Socio-economic assessment in the extractive industries—Avoiding the pitfalls

• Inadequate input-output multipliers means ‘sense checks’ of the data are required.
• Consultation is critical but sensitive information must be handled properly.
• Criticality/substitutability must be assessed.
• Some impacts cannot be quantified but can be illustrated using case studies.

There is increasing interest in the use of socio-economic assessment (SEA) as a tool to support regulatory decision-making and to help businesses maintain their social licence to operate. However, its application in the extractive industries remains unclear. Minerals and metals move through a complex and dynamic global supply chain, which makes it difficult to ‘assign’ socio-economic impacts to any one location. Intermediate products (e.g. metals) generally comprise many different inputs – some of which may be used in very small quantities but, nevertheless, impart essential and/or valuable properties to the final product – making it challenging to assign values. The SEA process is made even more complex by the diverse range of downstream applications which these products have, the potential for future innovation and a lack of reliable socio-economic statistics for the sector. In 2013/14, Risk & Policy Analysts Ltd undertook the first global study on the socio-economic value for manganese (Mn). This paper describes the key obstacles identified while undertaking this research and outlines some of the steps that were taken to ensure a robust SEA. It highlights important lessons that should be taken forward when undertaking future SEAs in the extractive industries.