Mining is a good thing, right? Yes, of course it is. The mining industry provides the raw materials society needs to advance. The business itself creates wealth, employs millions and brings much-needed infrastructure to remote parts of the world. Overall, the industry’s track record regarding health and safety, environmental stewardship and sustainable development continues to improve. With so many mining companies doing so many great things, why is it saddled with a bad reputation?
Several articles in this edition talk about the good, the bad and the ugly. Leading Developments this month carries a story detailing the tax revenue stream mining provides for Canada. Throughout the regional news, readers will see several success stories, many of which are new projects using the best available means to mine and process ore. In Clarity Matters, Simon Walker offers a wide encompassing update on the diamond mining business. He also delves into the seedier side of the business, discussing the flaws of the Kimberley Process and the questionable practices in Zimbabwe and Venezuela. Even though that side of the business is bad, what happened in Romania was ugly (See Mine Remediation, p. 64). Fortunately, engineers from Wardell Armstrong, stepped up and healed wounds left by another generation. Too often, especially during times of high commodity prices, governments are tempted to take a populist approach and assess mining companies with windfall taxes or, at worst, seize the assets. Earlier this year a study on the mining business said that one of the immediate risks mining companies face is resource nationalization. Almost on cue, the press reported that Hugo Chavez had nationalized the Venezuelan gold mining business. Peruvian politicians decided to convert the country’s royalty system to a profits-based tax system similar to the Chilean system. Central African countries began modifying tax schemes. Australian politicians are getting in on the action too.
Governments play an important role. First and foremost, they must maintain the rule of law. The rules and the consequences must be clear and fair. Corruption and civil disobedience are unacceptable. Government should foster a stable business climate and respect property rights. The ruling authority is also responsible for the infrastructure to meet societal needs, not just utilities and highways, but schools and hospitals as well. It’s acceptable for the government to collect revenues to support these needs through taxes and royalties, but it must be a consistent system that allows mining companies to earn a profit.
The mining industry needs to take the intellectual high road and blaze a new path forward. It needs to forge an alliance with employees, the surrounding communities, government officials and stockholders. That alliance has to be based on trust, understanding and a long-term vision. Transparency builds trust. The mining business needs to explain that the massive investments its making today will benefit future generations. Short-term thinking, whether it’s commodity price fluctuations, quarterly financial results or election cycles, cannot be allowed to cloud the long-term performance.
No doubt, the mining business has some legacy issues. We can reverse that image by being honest and acting with integrity. A wise old miner once told me integrity is how you act when no one’s looking. We need to insist on the highest standards engineering can offer. Finally, we need to be more assertive in communicating the benefits of mining.