Nowadays, with the economic crisis going around the world, being a profitable company is hard, but being a profitable and social responsible corporation is even harder. In the Barrick mining company case, one may notice there are many problems confronting the firm ranging from property vandals, trespass, sexual assaults, and deaths to fraudulence conducted by Tanzanian police. Many may argue that as long as the region is plagued by unemployment and poverty, violent conflicts will continue to intensify. This, however, does not hold true because the area is poor to begin with. In fact, since Barrick’s arrival, the community has gained accessed to electricity, roads, employments, hospitals… etc. (Regent, p.1)
Looking at a bigger picture, it all comes down to one core problem that the villagers do not feel Barrick has done enough to the community comparing to the profit it has gained. In other words, the residents feel they are being ripped off because they benefit little to nothing from these mining activities. Even worse, the villagers living around the mine suffer the pollution and the climate of fear of violence that the company has created. In addition, Barrick’s failure to honour its promises of demarcating an area for small scale miners and setting aside money equivalent to one percent of the company’s income fuels the intension. Therefore, violence will continue as long as villages’ dissatisfactions remain unsolved.
There are two possible options Barrick can attempt to solve this conflict. The first option is Barrick should honour its promises mentioned above. A war cannot be won by force and it has been proven by history. What Barrick has been doing with the use of police and security will only trigger the hatred furthermore from the villagers. There are two reasons why Barrick ought to do this. First of all, since the company’s arrival, 40,000 villagers have been forced to give up their artisanal mining (York, p.1). They have gone from being employed to unemployed. Barrick is partially responsible for this situation. Secondly, it is Barrick’s promise to set an area for these small scale miners and this project has been long delayed by the company. Accordingly, this postponement is one of the reasons contributing to the intension between Barrick and the villagers. Therefore, by fulfilling its promise, Barrick is able to build a better image and weaken the intension.
Having said that, let us take a look at possible benefits and harms to stakeholders such as villagers, intruders, company and shareholders. First, the benefits this option brings are the small scale miners will able to get their jobs back. This in turn will soften the conflicts between the villagers and Barrick. For Barrick, the support from local community will increase; consequently, a better image of the company is forged. There may be no need for police and security guards as intruders will find it not necessary to invade the mine; thus, costs of hiring these staff are saved. Most importantly, the degree of violence will decrease in the area and property damages which cost the company millions of dollars are saved.
On the other hand, Barrick will lose some of its profit under this option. In addition, there is no guarantee that mine intrusion will stop, a better relationship with the community will be born and the villagers will not demand for more privileges. At worst, possible lawsuits to the firm can occur due to the fact that incidents may happen in this small scale mining area.
As mentioned above, the core problem has to deal with what the villagers feel about the company and their own situation. That is to say how one interprets a situation; therefore, another course of action is that Barrick should continue what it is doing currently. There are several reasons for this. The first reason is how one may define “sufficient”? There is no measurement and it really depends on the perspective view of a person. In essence, one party may feel that at this level it is enough; on the other hand, one party may feel it is too little. Particularly in this case, the villagers do not feel Barrick has done enough to the community despite the company’s efforts to build roads, good water and reliable water where there was none or very little before (Regent, p. 1). In contrast, Barrick feels it is “seen by the majority as stable, reliable, beneficial contributor to the community and the economy” (Regent, p.2). As a result, it is difficult to distinct between “sufficient” and “not sufficient”, which leads to the option that Barrick should continue doing its part. Another reason is that change is inevitable in life and the villagers must find ways to cope with the change. There are always two sides of the coin as a matter of fact. Looking at the case of North Mara mine, one may raise 2 questions: “How come the villagers can cope with the positive changes such as electricity, water supply, roads… but cannot adapt to the negative impacts Barrick has brought in?” and “Is it true that ‘the massive piles of waste rock have become the only real source of income for the villagers?” (York, p.3). To put it differently, the second question asks whether invading the mine is the only mean to living. This is very questionable providing the facts that there are villagers who exploit successfully the changes Barrick has brought in. Specifically, Evodius Fulgence, a young entrepreneur in the article “Golden possibilities” has found new opportunity to double his customers and double his income by selling new products such as DVD players thanks to the electricity Barrack has brought to the area. (Barrick, p.1).
The third reason is being a socially responsible corporate does not mean that Barrick has to take care of every citizen in the area it operates. In fact, it is irrational and close to impossible to do so. Corporate Social Responsibility requires collaboration and support from many parties including the company and the government. With 70% of ABG revenue retained in Tanzania (2009), Barrick is among the largest tax payers ($73 millions) in the country (Barrick, p.2). With that amount of money Tanzanian government has, why do their citizens still suffer unemployment and poverty? Let us turn the attention to the stakeholders again. The benefits for Barrick under this option are no sacrificing of profit and no possible actions against it if there were accidents in the small scale mining area. If Barrick continues what it is doing now, assuming this belief is true: “for every job in the mining sector, three indirect jobs are created” (Barrick, p.3), then more jobs for the community are being created. Along with its policy which “ensures that whenever possible all supplies are sourced at a local or regional level” (Barrick, p3), relationship with the villagers is enforced in the long term.
In the short term, however, this solution does not answer to the residents’ needs. Negative harms may present, such as no support from the community. “Tarime District residents have threatened to halt mining gold operations at North Mara” (Kaijage, p. 1). Violence will continue because according to South African Institute of International Affairs, “there are repeated reports…. The community feels duped and deceived by the way in which the mine was established.” (York p.2) In deciding which course to action to choose, let us examine several ethical principles and moral standards underlining in each option.
Going back to option 1, honouring Barrick’s promises with the villagers is a logical and ethical choice under Kantianism. Many may argue “the artisanal project has been delayed because its safety and security aspects require more study” (York, p.6). Assuming this holds true, fulfilling the company’s promise is still the right thing to do because consequences are ignored. For this principle, if one universalizes the act of breaking a promise; then trust will not exist and a promise becomes a self-defeating purpose. Barrick has the moral duty to treat people with respect, not to exploit people’s trust as a mean to earn profit. As a result, the company ought to do it.
Using moral standards, there is not a clear line between right or wrong. The consequence of option 1 is the company and shareholders will lose some of their profits. Assuming the profit is the most important thing; then the right of shareholders in using the mine to earn profits conflicts with the right of the villagers in earning a living. For the shareholders, they are the investors and they have the right to make the most profit out of the mine because it is their investment. If however, assuming life is the most important element, then clearly, the residents have every right to invade the mine to make the living. Barrick’s right to profit is outweighed by the villagers’ right of living.
On the other hand, based on ethical egoism, an individual or a business should only act according to their own perceived interest. In this case, for Barrick, it is to maximize profit. The original purpose of opening the mines in Tazania is to utilize natural resources and cheap labour to gain a competitive advantage and make profit. So if Barrick’s management team tries to resolve the problems by sacrificing shareholders’ self-interests and taking care of the community; then, it is going against egoism principle and put the interest of the shareholders at risk with these expenses.
Let us turn to option 2. Using Milton Friedman CSR business concept, Milton would agree with this option. In his view, a corporation’s only social responsibility is “to make as much money as possible while conforming to the basic rules of the society” (Textbook, p. 42). Clearly, in this case, Barrick has complied to all the laws and ethical customs. Specifically, when relocating families around the mine to different locations, critics criticize the company for giving penny compensation; however, it is due to “the socialist-era law that deemed all land to be owned by the state” (York, p.2) and Barrick just follows it. In addition, in attempting to be beneficial to the community, Barrick has joined a number of associations such as “International Council on Mining and Metals, International Cyanide Management Code and Voluntary Principles on Security and Human Rights” (Regent, p.2) to show their friendly intentions. Having said that, based this CSR business concept, directors have fiduciary duties to act on the best interest of the shareholders that is to earn profit as much as possible. So, to act in the interest of the villagers would violate the directors’ fiduciary duties to the shareholders.
Assuming the human life is the most important, Barrick’s action is unethical under Kantianism. Using force to solve the problems cannot be made universal because if every mining company does it, human life is undervalued. In addition, the action of doing nothing to stop conflicts should not be used because it exploits the villagers’ rights of living as a mean to earn the company own profit. Barrick is the guest of the country to begin with and as a guest, it should be living in peace with the host, not by going to war.
Under Utilitarianism, looking at the long term effect, the short term benefits Barrick gets from not doing anything will not outweigh the long term costs Barrick’s current actions will incur. Namely, the costs Barrick saves from setting up the area for small scale miners will be outweighed the by the costs of bad publicity the company will suffer in the long run. With many scandals of shooting, sexual assaults and environmental damages being published, Barrick has fallen off the list of Canada’s 50 top corporate citizens (York, p.6)
In my own opinion, taking these ethical principles into account, the best course of action is option 1, which is to honour Barrick’s promises to build a better image. It may not be the optimized solution in the short run, but in the long run, it provides greater net results than option 2, which is not doing at anything at all. As a manager, one should be well aware that consumers nowadays are more concerned about where their goods come from and how they are being produced. To put it differently, company’s image and reputation are very important and directly linked to the profit. So, assuming the company adopts option 1, while in the short run it loses some profit, in the long run, it is able to build a better company’s image and calm down the intense situations at the mines. In contrast, adopting option 2 can save some up-front costs; but in the long term, the costs associated with bad reputation are unpredictable.