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Quarrying and CSR: The South East Asian experience

Established in 1965, Kukusan Quarry occupies 65ha of forestry land in Tawau, Sabah, East Malaysia and produces around 100,000 tonnes per month of high quality aggregates from its diorite reserves.

Diorite is uncommon in Sabah, where most quarries are extracting much weaker greywacke sandstone, and as such, combined with its coastal location, this makes Kukusan Quarry a valuable asset both for its operators, Hap Seng Building Materials Sdn Bhd (HSBM), and for the Malaysian Government.

When Ron Delaney joined HSBM in 2005, he had already mapped out a program to exploit the value evident in Kukusan. Unfortunately, within two weeks of his taking on the role of CEO, the quarry was issued with a ?stop work? order which was to remain in place for six months.

Ron explains that the major reason the operation was closed down was because the previous quarry management had consistently failed to consider the quarry?s impact on the local residents, dating right back even to when it was first established in the area in the 1970s. A mosque located on the boundary, approximately 50m from the crushing plant, was constantly being given a dust coating. When asked to suspend production for the funeral of a local dignitary, the former manager refused, causing much resentment amongst the community which subsequently escalated into the suspension order.

REBUILDING COMMUNITY FAITH
?So, we had a lot to do to restore our reputation and credibility,? explains Ron. ?First, we ripped down the old, inefficient plants that spewed dust out and designed a new modern system from Sandvik with less than a quarter of the number of machines. Then we built a bund wall around the boundary to screen off the operational area from public view, which also dramatically reduces noise pollution.
?We resurfaced the road through the village, installed wheel washing equipment, built a new modern office, renovated the workers? quarters and landscaped the external boundary, especially the entrance,? he adds.

At the same time as dealing with environmental issues, HSBM were in the process of negotiating a lease extension, both in terms of extending the tenure and increasing the exploitable reserves. ?It was a very sensitive time,? recalls Ron, ?as there were a number of opposing groups, including several elected officials and government departments whose views needed to be balanced with our commercial interests.?

Malaysia does not yet have the same level of planning control found in Australia or other Western countries, that is, there is limited zoning (no zones specifically for quarrying), no requirement to set aside buffer zones, or mineral supply/demand obligations placed on authorities. Ron explained that HSBM were the first to propose an afterlife purpose for the quarry or a ?Whole of Life? plan.

?As part of the process of applying to extend the lease, we wanted to show the government departments what can be achieved, and drawing on my experience from working on the Sunway Lagoon theme park in Malaysia, we used a computer-based modelling program to design what we thought was the optimal solution, both in terms of maximising exploitable reserves and to leave a valuable post-operation landform.?

Another issue that HSBM had to deal with was the growing population in Kukusan Quarry?s immediate vicinity. According to a Malaysian Government survey, in around 1970 there were only a few houses (more accurately, timber huts) in the affected zone. The last census in 2005 recorded at least 18,000 residents, which by now has grown to in excess of 20,000.

?While many of the structures are without any permit, and the occupants termed ?illegal? immigrants, their views must be taken into consideration,? explained Ron. ?Some of those shacks have mains power and satellite dishes!

?So, in parallel to the discussions with the government departments, we hosted a number of meetings in the local community where we explained the technical details of what was proposed as well as offering several social initiatives, such as ensuring locals were given priority when recruiting staff, the donation of computers for the local schools, English teaching programs and scholarships for the less well-off children from the neighbouring villages,? he adds.

?We found that by creating a situation where open dialogue could be conducted with the village chiefs and other interested parties, we could generate genuine simple and workable solutions. Actually, we did this by organising a few barbeques! At the end of the day, we would rather they (the villagers) complained directly to us than taking it up with the local politicians, or responsible authorities.?

THE BENEFITS FOR A GOOD CORPORATE CITIZEN
By going through the process, HSBM discovered that a track record as a good ?corporate citizen? is essential and that the most effective approach was to adopt a triple bottom line methodology. ?We have rolled this out to a number of our new developments and greenfield sites also,? explains Ron. ?Sometimes it?s a hard sell, even to our own people, but in time they all come to recognise the benefits.?

Ron Delaney espouses five simple rules for implementing corporate social responsibility ? or CSR:
1. Keep it simple.
2. Keep it local.
3. Involve employees.
4. Innovate and adapt.
5. Lead (but by a metre, not a mile).

?I have seen big local corporations and multinational corporations launch high profile, expensive CSR programs, which, in all honesty, is meaningless to the villager who is struggling to put shoes on his kid?s feet,? reflects Ron. ?Sometimes it?s a cultural issue. For example, when I first went to Vietnam, I saw a hundred or so local villagers breaking oversize rocks with hand-held sledge hammers. I immediately bought a hydraulic breaker on an excavator and put it to work in the quarry. Within a few days, the village chief was in my office, demanding to know why I had dismissed his people! The $US40 a month we were paying them was more hard cash than they normally saw in a year. Back in 1992-93, most villages survived on barter trade, so 100 people breaking rocks with sledge hammers had a huge impact on the local economy.?

In summary, after 28 years of working within the Asian quarrying industry, Ron concludes, ?To succeed, you have to be a part of the community, not be apart from the community.?

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