Mining CEOs see sustainability as key to future success but transition to inclusive wealth needed
The Network for Business Sustainability research found that, while 93% of CEOs see sustainability as important for their company’s future success, most do not know how to successfully embed sustainability into their company, management consulting agency Blank Canvas CEO Raldu Nel tells Mining Weekly.
The Risk Radar for Mining and Metals Report for 2014 and 2015, published by advisory firm EY, indicates that the top three risks faced by mining companies in the two-year period are productivity improvements, capital access and allocation and social licence to operate.
Nel notes that the resources industry aptly applies long-term thinking and effective collaboration on precompetitive technological innovation; however, industry now needs to leverage these two aspects with a new focus on nontechnical aspects, enabling a sustainability revolution while at the same time securing a future licence to operate.
“Business today needs to transition from creating shareholder value in the short term to creating and preserving inclusive wealth for all stakeholders. Sustainability is no longer only a term requiring compliance, but is globally recognised as a key business driver in corporate strategies,” says Nel.
He adds that a sustainable development (SD) framework, like the six Capitals Model, which includes financial capital, manufactured capital, intellectual capital, human capital, social capital and natural capital, makes it possible for executives to clearly define what SD means for their business.
BUSINESS MODEL CHANGE
A complete step change in the current mining business model in South Africa was required for the industry to survive in future, global consulting firm Deloitte Africa energy and resources leader Andrew Lane said at a Deloitte in Conversation discussion, titled The Future of Mining in South Africa, attended by Mining Weekly in Johannesburg last year.
He added that the only way to ensure sustainable growth and deliver a return to stakeholders was through innovation.
Also speaking at the Deloitte-sponsored discussion, Deloitte Canada energy and resources leader Jürgen Beier said South Africa’s mining industry was plagued by unfavourable commodity prices, tougher mining conditions, rising input costs and having to balance society’s and government’s demands and expectations, which were compounded by the recent labour unrest and legislative uncertainty that impacted on investor confidence.
Beier was encouraging the innovation imperative, saying that incremental change in the way that South African mining companies were conductingmining was not enough to overcome the challenges facing the industry and that, instead, it hinged on taking radical leaps.
He highlighted the need for mining companies to reimagine the future of miningby changing their current mindset of extracting higher grades and achieving faster throughput to optimising only the pit, the schedule, the product mix andlogistics.
“A truly innovative and sustainable mind-set will instead result in miningcompanies adopting an entirely new design paradigm that leverages new information, and mining and energy technologies to help them increase their value,” he said.
Beier noted that by innovatively integrating mining, energy and information technologies, such as simulation modelling, robotics and energy storage, into mine and process design, the radical performance improvement breakthroughs – which were not possible on an incremental basis – could be achieved.
“This approach can help mining companies reduce energy use and capital intensity, while increasing mining intensity,” he noted.
Part of the innovation approach includes maximising value for the socioeconomic system, said Beier, adding that, by focusing on value creation for the environment and society as part of the mine and process design, new levels of improvement in value to shareholders were created in a substantial and sustainable way.
To ensure that mining companies reap the benefits of innovation, Lane highlighted the need for mining companies to prepare for the subsequent new realities at operations, such as striking a balance between the likelihood that fewer mineworkers would be required, owing to increasingly mechanisedoperations, and the South African government’s job creation imperative in a country where mining was regarded as one of the biggest creators of employment.
He states that the Exxaro business philosophy includes four strategic objectives – demonstrating responsibility and accountability, developing Exxaro’s leaders and people, achieving operational and financial excellence and improvingExxaro’s portfolio – that are ringed by the six sustainability capitals.
“The tiered approach explains that sustainability starts with the basics within each stock of capital to which we have access. It is Exxaro’s view that you cannot be sustainable if you do not build from the bottom up as a principle. For example, one cannot realistically create shared value in a capital if one is not managing it well within the fundamental laws and stipulations governing the respective areas,” he says.
Exxaro executive head of strategy and corporate affairs Mzila Mthenjanefurther tells Mining Weekly that Exxaro’s business philosophy recognises that the company exists in the context of a South African society that expects a net positive benefit from its activities; therefore, the company has a contribution to make in the development of this society.
“Therefore, Exxaro’s business development and growth efforts balance a portfolio of social, environment and economic objectives. Mining is critical to stimulating economic activity and we foresee Exxaro’s investment activities making an even greater impact on the country’s socioeconomic development goals,” Mthenjane says.
Olinger mentions that Exxaro’s approach to sustainability is guided by global best practice on sustainability and is contextualised further by formal charters that define its goals and commitment to stakeholders.
“These charters are guided by South African legislation, PwC’s King III report on recommendations on corporate governance, which was published in 2009, and the JSE Socially Responsible Investment Index requirements, as well as international benchmarks such as the Global Reporting Initiative, the United Nations Global Compact and the International Council on Mining and Metals.
Mthenjane says, for Exxaro, sustainability is a journey and the company recognises that sustainability is an important element in ensuring that the future of all its stakeholders is secured. The concept of sustainability and the implementation of its constituent parts are integral to Exxaro’s strategy and the way in which it measures the performance of its people.
Source: Mining Weekly
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