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An international outlook


Tom Butler, ICMM's CEO, tells Richard Barrett how members are advancing mining with principles.

Whatever the prevailing market conditions are for miners, a failure to secure or the potential loss of a mining license through weak engagement with local people and host governments, or poor environmental performance, are ever-present risks at all stages of mine development and operation. The reputational and financial damage when things go wrong can be severe.

Consequently the major global miners forming the core membership of the International Council on Mining & Metals (ICMM), which are represented at CEO level, have a mission to lead by establishing policies, practices and principles for the membership and to provide a good example for other miners to follow.

In an interview with Metal Market Magazine, ICMM’s CEO Tom Butler, based in the UK, highlighted continued global political and macro-economic turbulence and uncertainty as an over-arching trend facing the global mining industry. “There are very big shifts in government, such as the Chinese looking to step in where there is now an American vacuum,” he said.

He pointed to China’s decision to set up its own Development Bank and America’s withdrawal from international agreements, such as the Trans-Pacific Partnership on trade, as well as China’s seeming willingness to take an international lead. “At Davos this year [2017], it was president Xi who made all the big speeches, making commitments on climate change etc.,” he noted.

Questions about the impacts of Brexit and slower rates of Chinese economic growth add to the uncertainty. “All of those have uncertain impacts on global markets,” said Butler. He added that disruptive technologies and the speed at which new technology is coming on to the market is taking some people by surprise, noting that DRC copper-cobalt miner Katanga Mining’s share price, for example, rocketed last year as a reflection of the rapid growth in demand for cobalt taking the market by surprise.

“I’m sure there will be other surprises around the corner because we keep shortening the pace at which we innovate,” he said, stressing that all of that becomes more difficult to forecast and predict. “If I had to characterize the industry, I would say cautiously optimistic, but keeping a weather eye over the shoulder in terms of some of these factors,” he summarized.

Public expectations
Beyond such over-arching trends, ICMM looks down to the next level at society’s expectations of the mining sector and how those are likely to impact the mining industry. There are three categories in ICMM’s view of these: expectations in terms of private sector value-add; much better private sector stewardship of resources; and calls for further transparency and accountability.

An additional emerging concern is about supply chains, initiated by the Amnesty International reports on cobalt mining in the DRC, but rapidly broadening across other sectors, Butler noted.

“For value-add, for example, the United Nations (UN) sustainable development goals (SDGs) talk for the first time about the importance of partnerships between government, community and mining in the private sector,” he pointed out.

In addition to mineral resources, private sector stewardship includes water, energy, air and even human resources: “We’re expected to think much harder about those because they are all limited.”

Transparency and accountability are related to environmental, social and governance (ESG) issues. Butler highlighted that, in early December 2017, The Economist reported that investments based on companies’ ESG criteria performance last year was $23 trillion, compared with $13 trillion four years earlier.

These are made by funds that take ESG factors into account when they invest. “So ‘big money’ cares about these issues. People want a lot more disclosure, they want a lot more transparency about contracts and where taxes are going: What does the contract say? Who actually owns the project? All of this is just going to go in one direction,” said Butler.

Money and members
Investors sometimes encourage ICMM to reach out to certain companies to highlight its principles. “That pressure is still there and one of the challenges of being a leadership organization is that some of the companies that are interested in becoming members of ICMM are interested in the ‘reputational cleansing’ that they think that offers, which of course is fine as long as they upped their game and meet the standard. And part of that is driven by investor pressure,” said Butler.

ICMM’s rigorous admissions procedure is run by a separate panel of experts, who make an independent decision about whether a company meets the standard needed for membership.

“We do continue to engage with investors and usually invite some of the key investors to our biennial meetings, including rating agencies specialized in sustainable ratings,” said Butler. ICMM has 25 member companies, following the addition of Vale and Newcrest last year, and has a budget of about £6 million (US$8 million) per year. Butler says that ICMM expects to add several more members in 2018.

Positions stated
Over the past two years, ICMM completed two new position statements, which give the commitments that members sign up to, contributing to eight altogether.

One new position statement, released in January last year, is on water. “The commitment is to look at water in a much more holistic way, taking an ‘outside-the-fence’ catchment basin approach,” Butler explained. Accounting and reporting on water usage in a consistent way is another element. Companies have until 2019 to implement the water principles.

The second position statement, on tailings, released in December 2016, took almost a year to put together and included a global review of members to look for any gaps in practice. It focuses on management and governance issues. “Probably the most interesting commitment in there is to take a much better approach to change management,” said Butler. “People are accountable for tailings facilities but, when they move on, how do you handle the transition and ensure the incoming person is properly briefed? When you make design changes, how do you ensure that all of the previous decisions that were made are taken into account, and was there a holistic overview?”

ICMM has also developed an index and map to quantify the role of mining in national economies. “There are 25-30 countries for which mining is a major part of their economy and therefore people need to think hard about policies and impacts in those,” Butler said.

Canada has the most ICMM members operating in it, but Butler said that Peru has the most ICMM member companies operating with projects that are challenged one way or another by community opposition. ICMM organized a network in Peru of the operational heads and is in the process of looking for an area where collective action could make a difference. “We’re looking at nutrition in rural areas,” said Butler. Mining companies have a lot of logistics expertise that could help with delivery.

Implementation, and knowledge-sharing between member and non-member miners in different regions, are other key roles: “We produce guidance and policy positions, but how do a million employees implement the commitments?”  ICMM runs a lot of workshops at a regional level, including Australia, Latin America, Canada and South Africa. It has also started opening those workshops up to non-members when space is available.

As part of its most recent work, ICMM launched a new social-media-focused communications campaign – Mining with Principles – last September, aimed at public communication about the importance of mining “and the fact that there is an organisation with principles and a commitment to do things right.”

Butler said that there continues to be a “trust gap” between the public and the mining sector: “In my mind there are two things that you need to do to close it. The first is to do the right thing on the ground, which are the environmental, social and sustainability things that we do, and then the second thing is to communicate about it,” he stressed. The second phase of the campaign will focus on individuals who have seen the benefits of mining: identifying those via video, with an emphasis on Twitter, LinkedIn and Facebook.

Future strategy
Butler said that societal trends will inform the strategy that ICMM develops, but it will fundamentally come back to thinking in terms of the trust gap: “What do we need to do in terms of technical issues? What do we need to do to perform better?”

Some of the areas of focus will probably include more on water, community engagement, particulates in emissions
from diesel-powered vehicles and generators, and two or three other issues to be narrowed down, such as tailings. Thought-leading ICMM research, such as on social progress indicators, will probably be launched at the Investing in Mining Indaba in South Africa 2018, asking the question: “How does my country’s progress correlate with social progress indicators in other countries?”

Butler said that ICMM has put more emphasis on communications and will continue to do that “with a view to making sure that people are aware of the fact that ICMM exists, that we’re advocating mining with principles and that people understand that there is a principled body out there in the mining sector.”

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