Mining and Sustainability Research

Sustainability is a buzzword that has worked its way into almost every industry in the modern era. Coffee, fishing, and certainly mining all have to consider this relatively new concept in business, but what does it really mean. If we take mining as an example there can be lots of interpretations on sustainability, in terms of environment, people and the economy. So what do we mean when we talk about sustainable mining? 

Below, I include an article I hope will begin discussion. Whether you agree or don't, let your opinion be known and get involved

Go on to any of the large mining companies websites and you will undoubtedly see images of green fields, expansive boreal forests, and still lakes seemingly touched only by the rays of the sun. This is the image of a company with the environment and people at its core. It is the vision of sustainability they would like to project, and often it is not far from the truth, as they put in a lot of time and money to come as close as possible to harmonise the mine with its surrounding environment. This is the so called “do-no-harm model”, and that is what my understanding of sustainability was for a long time.

On long drives, I have played debating games with friends where we would discuss and then argue simple ideas. In doing so we are challenged to convey our own point of view as opposed to another’s.  Assuming you don’t get left at the side of a busy highway, we all come out better off, as we are more informed and better understand our own reasoning.

Let us challenge this “do-no-harm model.”  Today  I read a little piece by Joyce & Smith titled Sustainable Development in Mining: Not necessarily and Oxymoron, and now I feel more informed about what we should aim for when we use the phrase “sustainable mining”.

The main argument behind the article is underscored by the quote “Use the economic engine created by mining to build an economy that survives and is better off after the end of the mining.”  The authors examine the spontaneity associated with mining that has allowed economies to grow and diversify for the well-being of their communities. They then ask if these historic successes were spontaneous, then imagine the possibilities that exist with a little planning.

The authors write of the California gold rush and the impact that had on the economy of the state.  Here is their summary of the benefits of California mining:

• Wealth:  30 million ounces of gold were mined by 1860, resulting in a phenomenal increase in capital, purchasing power, and economic circulation in a short period of time.
• Innovation: Lack of basic materials as well as the machinery and skilled labor spurred inventiveness. Levi Strauss started as a tent maker for the gold camps.
• Industrialization:  The remoteness of the mining camps required local production of nearly everything required by the mines. The result was the development of a strong industrial base.
• Economic Diversity:  Rich agricultural land, vast water supplies, port access and strategic importance both during and after the Civil War brought national attention – as well as a railroad.
• Government:  California established the rule of law early, by Western US standards, and entered the Union before most of the other Western states. Once the real “value” of California became apparent, the federal government focused on law enforcement and protection of the boarders, providing a relatively safe and secure environment.

The same story could be told for the development of the gold mines along the Witwatersrand of South Africa.   Look at the powerhouse of money, innovation, industrialization, and economic diversity associated with the mines starting in the early 1900s.

The authors acknowledge the negative side of the California gold rush, namely:

Native American population in California dropped from 150,000 in 1846 to 30,000 by 18704. Racism in the diggings made it increasingly hard for Native, Chinese, Black or Latino miners to participate in the boom. The environmental damage wrought by hydraulic mining was the impetus for the first water quality legislation in US history and the resulting siltation is still clogging northern California’s navigatable waterways. Competing land claims caused by the haphazard mapping of mining claims are winding their way through the courts to this very day. Finally, mining often brings the classic boom-bust cycle that leaves a wake of poverty and, too frequently, environmental liabilities.

The same and worse could be said of South Africa.

Thus we are left wondering why the people of Bristol Bay, Alaska should embrace the Pebble Mine with open arms.  Afterall Anglo American was at the center of the Witwatersrand and is at the center of the Pebble Mine.

The authors write of the troubles of the Meridian Esquel Mine in Argentina, telling us that “81% of local residents vote against the mine. Stock plummets from $20 to $9 per share, losing $1.2 billion in market capital.”

Here is another side of the story:

The proposed open-pit mine would have use cyanide to extract the gold. The company proposed to bury solid waste from the mine in pits. Lake Esquel would quite likely have been used as a tailings dam for liquid wastes flowing downstream from the mine site. In addition, the Esquel mountain range is covered with faults and fissures that could have caused toxic waste from the mine to seep into the groundwater.

Merdian tried to soft pedal the environmental impacts of the proposal with a flawed Environmental Impact Assessment. A March 2003 independent evaluation of that assessment revealed the inadequacies of the EIA. Written by Dr. Robert Moran, the report “Esquel, Argentina: Predictions and Promises of a Flawed Environmental Impact Assessment” demonstrated that Meridian’s proposal “[...] is the classic example, which is all too common in Latin America, where an EIA describes short-term benefits and solutions, but fails to even begin to consider long-term consequences.”

Now the property is owned by Yamana Gold and they are taking a completely fresh look at the project.  No open pit, no vast tailings impoundment, no lake infilling.  Now they are considering high-grading, filter-pressed tailings, and putting all waste back underground (not feasible, but a good intention.)

These are contentious issues: questions to be answered in board rooms, investor conferences, and discussions in the car and on blogs.  Maybe there is a better ways?  Why argue in a car, or roll down your windows to get the message out.   I suggest that a better approach is to use the Continuous Conferences , particularly the ones on Social responsibility and on Mining and Sustainability Research.  At those sites, industry practitioners are encouraged to exchange information in order to generate discussion and mining intelligence. We would encourage you to lend your thoughts.  Particularly on the benefits to California and the Witwatersrand of old mining and to Bristol Bay and Esquel of new mining.

Here is something I wrote a long time ago.  It is still valid and contentious. 

Rain has kept me indoors this weekend reading Robert B. Reich’s new book Supercapitalism.  He mentions mining but once, noting in passing that New York City public employees via their pension fund own some $37 million worth of shares in the Freeport Mining Company’s gold mine in Papua.  He does not decry this, saying that, like all investors, they are merely seeking to maximize their returns.  But pretty much everything he says in the book is relevant to the mining industry and your role as an investor, a worker, or a critic.  Here is my summary and my opinion.

His thesis is simple:  Corporations are engaged in a mighty struggle with each other to serve consumers in order to maximize shareholder value and income.   As consumers, we all benefit from the quality goods and services this competition produces.  As investors we benefit from the dividends good companies produce.  As citizens of a democracy, we may have problems with corporate behaviour that leads to job losses, environmental impact, and income inequality.  But we cannot and must not expect companies to right these social wrongs.   

Here in his words are a summary of his thesis: 

A citizen’s guide to supercapitalism would begin by instructing the public to beware of any politician or advocate who blames corporations and corporate executives for the negative social consequences of supercapitalism, whether it be  low or declining wages and benefits, job losses, widening inequality, loss of community, global warming, indecent products, or any other of the commonly voiced complaints.  Corporate executives are responsible for obeying the law, and should be held accountable for any illegality.  But they cannot and should not be expected to do anything more.  Their job is to satisfy their consumers and thereby make money for their investors.  If they fail to do this as well if not better than their rivals they will be penalized by consumers and investors who take their money elsewhere.

His point is one that I support most strongly:  if we believe companies should behave in a different way, then we must change the laws that govern their behaviour by normal democratic means.   To place the burden on Corporate Social Responsibility is to avoid the hard work of democracy.   I have no qualms or truck investing in a mining company that offers to build schools and clinics next to its mines in South America, if this act enables them to access the ore body with healthy workers and local peace, hence make money and pay me dividends.  But I cannot demand that a specific mining company build schools solely as an act of social responsibility.  For if I do, some other company will come in and mine at lower cost by not building schools–I will transfer my investment to that more profitable mining company that is not squandering money doing what the government should do.   To repeat more from his book on this point:

Corporate executives are not involved in a diabolical plot.  The negative social consequences are the logical consequence of intensifying competition to give consumers and investors better and better deals….Good deals may depend on filling the air with gunk or filling our stomach with junk food. The deals may involve trampling human rights abroad or putting young children to work in Southeast Asia.  As long as the deals are legal, and as long as they satisfy consumers and investors, corporations and their executives will pursue them…This doesn’t make them right, but the only way to make them wrong —the only way to stop companies from giving consumer and investors good deals on such moves—is to make them illegal.  It is illogical to criticize companies for playing by the current rules of the game; if you want them to play differently, we have to change the rules. 

I recommend this book to all NGOs pursuing the mining industry.  If they would but read it and understand it, they would surely desist from pointing out the failure of mining companies to indulge in good and noble deeds, and instead put their energy into improving the legal failings of those corrupt and inept countries where mining companies are urged to substitute for competent governance.   Surely no NGO having read this book, could demand that the US or Canadian government impose Corporate Social Reponsibility requirements on national mining companies.  To do so merely puts them at a competitive disadvantage relative to Chinese mining companies already running around scooping up the best opportunities in Africa and Peru.  Better the NGOs pushed our politicians to push African et al. politicians to clean up their act so that mines developed by any country are taxed and legislated reasonable and rationally.  And the money used to build schools not Swiss bank accounts.

I also recommend this book to all miners.  It will bring you no peace of mind.  It will scare you into a realization of the intensity of the competition that faces all companies, including mining companies.  It will remind you that you are a producer, a consumer, and an investor and that your personal desires may conflict with your moral and ethical instincts—or what you would want for your family and friends.   He offers no easy solutions;  it will cost to have a clean environment, good health care, decent education, a high salary, an assured pension, and Wal-Marts in every town.   And to the extent these desires are incompatible, you will have to engage in true old-fashioned democracy to achieve a compromise balance.

I recommend this book to all investors in mining stocks.  It sure opened my eyes to the need to judge mining companies more critically regarding extraneous costs not directly focused on getting the ore out of the ground and processing it.   It opened my mind to the need to accept high pay for top executives–something I have been fretting about all week as I watched badly run companies make silly decisions that put them in court and their stockholders in declining share-value despair. 

Reading Supercapitalism, I wondered about the extensive promotion of sustainable development as a mining industry practice.  There is nothing wrong with a mining company acting responsibly in this regard.  We may choose to selectively invest in such companies on the basis that they are more likely to be permitted to open and operate mines.  We may reap greater dividends from such companies because sustainable mining practices result in lower overall life-time and post-closure cost burdens to the company.  But we should not and cannot expect all mining companies to voluntarily implement  such principles as a matter of course.  For if some do, you can be sure there will be some that won’t.  The cost advantage is just too great.  At best then, proclamation by a mining company that it is implementing the principles of sustainable development must be viewed as no more than advertising.  

If as a society we want mining companies, all mining companies, to implement the principles & practices of sustainable development, then we must pass laws that mandate appropriate actions.  We cannot demand that every mining company be impeded by the unpredicatable course of submitting to a Scoble Kemess North Mining investigation.   Northgate Minerals followed the law; they should be allowed to mine.  To be derailed by personal opinions, however cogent, does not make for good business, good governance, democracy, or the rule of law.  If as a society, we concur that the mine should not proceed because of the balance of operational-period benefits to the long-term costs of water treatment, then we should pass a simple law: no mine shall be opened if post-mining water treatment is required for more than X years.  You fill in the period. 

This book has been soundly criticised by those who exonerate politicians for their inaction but prefer to throw the burden for social good acts on corporations.  It is so much easier to blame Wal-Mart for poor health benefits than it is to face up to the fact that this is an issue that demands public debate and ultimately public action. 

 

Thanks Alistair for this question - I think it would be great to have the 5 biggest take aways from participants at this conference. The closing session was interesting and informative but quite "high level" rather than solidifying a toolbox for people or demarking a set of "facts" that had been uncovered through the sessions.

Unfortunately, I'm not sure my take-aways would necessarily be concrete because there is so much fuzzy ground still to be covered.

what always intrigues me is whether or not there is a common set of practice that plans for success. Do any commonalities emerge from all this conference talk? Perhaps you can invite participants that you know to comment on 5 key things that they learned or would want others to take on board. And 5 questions that they felt went unanswered.

I have just returned from SRMining in Chile, organized by Gecamin.  The conference was attended by well over 500 people, with attendance from 26 countries - it was an impressive group of people with vast experience in an array of topics related to csr, sustainability, stakeholder engagement, and related topics.  While there are many CSR related events going on around the world, this seemed to be the first major galvanization of people - so the time is right for sharing and progress in this area.

Several frameworks, guidebooks, policies and approaches for stakeholder relations were presented- but I found that the unofficial line was that despite the effort to create overarching policies for companies, what happened on the ground always required a bit of modification.  To what extent HQ is aware of the alterations is unclear - but it seems that they must tolerate these differences as all communities are different and working with different groups requires taking a flexible approach to the needs of a community.  Would it be beneficial to capture all the variations of the policies and frameworks so that people have a new toolbox of approaches?

I think a few areas that perhaps were underrepresented at the conference include: health related issues, human rights, child labour, working with artesanal mining communities and generally, the voice of communities was pretty quiet.

It would be great to hear from others who attended the conference to hear about their take-aways.

Hello everyone,

This platform has been developed as a forum to continue the discussion that was started at the Sustainable Development in the Mining Industry (SDIMI) conference in Aachen, June 1011.  A group of "new researchers" gathered to discuss key themes, issues, and topics that they are interested in developing to advance the application of sustainability concepts in the mining industry.  Feel free to share your ideas and priorities, tools and projects.

Looking forward to hearing from everyone.

 

Zoe

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