Business and Human Rights – mining sector and licence to operate: recent case studies

Under international standards such as the UN Guiding Principles and the OECD Guidelines, companies are expected to conduct human rights and environmental due diligence to identify, assess, mitigate and remediate any adverse human rights or environmental impacts that they cause, contribute to or are otherwise linked to.  A failure to do so can expose a company to legal, regulatory and reputational risk.  This could come in the form of litigation and other dispute resolution (e.g. National Contact Point complaints), regulatory fines, stakeholder pressure (e.g. from investors or NGOs) and/or a drop in share price.

The mining sector is generally exposed to heightened human rights and environmental risks.  New mining operations may impact local communities and Indigenous Peoples; leaks of tailings dams could contaminate local water supplies leading to environmental contamination and/or restricting the availability of potable water for local communities; excessive use of local natural resources could have lasting impacts on the local environment. 

The robust management of human rights and environmental risk by mining companies is at the core of such companies’ licence to operate.  Two recent cases illustrate some of the perils that mining companies can face from a failure to effectively manage human rights and environmental risks – putting their licence to operate at risk and attracting regulatory sanctions.

Ecuador: environmental licence revoked over community and water concerns

In October 2025, Ecuadorian authorities revoked an environmental licence granted to a Canadian mining company for the development of Loma Larga, a gold project in an environmentally sensitive area.[1]  Local residents and authorities had argued the project threatened the Quimsacocha water reserve and posed material health risks.

The case is illustrative of how human rights and environmental considerations can go to the heart of a mining company’s licence to operate: under the UNGPs and OECD Guidelines companies should respect indigenous people’s rights, including by obtaining free, prior and informed consent (FPIC) as part of the stakeholder engagement process.  While an environmental licence was previously granted, pushback from the local community was sufficient for the government to revoke a licence that had been previously granted – showing that stakeholder pressure could lead to government agencies revisiting past decisions.

Chile: regulatory enforcement at lithium operations

In September 2025, Chile’s environmental regulator fined a US company nearly $340,000 for exceeding its approved water extraction limited between October 2019 and September 2020, and for failing to comply with safeguards under its aquifer alert plan.[2]  This case illustrates some of the challenges in conducting operations in areas that present particularly high environmental risks – and illustrates that regulatory risk can crystallise where an operator falls foul of its environmental obligations.

Where there is a regulatory finding of this nature, it is foreseeable that other interested parties (e.g., NGOs, local communities, supply chain counterparties) may be put on notice as to other forms of pressure they could exert on the operator (e.g. through litigation if they have suffered loss or via an NCP complaint in respect of a potential violation of the OECD Guidelines).

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As companies develop, review and enhance their existing sustainability and human rights programmes, in line with best practice, companies may wish to apply the below strategies to improve their sustainability and human rights risk management strategies:

1. Ensuring that they have processes in place at a board level to translate human rights-related commitments into positive action;
2. Closely monitoring legislative developments relating to mandatory human rights and environmental due diligence (“HREDD”) obligations;
3. Integrating meaningful stakeholder engagement in all steps of their HREDD process;
4. Carrying out a human rights impact assessment and taking proportionate counter-measures, as well as communicating internally and externally on what measures have already been taken;
5. Reviewing and reinforcing complaints mechanisms and speak-up programmes, and ensuring they are well-equipped to deal with human rights-related “crises”;
6. Reviewing the extent to which their board is equipped to address supply chain risks, including through training executives and seeking independent support and advice; and
7. Reviewing the role, resources and expertise of the legal and compliance functions, who should play a key part in addressing these new challenges.

Mayer Brown lawyers are available to help clients in this increasingly complex and evolving regulatory landscape.

[1] Ecuador revokes environmental license for Canada’s DPM to develop gold project, Reuters, 4 October 2025, available at: https://www.reuters.com/sustainability/climate-energy/ecuador-revokes-environmental-license-canadas-dpm-develop-gold-project-2025-10-04/

[2] Chile fines Albemarle for lithium extraction violations, Mining.com, 30 September 2025, available at: https://www.mining.com/chile-fines-albemarle-for-lithium-extraction-violations/

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