An alternative view of the Resource Development Business
Supporting local communities in Madagascar(Page 1/2)
- Mineral Resources, Energy, Chemical & Electronics Business Unit
- Mineral Resources
Africa--the "last frontier" with huge potential
In June 2013, top-level government delegates representing more than 50 African nations arrived in Yokohama, Japan, to attend the fifth Tokyo International Conference on African Development (TICAD-V). The event, held over three days to spur inter-governmental dialogue, received high-level officials from 51 nations, including 39 heads of state from the world's second largest continent. They joined Japanese government leaders to discuss how Japan can support the region to achieve economic growth while fostering peace and stability. The meeting concluded with the adoption of the Yokohama Declaration, which formally established Japan's commitment to supporting the development of Africa through the expansion of private investment. As the region is expected to become a key player in the global economy by the mid-21st century, the success of this event will no doubt serve to stimulate interest among Japanese companies attracted to doing business in the world's "last frontier."
The nickel and cobalt refinery plant in Madagascar
Madagascar--a country with vast possibilities
What first comes to mind when you hear the term "Madagascar?" It may bring up images from the American animated comedy of the same name. Madagascar tells the story of a team of Central Park Zoo "stars," where the animals are shipped from New York towards Kenya, but against their will, end up on the island. In the blockbuster film series shown around the world, the "civilized" animals are perplexed by the island's pristine nature, wondering "Where are the people?" As presented in the movie, Madagascar is home to diverse wildlife, the most famous which may be the endemic lemur. The Indian Ocean island nation with an area 1.6 times the size of Japan is actually home to around 22 million people, with about 2 million living in the capital, Antananarivo, located in the center of the island. Still, many parts of the island remain uninhabited and unexplored.
Madagascar hosts a number of local specialties, including steak of the zebu, a distinctively humped cattle breed. High-quality vanilla flavorings and fragrances are some of the nation's key products. Anguilla mossambica, or African longfin eel, caught Japanese attention when its similarities to the Japanese eel was publicized. A delicacy in Japan, the indigenous breed is facing a serious population decline. Amidst high expectations, imports began in 2012.
The abundant nickel and cobalt deposits concentrated in the central area of the island have been known for some time. However, developing these untapped mineral resources was a different story. It was nearly three decades after the first studies began to identify the possibility of launching a mining business in Madagascar that Sumitomo Corporation, in partnership with a Canadian refinery company and a South Korean state-owned resource development corporation, began construction in 2007. The 30-year mining agreement known as the Ambatovy Project was underway.
A pair of "Verreaux' sifaka" (a type of lemur monkey native to Madagascar) filmed by one of our employees in a local nature preserve
The essential "social license" for resource development
Mineral resource development entails enormous investment in remote, frontier locations. Grandiose images evoked by this business continue to inspire many new university graduates who aspire to become globe-trotting businesspeople. What may not come so quickly to mind may be that this grand mine development business cannot happen without building strong relationships of trust with local communities and national governments. In developing countries rich in mineral reserves, mine development is generally defined as a priority sector which will drive economic growth. But the project cannot be called a success without the local community approval, where each citizen recognizes and appreciates the benefits of the foreign investment.
The concept described above is known as a "social license," a basic philosophy of CSR that is particularly relevant to mining and other development sectors. Businesses should fulfill their responsibility to contribute to areas where they operate, by protecting and enhancing the environment and the livelihood of the people in local communities. Only companies that have been approved, or given a "license," by the local citizens should continue their business activities. In line with this concept, which was introduced in the U.S. and Europe and is now widely adopted throughout the world, the Ambatovy project has a full-time CSR staff of over 100 members to make daily communication with the many local communities.
Sumitomo Corporation has readily adapted to the concept of social license, which is in line with its own business philosophy that has been passed down over the centuries of operation. One credo contained therein is: "Benefit for self and others, private and public interests are one and the same." Put in another way, it means "Sumitomo's business, while benefiting Sumitomo, must also benefit the nation and benefit society." The CSR activities conducted under the Ambatovy project reflect this long-established creed.
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