The industry, currently mired in a slump, has to keep its SD initiatives in motion
By Russell A. Carter, Managing Editor
As Teck’s Red Dog mine in Alaska moves ahead to install high-speed broadband internet service, the nearby community of Noatak will benefit as well.
It’s easy to suspect that the lofty principles and high expectations that often accompany sustainable development (SD) initiatives might not have top billing in the strategic agenda of a mining company currently focused on trimming overall costs to the bone. However, in today’s environment, a company simply can’t afford to ignore or short-change SD issues.
A recent Deloitte report*, for example, pointed out that “Despite the recent ills in the mining sector, many governments have not softened their stances around resource nationalism. In most jurisdictions, mining companies continue to struggle to obtain environmental and other approvals, adhere to a range of beneficiation regulations, and remit sometimes excessive taxes, royalties and fees. At the same time, the cost of bureaucracy is taking a toll on corporate profits. Deloitte estimated that compliance with public sector rules in Australia alone translates into a AUD95 billion price tag for the economy.”
The report continued: “Pressure from other stakeholder groups is also mounting. Community expectations can no longer be met with lump sum cash payments, sports stadiums or water pumps. With each passing year, communities are seeking more meaningful outcomes—and are withholding consent when companies fail to accommodate their needs. This is also taking a financial toll. Researchers found that mining projects with capital expenditures of between US$3 billion to US$5 billion can incur weekly losses of roughly US$20 million due to delayed production caused by community opposition.”
And finally, “As activist organizations become more vocal, and more organized, they are able to exert even greater pressure on both governments and communities considering mining project approvals.”
The global mining industry is in the unique position of providing commodities that are essential for living, yet having to compete against itself, other industries and society in general for the land, water, and energy needed to mine and refine those commodities. Economic pressures stemming from the industry’s current slump have resulted in mine closures, project cutbacks and worker layoffs—all of which add fuel to an already volatile atmosphere. Yet, mining really has no alternative other than to continue to creatively plan, promote, and implement sustainability projects and goals that lie within its economic reach.
Industry experience shows SD programs don’t have to be high-concept, big-budget endeavors in order to be considered successful. In some cases, necessary upgrades to equipment or technology used on-site can concurrently improve the quality of life for nearby communities. For example, Alaska’s largest telecommunications company and Teck Alaska’s Red Dog Operations announced an agreement earlier this summer that will bring high-speed broadband internet service to Red Dog Operations and the community of Noatak.
Once the network expansion is complete, which is targeted for 2017, Red Dog employees and Noatak residents will be able to stream rich media and stay connected with family and friends. The network will also advance the performance of online business, health, education, and other services for both Noatak and Red Dog.
“This partnership will help connect many more Northwest Arctic residents with important online services, while also providing business benefits to Teck Red Dog Operations and mine employees,” said Henri Letient, general manager, Teck Red Dog Operations.
In other instances, tweaks to plant design or use of mine equipment for community assistance qualify as SD successes. Specialty metals producer Wolf Minerals, which operates the Hemerdon tungsten/tin mine at Drakelands in the U.K.’s southwest region, recently completed the installation of external steel columns around the mine’s processing plant to reduce the generation of low-frequency noise that was a concern to some local residents. Initial results demonstrate a much reduced level of low-frequency noise emanating from the processing plant and a reduction in the quantity of noise in the surrounding areas. The company said further work to reduce noise from the processing plant is ongoing to minimize the impact on the community.
The company also assisted a local village to build a new church hall by conducting groundworks to remove surplus material and move 300 metric tons (mt) of soil to excavate a level, firm base for the new hall foundations.
The authors of Mapping Mining to the Sustainable Development Goals: An Atlas acknowledge the numerous initiatives that have emerged to lend guidance to SD efforts in mining. These include, but are not limited to, the International Finance Corp. (IFC) Performance Standards and Commdev.org; the Natural Resource Charter and Natural Resource Governance Institute; PDAC Guidelines e3Plus and Early Stakeholder Engagement Guide; the Mining Association of Canada Toward Sustainable Mining (TSM) Initiative; the Africa Mining Vision; Voluntary Principles on Security and Human Rights; the U.N. Guiding Principles on Business and Human Rights; the Intergovernmental Forum (IGF) on Mining, Minerals, Metals, and Sustainable Development; the Organization for Economic Co-operation and Development (OECD) Policy Dialogue on Natural Resource-based Development; and the Global Reporting Initiative (GRI) Mining and Metals Sector Supplement.
Mapping the Progress
There’s no lack of reference material from which the industry can draw to establish SD objectives. Guidelines, white papers, manifestos and proposed global agendas continue to emerge (see sidebar). However, despite the attention of outside organizations and ongoing commitment to SD by producers of all sizes, the industry hasn’t always done a good job of publicizing its efforts.
Nevertheless, a recently released report jointly authored by the United Nations Development Program, the World Economic Forum, the Columbia Center on Sustainable Investment and the Sustainable Development Solutions Network maps the relationship between mining and Sustainable Development Goals (SDGs) by using examples of good practice in the industry and existing knowledge and resources in sustainable development that, if replicated or scaled up, could make useful contributions to the SDGs. Aptly named Mapping Mining to the Sustainable Development Goals: An Atlas, the report is primarily aimed at an audience composed of mining companies, their staff, management and boards. However, the atlas is also intended to advance the conversation on how mining companies can work collaboratively with governments, communities, civil society and other partners to help achieve the SDGs.
The report is based on desktop research and interviews with more than 60 experts from industry, civil society, governments, academia, international organizations and financial institutions conducted between June and August 2015.
It doesn’t entirely focus on major producers, as it pointed out, “Exploration stage (junior) companies are often the first point of contact between communities and the minerals industry. Exploration companies are typically funded with equity financing and lack revenues from the production of minerals. Consequently, shareholders and management are under pressure to ensure that raising capital is spent ‘on the ground.’”
Given the pivotal role exploration companies play in the mining value chain for many projects, the atlas includes case studies highlighting SD contributions juniors can make.
The report addressed the 17 SDGs adopted by United Nations member countries in September 2015 aimed at ending poverty, protecting the planet and ensuring prosperity for all (For a list of the goals, visit sustainabledevelopment.un.org). Each of the goals includes specific targets—169 in total—to be achieved over the next 15 years.
Critics pointed out that the list of goals and targets is broad, somewhat vague, and nobody is really quite sure how progress toward meeting the objectives should be measured. The relationship between the SDGs and their targets with regard to possible mining industry tie-ins is shown in the chart below.
Based on E&MJ’s recent review of SD annual reports from several major mining companies, it seems likely that the industry’s preferred SD goals will not always match up on a one-to-one basis with the U.N.’s 17 SDGs. Authors of the atlas appear to understand the scope of the problem, cautioning, “Success of the SDGs will require unprecedented cooperation and collaboration among governments, nongovernmental organizations, development partners, the private sector and communities.” But they also helpfully provide a few hints about how and where to begin. “If companies are looking for a place to start, the goals of social inclusion, environmental sustainability and economic development highlight some SDGs that might be opportunities.”
Once committed, there are several approaches that mining companies might utilize to collaborate—beyond formal partnerships and regular roundtables, for instance—with stakeholders and leverage available resources, such as:
- Using their “convening power” to bring people and organizations together to close gaps in communication and relationships. For example, mining companies may have multiple relationships across government, industry, communities, civil society and other stakeholders. Companies can help facilitate communication and collaboration between different groups to address shared issues.
- In the course of their business, mining companies collect and analyze data that might be useful in the implementation of programs led by government or civil society. Sharing information, data and analysis around tax and royalty payments, watersheds, landscapes, health challenges and safety statistics, for example, may be useful.
- Actively contributing to initiatives targeted at the SDGs by participating in them. Involvement does not always have to take the form of financial contributions. Companies can contribute time, leadership and management skills.
- Making financial commitments to support the implementation of a particular initiative through social investmentprograms.
This chart depicts icons (inner circle) for the 17 Sustainable Development Goals adopted by the United Nations, and suggested targets (outer circle) that the mining industry might focus on to assist in reaching the SDGs. Abbreviations (in order): NCDs = non-communicable diseases; TB = tuberculosis; OSH = occupational health and safety; EIDs = emerging infectious diseases; TVET = technical, vocational, and educational training; CCS = carbon capture and storage; IFFs = illicit financial flows; PPPs = public-private partnerships. SDG icons adapted from www.globalgoals.org/.
Making Its Case
From the industry’s point of view, the atlas may be useful for a number of reasons, not least of which is that it will serve to illustrate the scope of its SD endeavors to the entities the industry routinely has to interact with to advance its projects. These include:
- National governments across all relevant ministries—mining, development, finance, environment, infrastructure and others—as a catalyst to further align mining policies with national development plans and to engage more systematically with industry and local governments to leverage investment for sustainable development.
- Local governments, communities, development agencies and civil society organizations to support programs and efforts to help unlock the mining sector’s potential to contribute to a sustainable future and as a stimulus for increased inclusive dialogue and cooperation.
- Existing and future multistakeholder dialogue forums at the mine site level and the country level as a foundation to integrate the role of mining into the broader discussion of sustainable development and national plans to achieve the SDGs.
Along the same lines, and turning again to the Deloitte report mentioned earlier, the authors noted that miners interested in obtaining or extending their license to operate are beginning to realize that a new form of stakeholder engagement is needed—one that balances the demands of multiple groups.
“The concept of ‘return to shareholder, return to country, return to citizen’ is relevant here,” said the report’s authors. “Rather than simply reporting the amount of money spent on taxes and community initiatives, companies should aim to track and report on the impact they are having on each stakeholder group—not only shareholders, but governments, communities and employees as well.
“At a country level, for instance, miners can show how their activities and investments contribute to GDP, economic transformation and job creation. At the community level, they could report on outcomes such as number of university bursaries funded or the number of citizens connected to fresh water. From an employee perspective, they could track the percentage of employees living in houses with running water or who have been given access to training or apprenticeship programs.
“Creative metrics could include the growth and profitability of local suppliers; the training opportunities made available to employees; improvements in literacy and secondary school completion rates; the percentage of children completing traditional or spiritual education programs; and even improvements in softer measures, such as work ethic or employee satisfaction.
In conclusion, the authors stated: “If mining companies can start aligning their investments with the underlying and long-term needs of their disparate stakeholders, and further explore the concept of shared value, which demonstrates the interconnectedness of corporate competitiveness and community prosperity, they could earn not only the license to operate, but the license to grow.”
Two Sides of a Coin
The terms “sustainable development” and “corporate social responsibility” (CSR) are often used interchangeably, although they’re not identical concepts. Experts debate and disagree on the exact definitions of each; for the purpose of this article, let’s assume that SD refers to what a company is doing or will do to benefit its business and society in general, while CSR is essentially keeping score of what a company has done, generally over a defined timeframe, to benefit society, or what it has avoided doing to achieve the same societal benefits. CSR and SD are the flip sides of a coin that, going forward, most likely will be the token of admission to future markets—or mining concessions.
A significant milestone in mining CSR was announced in early April when the Initiative for Responsible Mining Assurance (IRMA) released the second and revised draft Standard for Responsible Mining for review and public comment period prior to the first-ever global certification program for industrial-scale mine sites, planned to begin in late 2016.
According to IRMA, the second draft reflects input from more than 70 organizations and individuals worldwide, including industry and technical experts. Additionally, in October 2015 and March 2016, IRMA conducted two field tests of the Standard for Responsible Mining to ground-truth the draft standard through simulated mine audits in the United States and in Zimbabwe. Auditors hired by IRMA reviewed company documentation, made first-hand observations at the mine site, and conducted interviews with company representatives and other stakeholders to verify the requirements in the standard are clear, practicable, and measurable.
The Washington, D.C.-based organization said the standard reflects growing awareness and demand for ecologically and socially responsible products by jewelers, electronics businesses and others seeking assurances that the minerals they purchase are mined responsibly. The standard seeks to emulate for industrial-scale mine sites what has been done with certification programs in organic agriculture, responsible forestry and sustainable fisheries.
The draft is the result of 10 years of collaboration between groups from the mining industry, organized labor, nongovernmental organizations, impacted communities and businesses. Its best practice requirements for mining include health and safety for workers, human rights, community engagement, pollution control, mining in conflict-affected areas, rights of indigenous peoples, transparency in revenue payments from companies to governments, and land reclamation.
After the comment deadline, IRMA’s Steering Committee will make another set of revisions to the draft Standard for Responsible Mining and release the final Standard in late 2016.
What Can Mining Teach the Tech Industry About CSR?
Wayne Dunn, president and founder of the CSR Training Institute, a CSR consulting, training and communications organization offers a few ideas about what high-flying, speed-of-light tech businesses can learn from on-the-ground, pound-it-out miners.
The mining industry has become relatively good at figuring out how to organize itself to create local benefits and value as a byproduct of its core business operations.
From working with local agricultural producers, to supporting alternative economic opportunities for women to general education and health programming and across a wide-range of other social value areas, the mining industry is reaching out to support people and families in the communities near its operations. It is far from perfect and one doesn’t have to look far to find where it has come up short. But, what is important here is that there are many places where it is succeeding and having meaningful impacts on people, families and communities.
What does this have to do with high tech?
The tech industry has generally been paying increasing attention to its supply chain. This isn’t easy with supply chains spread throughout developed and developing economies and across a range of national regulatory frameworks. In many countries, the national regulations governing environment, labor standards, health, safety and human rights are below what the tech industry’s consumers would consider appropriate.
Many companies have acted to set their own standards in these areas to guide their employees, contractors, sub-
contractors and others in their supply chain, essentially establishing a private regulatory framework. Managing compliance throughout this diffuse network is challenging. Often the marketplace expectations that drive this private regulatory framework are totally foreign to the people and organizations being asked to apply them.
Soon, companies will be held accountable for a broader social performance expectation. In addition to meeting global expectations on materials sourcing, health, safety, labor standards, environ-
ment and human rights, they will be expected to create social value in the communities in which their supply chain activities take place.
This is where mining has lessons that can be helpful. Those companies that want to lead, rather than be driven to meet these emerging social value creation expectations should take a close look at what happened in the mining industry.
The mining industry’s movement to support social value and development was often driven by painful pressures from nongovernmental organizations, communities and the public. As society became more focused on social and environmental performance, the mining industry was an early and relatively easy target. It had:
- Large, highly visible and concentrated environmental footprint;
- Legacy of less than stellar environmental performance;
- Legacy of social disruption; and
- The industry wasn’t really prepared to handle the pressure for increased social performance.
Companies that resisted lost market cap and even valuable projects as that elusive “social license” evaporated when they were unable to effectively deal with growing social demands. Some adapted well and have learned to integrate local value creation into their projects and activities.
Today, leading mining companies are routinely involved in a wide-ranging suite of social, economic and environmental activities aimed at making life better in the communities in which they operate. These activities go far beyond mining and encompass a range of health, education, economic/poverty alleviation, agriculture, environment, gender and other activities.
The major themes of the mining industry’s social value added activities are nearly perfectly aligned with the global development community’s focus areas as defined by the Millennium Development Goals and the Sustainable Development Goals.
Tech companies have two choices in the face of the emerging expectations to create social value as a result of its supply chain activities. They can sit back and wait for the pressures to develop further and respond later as pressures build. Or, they can be proactive and get out ahead of the curve.
For those wanting to get out ahead of the curve, the lessons learned in the mining industry can be valuable.
