a variety of ways.

    The construction phase, which lasted from 2017 to 2019, had a very important impact on Yanzaza, Zamora and national levels.

    At the local level, supplier development is complicated because rural areas generally do not have the capacity to comply with mining standards initially.

    Lundin Gold and the Lundin Foundation [a non-profit organization]made important efforts to create the development of local suppliers, but also at the national level.

    Success stories have also emerged. For example, for important activities in the construction of the Fruta del His Norte tunnel, a consortium was established between the Ecuadorian company Semaica and the Chilean company Mas Errázuriz.

    After creating these capabilities in key local companies, many companies were able to do it alone for future projects. At the time of construction, this was not the case, but we endeavored to generate or promote those features.

    In 2021, Lundin Gold generated US$145 million in direct and indirect benefits to the state, paying income taxes of US$29 million, royalties of US$36 million, value-added taxes of US$22 million, etc. This shows the importance of mining.


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