Controversial International Mining Arbitrations and the Impact of ‘Social Licence’ – Lessons Learned and Future Planning
International energy analysts record that the market size of key energy transition minerals has doubled in the last five years, reaching a staggering US$320 billion in 2022. With this dramatic increase in mining for key mineral resources, industry experts also expect an increase in international mining disputes.
Mining projects often take place in remote areas where there are significant water and energy requirements and require a high degree of coordination with national governments (eg, through the negotiation of concession contracts) as well as local governments and communities where the project takes place.
The necessity for mining investors to liaise with local government and communities makes the concept of a ‘social licence to operate’ – that is, the process in which a mining investor gains approval from the local community where the mining project will occur – a key issue raised in international mining arbitrations. How past arbitral tribunals have dealt with the ‘social licence’ concept can, in turn, encourage companies, governments and legal practitioners to plan strategies to avoid disputes – or to employ effective dispute resolution strategies if any dispute relating to a ‘social licence’ arises.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.