Giving back to people and planet
Often in the news for the wrong reasons, the mining sector generally faces a chilly reception in the court of public opinion. Its historical environmental legacy, for instance, has won it few friends—and has led many communities to actively oppose any prospect of mining activity.
Times have changed, however. More than ever before, the mining sector today complies with many—and more stringent—laws governing environmental and social sustainability. Beyond such compliance, however, mining companies are giving back to people and the environment in ways that the public seldom sees. As independent consultants who spend considerable time in the mining sector, we see—and indeed are engaged in— a number of examples where mining companies are driving good sustainability practice towards creating positive impacts for the environment, the economy, society and governments.
This innovation improves not just the industry’s direct environmental and social impact, but extends as far as promoting better governance in many countries while generating skills and revenue that feed the broader economy. Through its global associations like the International Council of Mining and Metals (ICMM), the sector is constantly raising the bar for responsible practices.
Mines themselves clearly have a finite reserve and life-span, but mining as a whole remains an important ‘pioneer industry’ from which other—more sustainable—sectors can start and grow. In the past, the way that mining contributed to such growth was largely spontaneous, and generally not planned with much circumspection.
Today, the context is more demanding. Mines are frequently required to meet legislated targets that promote local economic development. While mining’s contribution to South Africa’s overall gross domestic product (GDP) has fallen steadily in recent decades, the industry still contributes significantly to the economies of mining regions. Its secondary and tertiary economic benefits also ripple deep into the informal economies in these areas; and by strengthening spending and skills in the upstream and downstream informal economies, mining boosts the ‘economic engine room’ of the country.
What is often not considered by observers is that the legislated requirements to promote local economies are seldom straightforward—either in their execution or their impact. It takes dedication, skills and resources to act effectively on many aspects of compliance if the intended outcome is to be ensured.
Enhancing local procurement
Prompted by policy and legal requirements for growing local content, the mining industry is showing a great deal of commitment and ingenuity—by evolving policies, strategies and projects that enhance its positive impact on its local communities and society in general. There has been much progress in the way that mines leverage their supply chains, for example, to nurture local enterprises. The resilience and sustainability of the local providers of goods and services has been recognised as a key aspect of a mine’s contribution through its supplier development mandate.
One of the signs of progress in this field is the evolution of international good practice in reporting on mining local procurement, one of the relevant instruments is the Mining Local Procurement Reporting Mechanism developed by Engineers Without Borders.
The economic benefits of mining clearly extend beyond the royalties paid to central government and salaries to employees. By proactively developing the local supply chain, mines can give back more to their host countries and local communities through the services and products they procure. This can have a significant impact on gross domestic product if astutely pursued. Local imperatives like transformation can also be promoted using innovative procurement strategies—which could affect items ranging from services like conference hosting and environmental support services. Several mines are also successfully procuring mining essentials through enterprise development initiatives that include joint venture arrangements.
One of the challenges in leveraging supply chains for broader economic development is where a country’s capacity to produce is low. This may be due to a lack of local entrepreneurial and technical skills, related experience and financial resources. Development is also hindered where government macro-economic policy and lack of a reliable power supply discourage investment in supporting industries. These conditions demand a more proactive role from mines to develop selected local suppliers —and this is being achieved with some success already through structured enterprise and supplier development programmes.
It generally requires closer partnerships between mines, large contractors, suppliers and—where possible—supportive agencies from government or the non-governmental sector. The potential benefits here are significant, as mines are complex operations which act as dynamos for economic opportunity. Mining companies have for many years been innovating their practices to leverage these opportunities for local entrepreneurs. They are also responding to government priorities to boost representation from women and the youth in these initiatives.
Wherever in the world mining takes place, it is still a significant driver of infrastructure investment. In the developing world context, however, such investment is doubly important. Where a mine’s development can initiate the building of roads, rail, powerlines and even a port, the knock-on benefits for other sectors are vast. This is especially vital where government’s ability to fund or initiate these projects is limited. As has been witnessed in certain southern African countries, the expansion of upstream and downstream activities can lead to mining becoming less dominant while other sectors gradually contribute more to building and supporting that infrastructure.
Embracing the concept of shared value, there has been renewed interest in public-private partnerships as a means to promote these developmental efforts—and these are likely to increase in a post-Covid world. In an example of joint infrastructure development in the Democratic Republic of Congo, for instance, a mining company is partnering with the state power producer to refurbish and expand several power stations. The energy to be generated will benefit not only the mine, but businesses and communities.
Mining’s economic contribution has in the past often been on its own terms; today, there greater demands for other stakeholders’ interests to be more systematically addressed. More intense and meaningful engagement with a wider group of stakeholders—including local communities —has for the past couple of decades been a growing focus. In a field fraught with potential challenges, many mines are making important strides in developing—in collaboration with partners—strategies that work.
As in all new endeavours, success cannot be guaranteed at the first attempt. Rather, the evolution of mining is a difficult process that takes time, expertise and plenty of determination. The ongoing work that the mining sector puts into developing social engagement strategies and lessons learned, though, is likely to be valuable to many other sectors and professions.
Key among the focus areas today is building community resilience—an issue now more important with the impact of climate change. Linked to a mine’s social development obligations and its enterprise development efforts, this calls for closer collaboration between mine and community from an early stage. The aim is to create an economic and social structure tha—through active economic diversification strategies and plans—could better survive the eventual closure of the mine’s operation and the loss of its direct local benefits.
Historically, the environmental damage caused by mining has frequently been significant. Managing the environmental impact of mining has been a central concern for governments and civil society organisations over the past couple of decades to mitigate biophysical degradation and human health effects, and much has been achieved. Mines now need to demonstrate environmental compliance and align with global good practice. This also requires that they contribute practical solutions to addressing issues such as climate change, land and water management and resource efficiency.
In terms of ICMM guidelines, this performance must be stringently validated at site-level, and company sustainability reports must be assured by credible agencies. These guidelines also require signatories to conserve biodiversity; this might mean that a company neither mines or explores in a World Heritage Site, or protecting local ecosystems by ensuring no net-loss to biodiversity.
Innovation and environment
As with all industries, the mining sector is constantly applying new and emerging technologies to become more efficient and productive. These technologies may be specifically mining-related, but often they are drawn from other sectors and in turn open up opportunities for application in broader society.
For instance, the industry tends to be at the cutting edge of innovations in water management and resource efficiency—often ahead of other sectors that can also apply these methods. In recent decades, mines have evolved effective strategies to deal with limited water resources, and their advances benefit the planet generally.
Many recent developments actively target global environmental issues like climate change. Mines have been implementing alternative energy generation technologies that facilitate a shift towards a low-carbon future. On some mining sites, these efforts have included the use of energy recovery plants and replacement of diesel power with renewable sources of generation like solar and wind. In countries like South Africa, some large mining companies have plans for self-generation with renewables; this promises to ease the load on the national grid and create added capacity for the rest of the economy.
There is even experimentation with hydrogen-driven vehicles to reduce the carbon footprint of mines. Such technology is likely to have a valuable contribution on society as whole in boosting our trajectory away from fossil fuels; but the research and development must first be conducted, and mining is a sector that is prepared to invest in this process.
Many of these technologies often have a direct financial benefit, and contribute significantly to commercial sustainability—not only of mines but of businesses elsewhere in the economy. The ongoing innovation effort therefore has positive spin-offs well beyond mining.
Safety at work
Mining is intrinsically a sector that involves multiple safety-related risks, and it has been forced over the decades to find more effective solutions. Heightened levels of attention to health and safety on mines has led to South Africa’s mining death toll reaching an all-time low in 2019.
The sector’s development of mechanisation and automation technologies also hold great promise. Through ongoing research and development, mines are evolving practical ways to safeguard employees from dangerous areas and activities.
The mine of the future—aspects of which are already in place on certain high-tech mines —envisages much more remote operation, for example. With the contribution of digital technologies, equipment can be operated and monitored even from other continents. In turn, this is requiring people to re-define and develop new skill sets that have relevance throughout the economy.
Mining equipment designers are increasingly part of an important corps of technology leaders that are forging new work patterns and expertise. They will make work safer and more productive, and will share these innovations across sectors—helping economies benefit practically from the Fourth Industrial Revolution.
In most of the fields in which mines are today required to be compliant—ranging from health and safety to environmental control and resettlement—there were many countries which did not have the necessary guidelines, laws or regulations to apply. In recent decades, the mining sector itself has played an active role in developing these requirements at corporate and operation level, or engaging with government where legal gaps exist.
In many instances, mining has been the activator which has forced governments and their regulators to clarify what is good practice. The Extractive Industries Transparency Initiative (EITI), for instance, is today the global standard for promoting the open and accountable management of oil, gas and mineral resources. Significantly, it is guided by the belief that a country’s natural resources belong to its citizens.
In recent decades, regulatory requirements around Africa have certainly been strengthened —in large part because the mining sector has needed the environmental and societal parameters in which to operate. In cases like air quality, water quality and biodiversity, once the legal obligations are applied to mining, countries can also benefit from their application to other industries.
It is also common for good practice to be introduced to a host country by a mining company—by virtue of company’s corporate policies and adherence to good international industry practice. When funded by an international financial institution, mines have generally had to comply with the lender’s own—often stringent—environmental and social safeguard requirements. These are then applied in-country even in the absence of national laws to that effect.
The impact of this is to immediately raise the bar of performance, and these requirements will frequently be emulated in future national regulations.
In the long run, this undoubtedly helps build national governance systems as it can lead to the establishment or strengthening of regulatory institutions which hold mines to account. By promoting effective and efficient regulation, it also helps to foster transparent and responsible business practices.
Changing face of mining
It is certainly true that the mining industry’s reputation in the public domain remains contentious. It is equally true, though, that the sector often does not get the recognition it deserves for its daily commitment to mitigating its social and environmental impact and enhancing developmental benefits. Such efforts are usually not glamourous, so they do not catch headlines. But they are vital to charting the planet’s path to sustainability, while at the same time providing the global economy and its consumers with minerals and metals they need. ▲
Vassie Maharaj: Director, Partner and Principal Consultant in Social Risk and Stakeholder Relations Management, SRK Consulting SA Darryll Kilian: Partner and Principal Environmental Consultant, SRK Consulting SA