Mining still society’s game changer


Mark Cutifani*

‘The innovation imperative that resides within mining companies provides fertile ground to develop and grow new skills and industries’

While the use of natural products and tools to support life has been vital since animals with opposing thumbs walked the planet, it is remarkable how little most people today understand the importance of our oldest, and still most critical, industrial activity.

Put simply, without mining we couldn’t provide clean water, food and shelter, or support people living remarkable, and sometimes less remarkable, lives.

It would seem the Ancient Greeks had a better sense of the importance of mining and its contribution to society than modern citizenry living in a rich information age.

In around 450BC the Ancient Greeks described the nature of the world in terms of earth, water, air and fire. In capturing the essence of our worldly existence, they understood the products of Earth were the fundamental building blocks supporting sustainable civilisations.

Yet today the products of Mother Earth are rarely seen or understood for what they are.

A simple walk through our natural sciences helps paint the picture of what mining means to our daily existence.

The role of mining in protecting water sources and allowing the storage, and piped or canalled distribution of water to barren landscapes, is an obvious starting point. These structures are not built from air or fire. And then the use of mined products to desalinate or purify water that is not fit for consumption has helped create great civilisations across the planet.

The replacement of minerals leached from the Earth through years of agriculture is possible through the sensible use of minerals mined from remote locations in the form of fertilisers. Along with modern, large-scale farming enterprises, they help feed eight billion human beings. Between fertilisers and mechanised large-scale farming practices, we use 40% of the Earth’s surface to feed people through crops or livestock.

Without mining we would need to double that allocation of land, or halve the population!

I am being a little simplistic, but you can see what I’m driving at.

Intense land uses, particularly the construction of towns and cities, requires building materials sourced from mining activities. The ability to build vertically, to minimise our physical land footprints for shelter and social gatherings, requires steel and other construction products sourced from mining activities. This has kept our intense use footprint to about 15% of available land.

Again, without mining, we could need more than double the land area to house every individual, as well as families and communities, and urban sprawl would look like an endless sea of humanity taking out forests and biodiverse environments.

Given this compelling context, when one considers the scope and the breadth of use of the products of modern mining, it is hard to understand why the industry suffers such a poor public perception.

Or maybe it simply comes down to the fact that we assume too much knowledge in broader society about what is seen by those working in the mining industry as self-evident.

The need to tell our story

In a world preoccupied with news and entertainment in all its forms, filling our moments with new information, we sometimes forget to step back and reflect on how the world works, what makes it work and how we could all help make it work better.

Most of us have heard this simple observation about the nature of things: “If it isn’t grown, it is mined”.

To unpack this statement one must explore the very nature of life (pun intended); how we feed ourselves, how we provide shelter and warmth in our local communities and where the materials come from that support everything we do and everything we are.

While I believe the need to tell our story is self-evident, and there wouldn’t be many industry participants who would argue the case otherwise, I still can’t help thinking this is not the only issue that gets in the way of us connecting with our customers and the ultimate users of our products.

So let me unpack this in three parts.

First, telling our story in a way that connects to people is only a starting point.

We need to get beyond the arrogance of “knowing” we are important so we each take accountability for telling our story at every opportunity. We need to tell the story in a clear and digestible way. And most importantly, that story must be honest, transparent and it must deal with the good, the bad and the ugly in a consistent way.

Real communication is not simply about good news.

Secondly, it’s about doing good work.

The big issues that really do the most damage to the industry’s public image are the low frequency, high impact incidents. We must manage risk and our operations across traditional sustainability areas the way the airline industry has managed its risk profile on high-risk operating dimensions.

The obvious issues include safety and health, environment, and social performance; in particular, how we interface with local communities that are most impacted by our operations.

We must also manage the first order issues that drive other negative perceptions, and they include resources and reserves, unit costs and consistency of returns while maintaining balance sheets that are structured and managed in recognition of volatile revenue flows.

Sustainability and trust work together across all dimensions of the mining business and so we need to be good stewards of our resources to ensure we keep ourselves in the right conversations per our contribution to society. If you are on top of these issues you are likely doing well on people and maintaining a talent pipeline that supports long-term sustainable success.

Thirdly, integrating our work with, and within, local activities to ensure the collective local good is clearly more important than the inconvenience we create, as judged by our local stakeholders.

While the concept of going beyond expectations will have costs, judgements must be made in the context of creating value above and beyond the simple cost dimension.

In building long-term relations built on trust it is not simply about delivering on promises, it is about always being willing to go an extra mile as partners that can be trusted to “do the right thing”.

It is around this last point that I think lies the greatest opportunity for mining to set itself apart as an industry that understands and works as a true partner with its social stakeholders.

Social partnerships at the heart of sustainability

When mining companies develop new operations they bring physical and financial resources and individual capabilities that can be utilised to support local opportunities and projects.

And when these assets are brought to bear in conjunction with other businesses and local agencies, the gains are potentially exponential in the context of community benefit.

The Development Partner Institute explored these possibilities after AngloGold Ashanti developed its response to the sustainable development goals from around 2010. In 2013, Anglo American adopted the principles as part of its Driving Value Program, further enhancing the concepts in its Collaborative Development Program, which was initially developed in South Africa and then applied as part of the Quellaveco mine development in Peru.

In both cases, mining companies work with other mining companies and businesses to support local and regional governments in identifying and planning infrastructure and social service developments.

This work is not meant to supplant the role and work of governments and other social institutions. It is meant to provide early thinking on new developments that can be used to support broader regional developments that build more effective social and associated infrastructure. We have also seen effective partnerships developed in health facilities, particularly in remote locations, in education and in the areas of regional and local town planning.

The innovation imperative that resides within mining companies that understand the need to maintain their competitive position in cyclical commodities also provides fertile ground to develop and grow new skills and industries adjacent to and with mining companies.

The development of new energy strategies for Anglo American in South Africa is a good example of this integrated thinking and approach.

In summary, mining companies bring three key resource sets that can help catalyse new ideas and futures for local communities.

One, the physical resources associated with mine developments, including water, energy, transport and communications infrastructure that can help transform local subsistence activities into broader and larger scale commercial ventures. These resources can also be used to help build more effective social infrastructure such as education, medical and other supporting structures.

Two, financial resources that help leverage local projects and activities such that seed funding provided to priority community developments get a running start in terms of finance and support.

And three, business and associated people skills can be applied to social projects at a level that help lift local developments, supported by a range of skills that would not otherwise be available to that business. Consistent with these skill sets is access to larger-scale innovation that can be leveraged for local impact.

In terms of the transformative capacity of mining to leverage our core business in support of local communities, enabling them to explore and deliver on their potential, the industry’s impact is second to none.

Creating a resource blessing

In Kathryn McPhail’s seminal paper dealing with the so-called resource curse, she makes the point that those countries that used their natural resources and its financial dividends to invest in social infrastructure were the great winners in terms of social development in the second half of the 20th century.

In particular, sound policy frameworks, good governance and well targeted investment strategies have been the catalyst for successes in countries such as Chile and Botswana where most citizens have enjoyed the benefits of domestic resource developments.

We believe the mining industry can play an even more impactful role as a development catalyst and as a partner to governments and other businesses and local communities.

We believe this type of engagement helps people get close and understand what we do and it helps facilitate planning and developments that work for companies and the broader and impacted populations.

For the mining industry, telling our story is just a starting point for a dialogue that supports the transformational potential of our industry.

Consistent with the conversations that help set context, we will always be judged on our performance and delivery against social expectations – to at least justify our existence. But our true potential in driving positive social transformation sits with our understanding that how we engage and partner with our broader stakeholder groups is the key to multiplying the good that we do.

On a final reflective point, since the industrial revolution the mining industry has been a pioneer supporting the development of communities and critical infrastructure. With today’s technologies and broader social awareness, the opportunities for the industry to be a greater force for good are magnified.

In a world that is increasingly regulated and defined by what individuals and businesses can’t do – the ability to think and do and be a can-do contributor – is what should define our future and the perception society has of our contributions to a sustainable future.

The Ancient Greeks understood the importance of mining in society. Society’s current general ignorance about mining and its importance to people’s everyday lives reflects our limitations as communicators and a lack of creativity in how we leverage our businesses to make a much bigger impact on those we touch through our work.

In either case, the future of mining and society is in our hands.

The only question we have to answer is, are we up to that challenge?

*Mark Cutifani is a respected voice in the global mining industry who has held a number of senior leadership positions since starting his career in 1980, including being the CEO of Anglo American Corporation from 2013 to 2022, and CEO of AngloGold Ashanti for nearly six years from 2007.

This is the introduction to our August 2023 Mining Technology Report, ‘Game Changers’. To receive a copy, contact us at editorial@investmets.com

 

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