The Importance of the Social License to Operate at the Investment and Operations Stage of Coal Mining Projects: Application using a Decision Support System

The Social License to Operate (SLO) and the Value Chain business model are basic elements that need to be considered both at the planning and operation stages of mining operations and in particular in coal mining projects. If a coal mining enterprise loses its SLO, it may face risks in operations, which may lead to value chain risks. One of the causes of enterprise failure as related to coal mining operations is the inability to reliably assess/manage risk holistically and the inability to understand that lack of SLO is a critical risk. Although financial risks are typically assessed for mining projects, lack of SLO risk should also be taken into account starting as early as the bankable feasibility study. Furthermore, as it is difficult to establish a proactive decision-making policy for SLO risk in coal mining operations, the Operational Risk Management (ORM) methodology is probably a good tool to apply towards that goal. For this reason, a Mining Operational Risk Management Model (MORMM) was developed to incorporate risk probabilities and risk severities evaluated by experts. The final risk assessment is coded using Risk Assessment Codes (RACs). A hypothetical scenario was developed utilizing the MORMM model in order to illustrate how risks can be managed during the SLO granting process. This scenario describes a hypothetical coal mining project evaluated by virtual risk evaluators under specific hazard categories. Risk evaluation involves the assessment of risk probability and risk severity. Through this scenario this paper presents ways: (i) to establish a baseline ORM process that will be applicable to any coal mining operation environment, and (ii) to provide a theoretical example to demonstrate how the method can be applied to coal mining operations. The resulting RACs can provide critical information to decision makers regarding the rejection, acceptance or re-engineering of the mining business plan.