Mined materials support roughly 45% of the world’s economic activities – yet large-scale mining leaves social and environmental scars. Can the latest working group change that?
Mining conjures up an ugly environmental image. Companies dig deep into the earth and use large amounts of energy and water to extract, process and transport minerals, leaving behind a devastating impact.
That image has come to define the mining industry, and it’s increasingly hurting its ability to make money. Now a new group is working to remake that reputation by changing some of the industry’s practices.
A white paper issued by the Kellogg Innovation Network at Northwestern University last month outlines key issues and ways to tackle them. The white paper is meant to serve as a framework to inspire more mining companies to develop sustainable projects that could also boost their profits.
In particular, it focuses on building good relationships with local communities most heavily impacted by mining operations. But it also pinpoints some of the significant troubles the mining industry faces as it seek to expand into more remote areas of the map.
Keeping tabs of the mining industry’s progress in adopting more sustainable approaches should be in everyone’s interest. The raw materials extracted by mining companies are powering the world’s growing population and its dependence on gadgets and other technologies. The industry supports roughly 45% of the world’s economic activities, according to the white paper. Yet it’s impossible to carry out large-scale mining without leaving social and environmental scars.
This isn’t the first time someone has identified problems in the mining industry or suggested potential solutions, of course. The Kellogg paper, though, included input from a mix of mining firms, their suppliers and nonprofits, all of which formed a working group co-chaired by Mark Cutifani, CEO of London-based Anglo American, one of the five largest mining companies in the world.
Cutifani’s role gives this reform effort some gravitas, as he’s in the position to enact change. But he’ll need to lead by example, as many of his peers haven’t been quick or effective at carrying out past recommendations from their own industry groups. As the Kellogg paper noted, the mining industry has mostly stood on the sidelines of the global discussion on climate change.
“Everybody is nervous, and not sure why we are doing this,” said Cutifani in an interview. “From my point of view, we’ve done a lot of work on safety, environment and community engagement. But in order for us to be successful and sustainable, we have to do things differently than in the past.”
Survival hinges on stewardship
The need to take better care of the environment and build good relations with communities around the mines isn’t altruistic, of course. Like other industries that have built fortunes by exploiting natural resources and labor, the mining business is realizing that its survival hinges on it becoming a better environmental steward and caretaker of its workers.
Cutifani cited Coca-Cola as an example. In recent years, the company has invested in watershed restoration after running into problems securing enough water for its bottling plants amid criticism for its water use and pollution.
The costs of developing and running mines have escalated mainly due to poor planning, inefficient operations and rising water and energy prices, according to the white paper. Disputes among mining companies and local communities and governments have posed a particular challenge, causing about $25bn worth of projects being delayed or suspended worldwide, Cutifani said earlier this year.
“There’s a huge amount of issues with human rights and labor laws,” said Peter Bryant, a senior fellow at the Kellogg Innovation Network and co-chair of the working group that produced the framework. “Mining companies don’t envisage what their legacies are, and it’s something for the industry to think about.”
The power of social media – the ability to transmit a damning photo or video around the world instantly – also makes it more difficult for mining companies to contain their battles with environmental and indigenous groups.
Meanwhile, mining firms also are worried about accessing money for growth as more institutional investors views sustainability as a key metric for making investment decisions.
The Kellogg group reached out to the Catholic church, which not only wields influence in many communities in the developing world where mining takes place, but also manages tremendous wealth. Over 20 CEOs from the mining industry spent a day with Vatican officials in September 2013, followed by another meeting with officials in the Church of England.
A long list of challenges
The framework contains a long list of challenges – and potential approaches to solve them. Investing more in technology to plan and operate mines more efficiently is one, given that mining companies in general invest less than 1% of its revenues on innovation, Bryant said. Enlisting the support of local communities by being more open about the scope and impact of proposed projects is another.
Designing mining projects that will benefit indigenous communities is a major wish of nonprofits in Kellogg’s working group. As mining companies push into remote corners of the world for richer resources, they also are altering the lives of those who live there.
“Mines generate huge revenues, but communities who live around them are poor and don’t see the benefits. That creates a cycle of conflicts,” said Keith Slack, global program manager with Oxfam America, which is part of the working group. “Mining also shouldn’t take place until there’s an agreement with local communities, especially indigenous people, because their livelihood can be directly impacted.”
Some large mining companies have started to do a better job of community outreach and setting up funds for local residents, Slack said.
As an example, Slack pointed to Oxfam’s involvement in working with BHP Billiton, the largest mining company in the world, to set up a development fund in southern Peru. Cutifani cited Anglo American’s willingness to accept 23 recommendations from another community in southern Peru in its effort to mine copper as another example. The company ran into stiff local opposition to the project before that.
But these efforts are far from consistent within each company, let alone across the entire industry, Slack added.
A long way to go
While Oxfam officials said the framework is a good starting point, they also say it doesn’t go far enough in promoting environmental protection. They want mining companies to avoid areas where their operations will severely contaminate or destroy local water supplies.
Whether the framework will serve as a useful guide for the mining industry remains a big unknown. Bryant is working on raising money so his group can align with mining companies that want to develop programs based on the guide and track their progress.
Later this year, Oxfam plans to issue a report listing the major mining companies’ policies and practices on getting consent from indigenous groups before beginning mining operations. Also under way is the creation of a certification program for jewelry that is sourced from sustainably operated mines, Slack said.
In addition, Cutifani hopes to create a thinktank in 2015 that will identify and solve sustainability issues and advise mining companies.
“The industry is constrained by conventional thinking,” Cutifani said. “We need to do this outside of the normal industry structure by drawing ideas and experience from outside of the industry. We want to lead the industry and set the pace for change.”
That said, he added: “We are far from perfect. We have a long way to go.”
Source: The Guardian