The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™

A fertile prospect?

Will Sirius Minerals be able to negotiate the challenge of developing its major potash mine in a protected area of north east England?

In January 2013 Sirius Minerals lodged a planning application to develop a significant potash operation in the North York Moors National Park in north east England. In the UK there is a regulatory presumption against major developments in National Parks and some NGOs, government departments and even the Ministry of Defence have questioned the company’s plans for the project. In order to win planning approval from the multiple bodies from which consent is required, Sirius will have to demonstrate that the mine will have net positive local and national impacts that outweigh any social or environmental costs in the park.

Steaming ahead?

While projects in the OECD avoid some of the political volatility and weak institutions often found in developing countries, they offer up their own unique challenges: companies may face stringent operating standards; any activity seen to threaten pre-existing industries can provoke fierce opposition from powerful lobbies; and opposed civil society groups often have large networks and resources to support their campaigns. Crucially, in the case of Sirius’ project, the company appears to have employed a strong stakeholder engagement strategy thus far. This could help tip the scales in its favour in the upcoming planning decisions, provided it can demonstrate that environmental and technical issues are also manageable.

Following a recent visit to North Yorkshire, Critical Resource takes a quick look at the stakeholder dynamics surrounding the project using the basic structure of LicenseSecureTM – a rigorous approach for assessing and responsibly managing a resource project’s ‘socio-political licence to operate’[1].

Stakeholder dynamics

  • The majority of local residents appear to be supportive, with many owning shares in the company (reportedly there are over four thousand shareholders in Yorkshire and Teesside, who together own about 9 per cent of the company). Sirius estimates the mine will directly employ at least 743 people, and considerably more during the construction phase. This is an appealing prospect for a community suffering from high unemployment.
  • Local NGOs have expressed fears that the mine could destroy the environmental integrity of the national park, and damage the local tourism industry. While opposition has been relatively low-key so far, if local NGOs were to successfully leverage partnerships with more powerful national groups such as Campaign for National Parks, pressure on the planning authority to reject the project could build.
  • Under UK planning regulations, Sirius will have to convince the North York Moors National Park Authority that the local and national benefits of the project outweigh any environmental costs, and that it would be unfeasible to relocate the minehead outside of the National Park. Should the National Park Authority refuse the application, the final decision on appeal could rest with Secretary of State for Communities and Local Government, Eric Pickles. In June 2012 Mr Pickles approved plans for a gas well (also within the North York Moors National Park) that had been rejected by North Yorkshire County Council, which may offer encouragement to Sirius. York Potash is also backed at the national level by the local MP for the area, Robert Goodwill.
  • The Ministry of Defence, Natural England, and the Environment Agency have recently lodged holding objections against Sirius’ planning application. The MoD has requested more information on how Sirius will ensure the project does not interfere with sensitive radar equipment at the nearby RAF Fylingdales listening station. Natural England and the Environment Agency are seeking more detail on the company’s plans regarding water supply. Sirius has stated that it is confident it will be able to supply the information requested.

Management approach

  • RAF Fylingdales: is Sirius listening?

    Sirius appears to have been considerate to stakeholder concerns, including making concessions on the design of the proposed mine. The company has proposed a low-rise minehead housed in a structure resembling an agricultural building, so as to minimise the site’s visual impact.

  • The company has also worked closely with the North York Moors National Park Authority. For example Sirius paid for external consultants to support the authority to assess the planning implications of the project during the pre-application period.
  • Sirius has secured the legally required agreement of the 300 landowners with plots above the mine site, by negotiating a 2.5% royalty on annual mine revenue. In order to ensure transparent negotiations Sirius contracted the Country Land and Business Association as an independent third party to negotiate access deals.
  • Extensive local stakeholder consultation also appears to have helped build support. Sirius has held a number of public exhibitions, setting out its plans and inviting feedback. Company representatives regularly attend town and parish council meetings to respond to concerns face to face; they also launched a website and a helpline through which people can ask questions and give their views on the project. Of the stakeholders interviewed by Critical Resource, even those strongly opposed to the project recognised the company’s work in this area.
  • Sirius has established the York Potash Foundation to support local community projects, financed by a 0.5% royalty on revenue from the project. The company has also launched a university bursary scheme to support local young people studying geology and engineering.

Critical Resource comment

  • Sirius appears to have taken a proactive approach to engaging with its stakeholders and to have avoided substantial grassroots opposition. However, as demonstrated by the recent holding objections lodged by the MoD, Natural England, and the Environment Agency, developing an extractive project in a sensitive environmental area – even in an OECD country – can provoke concerns from a wide range of stakeholders. The Pebble copper-gold project in Alaska, for example, has faced high-profile opposition driven by powerful local landowners and an active NGO campaign. These interests have aligned with local indigenous groups fearful that the mine could damage the local fishing industry. Importantly it does not appear that York Potash will disrupt existing business interests significantly.
  • York Potash is one of a number of resource projects in the EU which Critical Resource has covered recently (others include: Cuadrilla’s Bowland Shale project; Scotgold’s Cononish project; Gabriel Resources’ Rosia Montana project, and Eldorado Gold’s Halkidiki project). Difficult economic conditions in Europe over the past few years have prompted many national governments to view new extractive projects favourably. At the local level attitudes have seesawed between environmental suspicion, often informed by national and international NGO groups, and optimism over potential employment and local benefits. Success at these projects is dependent on companies’ ability to build a coalition of support among local stakeholders, while demonstrating sound environmental management to assuage local and national concerns. So far York Potash appears to be doing just that.
  • In the longer term Sirius’ strong relations with communities could be undermined if high expectations for employment cannot be met, or environmental issues are mishandled. In such an event Sirius may face renewed local opposition, and pressure for greater local benefits. In the longer term, for example, government could put pressure on Sirius to invest in more value-added processing in the UK. Sirius has proposed a simple dewatering plant at Teesside rather than a facility to produce more valuable Sulphate of Potash from the ore.

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[1] Please note that Sirius Minerals is not a client of Critical Resource, and that this is a rapid analysis – intended simply to provide food for thought – in contrast to the detailed analyses we develop for clients. Also, while various independent experts have been consulted as part of our research, the views expressed are solely those of Critical Resource.

Photos: North York Moors, (c) iStock/Danielrao; and RAF Fylingdales, photo by Ben Sutherland