Leaderboard menu

UTS Library

Xstrata Zinc's McArthur River Mining Temporary Mine Closure Puts Jobs and Community at Risk

Client: 

Xstrata Zinc

PR Company: 

Rowland Pty Ltd

Award Category: 

Award Type: 

Call Number: 

2009 C03 - 03

Year: 

2009

Executive Summary: 

In December 2008 the Federal Court upheld an appeal that the $110 million McArthur River Mine (MRM) open-pit development approval was invalid due to Commonwealth Government (CG) procedural errors. This could not have come at a worse time given the global financial crisis, volatile commodity prices, operating cost pressures, currency fluctuations and shifts in supply.

 

With mining halted, ore stockpiles exhausted and no date for if the CG would approve the mine’s now-completed development works, MRM had no choice but to place the mine into care and maintenance (C&M).

 

For mining operations to resume, the Environment Minister had to approve the development works. This

critical decision would have far-reaching social and economic impacts.

 

MRM took a proactive, open and targeted approach to telling its story.

 

Ultimately MRM’s goal was to achieve urgent approval of the mine’s expansion so it could get back on with the job of delivering significant economic and social benefits to the Northern Territory. The objectives focused on supporting all MRM employees, suppliers and the local community, generating third party endorsement and proactively communicating the critical need for action.

 

This approach was highly effective, with MRM receiving approval within 21 business days.

Situation Analysis: 

Northern Territory (NT)-based MRM mines one of the largest known zinc-lead deposits in the world.

In 1995 MRM began operations as an underground mine. However, by 2002 the most accessible underground ore would soon be extracted and 100 kilometres of underground tunnels uneconomical to maintain.

Consequently, MRM sought NT Government approval to convert the mine to an open-pit. This approval was granted in October 2006.

Despite government approval and development works being well progressed, the mine’s expansion approval was contested in the Supreme and Federal Courts. This legal action was not about the development impacts but the process the CG followed in approving the expansion.

On 17 December 2008 the Full Bench of the Federal Court upheld an appeal that the mine approval was invalid because of CG procedural errors, and all mining work at MRM ceased.

This could not have come at a worse time given the global financial crisis, volatile commodity prices, operating cost pressures, currency fluctuations and shifts in supply.

For mining operations to resume, the Federal Environment Minister had to approve the mine’s development works.

Minister Garrett’s urgent approval was critical — without it MRM would lose its ability to:

·         Employ its 300-plus workforce, including 22 Indigenous trainees

·         Contribute to the community through in-kind support, donations, sponsorships and funding under its $32 million Community Benefits Trust

·         Retain 294 NT suppliers.

In mid-January 2009 Minister Garrett advised he intended to approve the development, with conditions. While this intention was welcomed, it provided no certainty about when a final decision would be made.

Fearing the process could take many months and considering no mining works could occur until the approval was handed-down and that MRM’s ore stockpiles would be exhausted on 26 January 2009, MRM had no choice but to place the mine into C&M.

Over a five week period Rowland partnered with MRM’s management team to prepare for and proactively communicate the announcement as well as the critical need for government action.

Research: 

Due to time constraints, limited research could be undertaken.

table

Target Policies: 

table

table

Communication Strategy: 

table

Implementation: 

table

table

Results: 

MRM’s proactive, open and targeted approach to telling its story and encouraging government to urgently act and approve the mine development proved highly effective.

Within just 21 business days after announcing the mine’s move into C&M, MRM received formal CG approval.

Importantly, MRM’s cause was championed by numerous third party endorsers including eight suppliers, Borroloola community members, Territory and NT Government Opposition members, and two industry bodies (see Appendix A: 3).

In all, MRM’s approach to communication around this critical issue received national and world-wide media coverage, generating more than 95 media items — the majority of which included MRM’s key messages (see Appendix A: 4). Furthermore, MRM’s employees, suppliers and the community remained well informed throughout this period of uncertainty.

Most important of all, following the mine’s approval MRM immediately mobilised its workforce with no loss to staffing levels or impacts on supplier agreements. MRM is now back getting on with the important job of delivering significant social and economic benefits for the people of Borroloola and the wider NT.

Evaluation: 

table