Can mining ever be totally sustainable or responsible — or even totally ethical?
Copper rich waters in Bucium mine, North Macedonia.
By Guest Author Dr. David H. M. Alderton
Dr. Alderton is an Honorary Research Associate in the Department of Earth Sciences at Royal Holloway, University of London, UK. Formerly a lecturer in Geology at Royal Holloway with over 35 years of experience teaching at undergraduate and postgraduate levels, his research using field and laboratory-based studies has been carried out at numerous locations around the globe. The results of this research have been widely published, with the focus on two broad themes: the characteristics and genesis of hydrothermal, metalliferous mineral deposits, and the geochemistry of mining-related pollution. Dr. Alderton’s collaboration with the mining and engineering industry has concentrated on the chemical and mineralogical characterization of mining waste and minimizing its effect on the environment.
With the increasing global focus on the environment, all industries are having to assess the way they operate, and a whole range of terms are now regularly highlighted in a company’s aspirations. But those noted above in the title are particularly prominent in debates regarding the resource extraction industries, being used by both advocates and opponents of specific mining ventures. These concepts mean different things to different people, so the answer to the question rather depends on one’s view of the world around us.
Recycling rates are currently not sufficient to meet the rapidly expanding need for new materials, particularly those which are termed “critical” because they are crucial for the new “green” economy. Consequently, we are witnessing increased pressure to source these new materials, and this drive has resulted in a number of prospective mining developments, increasingly located in sensitive areas. Unsurprisingly, these proposals have often generated a heated debate, as mining, by its very nature, finds challenges in satisfying everyone.
Current definitions of sustainable practices[1] envisage an operation with minimal environmental impact, ensuring that sites are left in a condition suitable for re-use by both humans and ecosystems. However, mining, by its very nature, depletes what is essentially a finite resource and, at least temporarily, disrupts the environment. Indeed, historically mining has often paid scant attention to the environment and thus does not always have a good press. There is an abundance of examples of poor practice that have impacted the surrounding environment and led to conflict with local communities[2].
Standards and Audits
Mining companies, like most industries, often report that they follow “best practices.” However, existing mining sector standards vary widely; there is no global consensus and many lack the transparency and rigour to provide reliable information on their practices. As the spotlight focuses more on the mining industry’s operations, an agreed standard is imperative as a means to provide information on their social and environmental performance.
Perhaps at the forefront of such attempts to standardise best practice is the Initiative for Responsible Mining Assurance[3]. IRMA envisions a world where “the mining industry respects the human rights and aspirations of affected communities; provides safe, healthy, and supportive workplaces; minimizes harm to the environment; and leaves positive legacies.” Members of IRMA have to agree to an independent audit of a mining operation and pass to their agreed standard. However, to date relatively few of the major mining companies have become members and follow IRMA’s principles of responsible mining (one notable exception being Anglo American).
Contaminated land in an old tailings lagoon (Gwennap, Cornwall, UK)
ESG
So, how can the operations of a company be assessed and quantified? Increasingly they are measured using ESG (Environmental, Social and Governance) criteria and these performance ratings are steadily being adopted by the financial investment world[4]. But if a mining company were to follow such practices, would it necessarily be at a disadvantage? It could certainly cost more money, but the true costs of mining have traditionally not been fully taken into account, and there is a growing body of evidence which suggests that good management of ESG issues could actually improve performance, albeit in the longer term[5]. There is little such data specifically for mining companies, but there is no reason why these trends should not also apply to them. Indeed, it has been proposed that mining companies with high ESG ratings provided 10% higher shareholder returns than the general market index during the pandemic[6] (Figs. 1 and 2).
Fig 1. S&P data demonstrating a progressive relative increases in value of ESG stocks[8].
Fig. 2. Relative (2022) stock returns of companies based on their MSCI ESG status. AAA (‘Leader’) to CCC (‘Laggard’)[9].
But why should a high ESG performance materially benefit a company? The premise is based on the proposal that environmental regulation spurs efficiency and innovation as firms seek new practices and technologies to reduce harm to the environment. It also takes account of risks (thus minimizing regulatory and legal interventions), increases employee productivity, and it optimizes investment and capital expenditures[7,8]. Importantly, this theory argues that the financial outperformance more than covers the cost of any innovations. Of course, investors also are increasingly more interested in financing portfolios that reflect their own personal values.
YES! Undoubtedly, mining can be MORE sustainable, responsible and ethical.
In conclusion, and returning to the original question, it is perhaps debatable whether those ideal scenarios can always be totally fulfilled. Undoubtedly there will always be some who are not completely satisfied whatever the outcome, but could mining be more sustainable and more responsible and more ethical? Here the answer is definitely “yes.” For this to happen, a major shift for the mining industry is required. Because of the nature of mining, it will not be easy and there will be difficult conversations ahead. But there is here a unique opportunity for mining companies to demonstrate to other industries examples of better stewardship and to become responsible contributors to a new economy.
References
[1] UN sustainable development goals. (https://sdgs.un.org/goals)
[2] Weaving Consensus: The Papua New Guinea – Bougainville peace process. Accord (Conciliation Resources), 2002. (http://www.c-r.org)
[3] IRMA (https://responsiblemining.net/about/about-us/)
[4] https://www.msci.com/our-solutions/esg-investing/esg-ratings.
[5] Whelan, T., Atz, U., Van Holt, T. and Clark, C. (2021) ESG and financial performance. Stern Center for Sustainable Business Report, New York University. (https://www.stern.nyu.edu/sites/default/files/assets/documents/ESG%20Paper%20Aug%202021.pdf)
[6] PwC’s 18th Annual Review of the Top 40 Mining companies - Mine 2021 (June 2021).
[7] Five ways that ESG creates value. McKinsey and Company Quarterly, November 14th, 2019. (https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/five-ways-that-esg-creates-value)
[8] Nasdaq: https://www.nasdaq.com/articles/how-long-does-it-take-esg-to-outperform.
[9] https://www.msci.com/www/quick-take/esg-ratings-financial/03657520719.