December 2015

Social impacts of the closure of Century mine

  • By Dr Jo-Anne Everingham and Professor David Brereton, Centre for Social Responsibility in Mining, University of Queensland

Identifying opportunities to leave a sustainable socio-economic legacy

A major challenge for today’s resource companies is ensuring a positive legacy when a mine closes. MMG is confronting the challenge this year with the end of open-cut zinc production at Century mine in the Gulf of Carpentaria, north-west Queensland. MMG, which acquired Century in 2009, is the fourth owner of the mine since production commenced in 1999. The operation has been a major economic force in the Lower Gulf region, stimulating both direct and indirect changes. In particular, the Gulf Communities Agreement (GCA) between the mine, four traditional owner groups (Waanyi, Mingginda, Gkuthaarn and Kukatj) and the Queensland Government drove socio-economic change for individuals and communities. 

The GCA was one of the earliest negotiated native title agreements and is more complex than a simple exchange of ore for royalty payments. It records expected opportunities and benefits for traditional owners and the wider community, and involved native title groups – especially through employment and environmental management – in activities at the mine. 

When the GCA was signed in 1997, it was hoped the mine would be a platform for change in a region that was socio-economically disadvantaged despite its abundance of natural and cultural assets. Almost 20 years later the challenge is to ensure that the Aboriginal people and the communities of the Lower Gulf will be able to lever off past and planned activities of the Century mine to weather the likely impacts of closure.

Recent studies by the University of Queensland’s Centre for Social Responsibility in Mining (CSRM) have reviewed the GCA and examined the social impacts of the mine and potential closure impacts. These studies have assisted with planning priorities for community and stakeholder partnerships in the final years of production and the transition to closure.

Century mine – a catalyst for change

During its 16 years of operation, the mine has provided many benefits for the surrounding communities, including stable, well-paid employment opportunities and increased personal incomes for employees and their families; business for supply chain companies; establishment of new businesses in the region; and payment of royalties, rates and charges – some of which have been channelled to regional infrastructure development and economic advancement. In addition, the presence of the mine has created or contributed to additional infrastructure, such as sealed roads, improved telecommunications, new port facilities in Karumba and all-weather airstrips.

Specific examples of the mine’s contributions to the socio-economic fabric of the Lower Gulf include:

  • More than 900 members of the native title groups or Lower Gulf communities have been employed at Century since 1997. For more than a third of these the mine provided their first experience of participating in the mainstream workforce. Members of native title groups and local Aboriginal people, who are prioritised under the GCA, have fairly consistently constituted around 20 per cent of the workforce. They report that employment at Century improved their family circumstances and future employment prospects.
  • Century’s annual funding to the Aboriginal Development Benefits Trust (ADBT) in accordance with the GCA provides financial assistance to new Indigenous businesses in the region. Over the life of the mine this will total in excess of $15m. ADBT and Century itself have facilitated the development of some Indigenous enterprises servicing the mine and local communities. The major success stories in terms of direct contracts to provide mining related services are Northern Projects Contracting (NPC) and Hookey Contracting.
  • An important non-mining related contribution has been the establishment of Lawn Hill Riversleigh Pastoral Holding Company (LHRPHC). Now majority-Waanyi-owned, LHRPHC  runs about 25 000 head of cattle.
  • Direct payments made to Gulf-based contractors and suppliers have varied but a total in excess of $20m a year has been typical in recent years. There was a total spend to contractors and suppliers in the four Shires of over $62m from 2008-12.
  • In 2014 alone, Century reported procuring $42m worth of labour, goods and services in the Lower Gulf.

Projected social impacts of closure

The implications of mine closure will be felt throughout north Queensland since the mine directly and indirectly influences communities such as Townsville, Mount Isa and Cairns, where many of the FIFO workers live and where some major suppliers are based. However, it is the less populated, less diversified and less prosperous Lower Gulf itself that is likely to be most affected. 

The list of possible changes is long and includes increased unemployment and welfare dependence; decreased economic activity; reduced funding to community development programs; deterioration of community infrastructure and local recreational facilities; reduced capacity of regional emergency services; demographic changes in towns; reduced household incomes; decreased local school enrolments; fewer education and training options; increased demands on community organisations and local social services and rising costs of essential services (eg fuel, power, telecommunications, flights and water). Most of these impacts will disproportionately affect local Aboriginal people due to the limited availability of government services
and the reliance of local Indigenous communities on the mine for employment, training and other support.

Maintaining the skills, knowledge and wellbeing of people in the region and continuing to improve the availability of human capital will be very difficult once zinc production ends and a large, experienced workforce is no longer needed. Future employment opportunities are likely to be in tourism, services, government and cattle grazing. While former employees of Century may be equipped to take on some of these roles, based on current projects there will be far fewer jobs available than is the case now.

Employability and career pathways after completion of production are not assured for those without formal qualifications or skills transferrable outside of the mining industry. Those unable to find alternative employment in the region may either go on to welfare, or leave the region.

Household incomes will change for those affected by the inevitable job losses. This will pose difficulties in terms of both reduced income and loss of self-esteem. Very little of the increased income associated with mining employment appears to have been converted into savings or long-term assets, in part due to the inability to purchase housing across the region. This affects a number of households since the post-production workforce is likely to be fewer than 100.

In 2012 there were over 1000 total employees – almost 250 of them being Aboriginal people with connections to Century’s lease area and/or residents of the regional communities of Doomadgee, Mt Isa, Mornington Island, Burke and sections of the Carpentaria shire around the centres of Karumba and Normanton.

The wages paid by Century and its contractors to Indigenous employees will reduce considerably from combined 2012 levels of almost $30m once production ceases and again after the active closure phase is completed and ongoing ‘caring for country’ is the main focus. Not all of these employees reside in the Lower Gulf because Century is a FIFO operation. To gain another sense of the scale of impact in the immediate region, Century paid $8.8m in 2012 to employees residing in the four Lower Gulf shires.

Other GCA-related financial flows from Century will also peter out. Annual compensation payment to native title groups’ eligible bodies distributed through the Gulf Aboriginal Development Corporation will end in 2018 (three years after production ends). They have totalled more than $13m over the productive life of the mine, although it appears that native title groups have invested in few sustainable development initiatives. As well, under the Agreement, 2018 will be the last of Century’s annual contributions to the Aboriginal Development Benefits Trust. These funds for Aboriginal business development have totalled about $15m.

Easing the negative impacts of closure

The GCA provides some cushioning of these far-reaching effects. Largely as a consequence of the investments in pre-vocational training under the agreement, there is a core of skilled mine workers among the native title groups of far north-west Queensland. As well, not all must compete for scarce alternative jobs in that region as many of the Indigenous employees over the years have taken the opportunity to relocate to larger centres such as Townsville and Cairns to improve family circumstances. Almost 40 per cent of the Indigenous workforce surveyed in 2012 had moved residence since starting work at Century. The functioning of LHRPHC as a strong and viable pastoral concern is another valuable legacy of the GCA that holds promise for a post-mining future. There have also been improvements to infrastructure and services that, if maintained, will continue to serve other local businesses and residents.

Other measures can also mitigate the direct impacts – especially on existing employees and supplier businesses. Retraining, job-placement assistance and efforts to maximise the role of local Aboriginal people in the new work requirements associated with the transition to closure are important. Unfortunately, the global downturn in mining will limit the opportunity, at least in the short term, for employees to find work elsewhere in the industry. Opportunities for the future will need to harness the substantial economic asset of land from successful native title claims. They will also require an inclusive approach to spreading the enterprise benefits widely in the local Aboriginal community and leveraging of strong government support. Fundamental to success will be local leadership skills, involvement of respected elders, good management and governance.

CSRM has recommended a number of action priorities to address these issues. These include:

  • Preparing the Century workforce and other Lower Gulf residents for post-mining employment so there is a diverse and useful skills base in the region by supporting non-mining related apprenticeships and training.
  • Supporting transition planning for local mine-related businesses, especially local Aboriginal businesses, to diversify their business and client base so they reduce dependence on Century for contracts.
  • Working with other authorities and agencies to devise alternatives for future maintenance of infrastructure and essential community services.
  • Continue to support LHRPHC in managing extensive pastoral lands and using these as a sound foundation for integrated economic, educational, environmental and cultural purposes in future. Explore ways for the Waanyi native title group to use relatively undisturbed and uncontaminated parts of the lease for low-intensity grazing land (recognising that this may be constrained until
    lease relinquishment).

Conclusion

The Century experience highlights the challenges associated with developing regional economies and cohesive communities in remote areas. The GCA expressed aspirations for indigenous communities in the Lower Gulf to achieve employment rates, health status and educational opportunities comparable to the rest of Australia. Notwithstanding a number of positive impacts from the mine for individuals and businesses involved, and a total injection to the regional economy of probably half a billion dollars, the region still lags behind others in terms of income, employment, infrastructure and labour force participation rates. It remains too under-developed in many respects to maintain jobs, services, revenue, infrastructure and improvements. This situation will be compounded when production ceases, as the majority of jobs associated with the mine will disappear, revenue flows to local government will be reduced, some key infrastructure is likely to be decommissioned, and other services may be reduced or cease.

This case highlights key challenges for community engagement programs and community investment in remote regions. It also demonstrates the need to plan for managing the social impacts of closure from an early stage of production.  The vision of those who negotiated the GCA provided some ambitious long-term goals. MMG has made significant investments in this respect over the past three years. However, an earlier and stronger focus on closure and the GCA aspirations by the mine’s successive owners and the other parties to the agreement may well have led to better long-term outcomes. 

References

Everingham J, Barnes R and Brereton D, 2013. Gulf Communities Agreement 2008-2013. 15-year Review. CSRM. The University of Queensland: Brisbane. www.csrm.uq.edu.au/publications/gulf-communities-agreement-15-year-review.

Everingham J, Barnes R, Parmenter J, and Brereton D, 2014. Social Aspects of the Closure of Century Mine. Social Impact Assessment Stage 2. CSRM. The University of Queensland: Brisbane.  www.csrm.uq.edu.au/publications/social-aspects-of-the-closure-of-century-mine-social-impact-assessment-stage-2.

MMG, 2014. Sustainability Report.  www.mmg.com/en/Sustainability-and-Community/Sustainability-Reports.aspx.

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