Presentation to the 2013 Credit Suisse Coal Seam Gas Conference, 13 November 2013, by David Paterson, Emergent Advisory*

Good morning.  It is a great pleasure to offer some thoughts this morning about how the CSG sector might communicate better with its stakeholders and the public in general.

I have three simple points that I want to make. The first is that the communication issues have not arisen because of a lack of data being disseminated, but rather a lack of trust between governments, companies and communities.

The second point is the media is not the villain of the piece.  In general, most journalists just want to tell a good story and industry players need to help them do this.

Finally, I make the point that in public controversies like this one, companies will not be treated the same way as their critics by the public.  That might seem to be unfair, but it is just the way things are. The challenge for us is to understand this and find strategies that help us adapt to this reality.

I propose to do this mainly by telling some stories from my experience in the mining sector that I think have some relevance to the current debate.

From 2004 to 2010 I was the head of external affairs at Rio Tinto’s Australian uranium business. Energy Resources of Australia operates the Ranger uranium mine and the Jabiluka project in the Northern Territory.  These are two of Australia’s most contentious natural resource projects.  If there is another sector of the Australian business community that knows what CSG companies are going through at present, it is the uranium sector.

The similarities between the controversy over CSG and uranium in Australia are striking.  The product offers much by way of economic opportunities and income to remote rural communities.  Its production is surrounded by fears and concerns, many of which are unfounded.  The public debate around the issues is highly divisive.  The debate splits communities, political parties and even families.  Everyone has an opinion, and usually a strong one.  And both sides are convinced they have science and best practice on their side.

It is this situation that leads me to my first point.

What this debate lacks is not data.  It is trust.

For gas companies seeking to win the hearts and minds of communities and the public, they will not get there by disseminating more data.  They are not losing this

debate because they have failed to provide enough information.   Their predicament is not caused by an unscrupulous campaign by the Greens.

If they are failing, it is because they have failed to build trust.

When I started working in the uranium industry I was involved in a number of industry groups.  These groups were full of passionate advocates for the nuclear industry; people who were convinced of the great benefits that could flow from the expansion of nuclear power and, but extension, uranium mining.

The problem with these uranium industry advocates is that so many had no real understanding of the factors that motivated our opponents.  Very few sat down and talked at length with activists from green groups.  Most would not have been to a dinner party where the prevailing views were opposite to theirs.

As a result we prepared wonderfully informative and accurate websites and information kits.   But in the end had almost no impact on the debate.

We were totally convinced about the rightness of our cause.  But, we were unable to generate the political, emotional or social capital require to shift the debate.

This changed with the formation of the Australian Uranium Association.  The AUA was, I believe, highly effective at influencing the debate about uranium in Australia. We saw the ALP has abandoned its Three Mines Policy.  Australia has entered into bilateral agreements with new markets to enable uranium to be exported to more countries.  Western Australia and Queensland have now removed their prohibitions on exploration and mining.  NSW has allowed uranium exploration to proceed.

At ERA, we had a very difficult history.  And while those relationships continue to be complex, they did improve dramatically as we were able to break with the suspicions of the past and build trust.

What did we do that worked?

One of the most important things we did was regularly seek to make a break from the way issues were dealt with in the past. We needed to produce what psychologists would call cognitive dissonance.

Let me give you two illustrations.

Rio Tinto acquired ERA in 2000.  ERA had just been through a bruising protest over the development of Jabiluka, where in 1998 5000 protestors had blockaded the development of the mine for 10 months. When Rio Tinto took over it stated publicly that it would not proceed with the development of the mine without the express approval of the Traditional Owners, despite having all the legal approvals required to proceed.

The representatives of the Traditional Owners were suspicious of Rio Tinto’s seriousness.  They challenged the company to back up its words with a legally binding agreement.  Rio Tinto agreed.

The TO’s then demanded that the exploration decline which accessed the deposit be filled in and the site rehabilitated.  Rio Tinto agreed.

Years after, the TO’s representatives have told me that these actions were pivotal in building a new level of trust.

In the years that followed there were many challenges to the relationship, with several serious environmental incidents, but ERA continued to find new ways to build trust. One opportunity that presented itself was the ongoing native title case over the town of Jabiru, the town which housed most of ERA’s work force.

The Jabiru native title case was the longest running native title dispute in Australia.  It was complicated by the history involving the formation of Kakadu National Park, and the TO’s assertion that they actually had a claim to the ownership of the land on which the town was built, not just native title.

At this point it is a story that we have all seen a hundred times before.  Mining company and aboriginal community at loggerheads over land rights.  However, with some innovative legal advice and management courage, ERA took a different approach.  It recognized that if the TO’s were prepared to agree to allow the town to function in the way it had been to date, there was no practical reason why the ownership of the land could not be returned to the Mirarr in exchange for a long term lease.

ERA approached the TO’s to ask if this would be a workable solution for them.  They responded that this is exactly what they had been saying for decades and nobody would listen.  So ERA then undertook to advocate this approach with the Governments of the Northern Territory and the Commonwealth.

Many in the NT and Commonwealth Governments greeted this proposal with a mixture of confusion and outrage.  They couldn’t understand why the mining company was siding with the TO’s.  However, with a persistent campaign of lobbying and dialogue, an agreement was struck and the proposal implemented.

The outcome was on the 26^th August this year, legislation was passed through the Federal Parliament amending the Land Rights Act giving ownership of the town to the Mirarr Traditional Owners and resolving the longest running native title dispute in Australia.

In both of these cases, ERA was able to start building trust by breaking out of old mindsets and demonstrating goodwill.  The solutions were very much in the shareholders interests as well as the communities, but it required fresh thinking.  The outcome was a step change in the relationship.

Let’s then turn our attention to my second point: the role of the media.

Of course, the local communities are not the only parties in any resource-based controversy.  The media is very much a player in any high profile dispute of this sort.

And while it often doesn’t feel like, I want to make the case that the media are not the enemy.

Let me tell you, when there has been a report of a uranium mine leaking waste into a world heritage listed wetland, doing interviews with the local ABC radio station is not a pleasant experience.  I know what it is like to be on the sharp end of a media feeding frenzy.

It is very easy for companies in the line of fire during a public policy debate to seek to make themselves a small target and minimize their public exposure.  This is a natural response.  But I think it is a mistake.

While journalists can be aggressive, and to be sure some of them ideologically driven, by and large journalists just want to tell a good story.  Conflict is a vital ingredient of any good story.  But it is possible for good media advisors to help construct the story in a way that is advantageous to the company.

Companies in the line of fire need to find ways of teaching journalists about their business.  Arrange site visits.  Open up to them about the challenges and ambiguities of the business.  Speak at conferences.  Build relationships and alliances.  It can be done and it can be rewarding.

I know that there are individual cases of journalists and media commentators who become part of the story – Alan Jones comes to mind in this instance – but I truly believe that this is the exception, not the rule.

I should add that companies also need to have a realistic view about what fair media coverage looks like.  Just because a story contains an element of criticism, it does not mean the story is hostile.  It often stings to read these sorts of comments, but it is important to take an impartial view about how the story reads or sounds.

That brings me to my third point.

Industry should stop think they are going to be treated fairly.  This is not going to happen.

For those of us in contested industries, it is often infuriating to hear extravagant allegations made about our businesses.  Claims we know to be wildly inaccurate.  Unfortunately, we often respond – quite naturally – by making counterclaims about our business that downplay the risks inherent in our business.  This is understandable in light of the messages of our opponents, but counterproductive.

The reality is that the public does hold companies and environmental activists to a different standard.  It is rooted in the precautionary principle.  “We know that the Greens are probably exaggerating about the risks of X, but that is because they are trying to protect the environment.”

But that permissiveness does not extend to industry.  Being perceived as exaggerating the safety of your business will be regarded as deceptive.

So, it is important for companies and their representatives to develop messaging along the following lines if you are going to gain public trust.  “Yes, there are some technical risks in our business.  And yes, there is a risk that some things will go wrong over time.  But we will commit to you that we will employ the highest operating standards in the conduct of our business, and will keep you fully informed about how we are going.

Conclusion

I hope that I have given you some food for thought today.  The CSG debate is an important one for Australia.  At stake is a vitally important source of energy, a driver of economic growth and a means of reducing greenhouse gas emissions.

But also at stake is the quality of water resources, the health of rural communities and the viability of traditional rural businesses.

My view is that the real challenges here are not technical, but rather social.  The industry need smart, courageous people who can reach across the divide and build trust with communities and activists.

We need to remember that there is plenty of data out there already, and what we really need is more trust.  Trust can only be built with courage, lateral thinking and goodwill.  We need to remember that the media is not really the enemy, even if it often feels like.  Journalists generally want to tell a good story, and we need to help them to do this.  Finally, we need to give up the idea that companies will be treated the same way as activist groups.  The public will always hold industry and its representatives to a higher standard than our critics.  That is just the way it is.

Our background is grounded in traditional business skills on which the mining sector has been built: an understanding of the important of capital efficiency and low cost operations.  This is complemented by a sophisticated understanding of the contribution of social sciences to the profitable operations of a resources business.  Rather than being a “soft skill set”, insights from social sciences are critical to today’s resources companies as they seek access to new mineral resources, capital from equity and debt markets and high quality employees.

Contact: David Paterson  E: david@emergentadvisory.com  T: +61 477 277 215