A brief glimpse of a world with considerably improved air quality will almost certainly continue to feed into public perceptions around CO2 emissions and environmental pollution in general.
Consequently, we’re likely to see increased agitation for industries like mining to ‘clean up their act’, which will impact those all-important social licenses to operate.
Likewise, other key influencers from the recent past will also continue to impact the industry’s reputation in this regard over the coming months. They include:
Courtesy of these and other disasters, miners will almost certainly find themselves having to negotiate their way back into society’s good graces, and it may not be all that easy for them to do.
This is in part because there appears to be somewhat of a disconnect in the public mind between many of the basic necessities of life (minerals, metals etc), and the industry responsible for supplying them.
Likewise, there is little appreciation of the fact that modern society’s increasingly insatiable appetite for things like high-tech electronic products is precisely what drives the development of projects that can cause these types of disasters.
We’re likely to see increased agitation for industries like mining to ‘clean up their act’, which will impact those all-important social licenses to operate
How the industry addresses this divergence between society’s demand for products that rely on mining to produce the raw materials needed to make them, and the reputation mining has with end users of those products, will continue to be a significant issue for all stakeholders over the next few years, if not decades. It will certainly be one of the major topics on the agendas of most mining boards in 2021.
Moving towards sustainability – speeding it up in 2021
The world must of necessity move towards more sustainable solutions for just about everything. Mining will play a pivotal role in this because it supplies the raw materials needed to produce these solutions. This isn’t breaking news. Most of the world’s population ‘gets’ this concept. However, the ‘how’ and ‘where’ it sources those raw materials are still major sticking points. Polluting entire ecosystems and endangering communities to dig up commodities for manufacturing clean, green technology is simply unconscionable.
Enter the world of ‘responsible sourcing’. To meet these expectations the industry must become more eco-friendly in its sourcing of raw materials too. It won’t be enough to simply ‘green’ the processing systems if the very act of sourcing and digging up the commodity wreaks environmental and social havoc. A growing list of end manufacturers that include the likes of Apple and Tesla are already demanding their component suppliers use only ‘ethical’ raw materials. Some are even investing in the mining and manufacturing sectors themselves to ensure this happens because they can’t wait for the relevant industries to sort themselves out.
Growing clout in society
Societies today wield considerable political and social clout, and they are increasingly aware of (and concerned about) environmental and social issues. It’s therefore not unreasonable to think that if there is enough outrage about these things, governments could be pressured into taking action to rein in mining companies and their assets. We’ve already seen examples of this with the nationalization of the mining industry in some countries.
How the industry addresses this divergence between society’s demand for products that rely on mining to produce the raw materials needed to make them, and the reputation mining has with end users of those products?
Therefore, if the industry wants to remain autonomous and in charge of its own destiny, it must do more than just pay lip service to modern environmental and social expectations. Granted, many companies have already made significant efforts in this regard, and are to be commended for doing so, but whilst the response remains fragmented and ‘company orientated’ at industry level, the entire industry remains at risk. Perhaps 2021 can be the year the industry makes a concerted effort to develop a more united approach.
Government bailouts and their ongoing effects
Throughout the course of the covid-19 pandemic, we’ve seen governments come to the rescue of industries with stimulus packages. The overriding intent has been to stimulate rapid economic growth first and foremost, whichever way that growth happens. Unfortunately, and this may come back to haunt industry, the packages haven’t necessarily dovetailed with public expectations around sustainability and ‘going green’.
China’s internal stimulus packages for example have created an infrastructure-building boom. This has led to a huge and growing demand for steel products, which has in turn skyrocketed demand for iron ore. Countries, and more specifically companies, that supply iron ore to China have therefore experienced ‘booming times’ during the pandemic courtesy of this demand.
Have they also ‘acted in haste’ under pressure to keep up supply? Was the Juukan Gorge disaster for instance fuelled by a need to meet China’s growing demand for iron ore? Have similar things happened elsewhere because governments have pumped money into economies to create growth without necessarily stipulating any environmental conditions over how that money can be spent?
Furthermore, will the types of profits garnered during these times by the likes of iron ore majors be seen as ‘profiteering’ in a ‘time of crisis’? Possibly, which means the industry needs to be aware of this as a potential and very real risk over the coming months, and develop strategies to deal with it should it happen.
2021 is certainly shaping up to be an interesting and unusual year. Whether we see any advances on what already happens is up to the players involved.
(A version of this article first appeared in Mining International Inc.)