Why mining needs to be sustainable and socially responsible
12 MINS READ
Reaching the core
Sustainable mining is at the core of any mining company’s license to operate. Miners have realised that to become viable is to operate environmentally and in a socially responsible way. The matters of climate change, resource scarcity and energy efficiency strongly resonate with the mining industry. Major miners are taking steps to be more sustainable to win over the community, being more profitable and it is also the right thing to do.
Strong Environmental, Social, and Governance (ESG) performance creates value for everyone including, miners, employees, communities, and investors. Mining projects must be safe, environmentally, and socially responsible to make economic contributions and support society as expressed in the United Nations Sustainable Development Goals and the Paris Agreement on climate change.
Being ESG accountable
Several tailing dam failures in the past have caused wide-spread damage downstream. These dams, which are used to store slurry and wastes that come as by-products from the mining processes, are embankments made of earth and rocks and their failure can be catastrophic. These incidents have resulted in negative credibility of the mining industry putting its reputation and social licence at risk. Wider stakeholder community putting enormous pressure to reduce emissions, monitor environmental impact as a move to make mining more sustainable. Without sustainability, it is becoming difficult to secure funding as investors are investing with ethical and sustainable miners only. Governments have started implementing carbon pricing that has a significant impact on the operating costs of the miners. A recent McKinsey study found that Scope 1 and 2 emissions from the mining industry totalled two billion metric tons of CO2e in 2018.
The Towards Sustainable Mining (TSM) initiative, an industry standard, allows mining companies to turn high-level environmental and social commitments into action on the ground. TSM provides the tools and indicators to drive performance and ensure that key mining risks are managed responsibly.
At the same time, it provides communities with valuable information on how operations are faring in important areas, such as community outreach, tailings management and biodiversity.
It is mandatory for the members of Mining Council Canada (MAC) with operations in Canada to participate in TSM. In Australia, from 2025, members of the Mining Council Australia (MCA) will be required to assess and publicly report on their performance against TSM indicators. Governments, investors, manufacturers, and miners view TSM as an important tool to ensure metals and minerals are produced responsibly.
Implementing TSM will enable miners to build trust in the communities where they operate through the demonstration of the commitment to sustainable mining. The investor community believes social and environmental risk management can significantly improve a company’s long-term value. It is also seen as sign of a company’s management quality. TSM enables mining companies to identify, understand and manage risks resulting in reduction in costs and improved performance.
The mining companies are preparing to adopt the TSM ESG management system. In recent years, mining associations in Quebec, Spain, Finland, Norway, Botswana, Argentina, Brazil, Australia, Colombia, and the Philippines have adopted the program. Adopting TSM involves subscribing to the TSM Guiding Principles, which are backed by specific performance indicators that miners publicly report on annually and are backed by site-level assessments and external verification. TSM helps companies responsibly manage environmental, social, and governance performance and record and drive performance.
The framework’s guiding principles and protocols cover three core areas:
Communities and people: Indigenous and community relationships, safety and health, crisis management and communication planning, preventing child, and forced labour
Environmental stewardship: Biodiversity conservation management, tailings management, water stewardship
Climate change: Site-level targets and management
At its core, TSM establishes accountability, transparency, and credibility of the ESG performance of a mining company. Assessments are conducted at the site level are made public, and are overseen by an independent advisory panel.
Measures to improve
Each of the three core areas of ESG is made up of a set of indicators that help miners to build, measure, and publicly report on the quality of their management systems and their performance in these focus areas. Each indicator ensures a formal process with defined accountability and business processes supported with the right capability.
Let’s look at the TSM indicators that the miners are required to report on.
Communities and people
Aboriginal and community outreach: Measure of relationships with the local communities of interest. It also ensures presence of formal process to communicate with Aboriginal communities about their operations and how to engage with them.
Safety and health: Measure of how a miner is managing health and safety of their employees, contractors, and communities.
Crisis management and communications planning: Measure of how a miner is prepared to effectively plan for communications in the unfortunate event of a crisis at one of their facilities or at the corporate level.
Preventing child and forced labour: Ensure that neither child nor forced labour, as defined by the International Labour Organization conventions, is used in mining operations.
Some of the examples of mining companies adhering to the TSM guidelines include organizations such as BHP providing AU$2.1M to help establish the Aboriginal Health Alliance to improve health services in Pilbara in Western Australia. In 2018, Rio Tinto launched its Domestic and Family Violence Policy, a package of measures to protect and support employees in Canada who are experiencing domestic and family abuse, or who have an immediate relative experiencing abuse.
Similarly in Australia, Rio Tinto and the Puutu Kunti Kurrama and Pinikura (PKKP) Aboriginal Corporation have agreed to create the Juukan Gorge Legacy Foundation to support the cultural, social, educational, and economic aspirations of the Traditional Owners.
In 2022, FMG published the Company’s annual Modern Slavery Statement, reaffirming its strong commitment to respecting human rights and eradicating modern slavery. Their approach rejects and prohibits the use of all forms of child or forced labour, and all other forms of slavery, within their operations and the operations of their suppliers.
The second core area of focus under the TSM framework is the environmental stewardship that mining companies must show to fulfil their responsibilities towards the environment they operate in.
Biodiversity conservation management: Measure of how a miner is adopting best practices in biodiversity conservation management through all stages of mine’s life cycle.
Tailings management: Guides and measures on how miners can safely manage tailings facilities by adhering to best practices in tailings management.
Water stewardship: Measure of water governance, operational water management, watershed-level planning, and water performance and reporting.
Energy Use and Greenhouse Gas (GHG) Emissions Management – this is measure of how a miner is managing energy use and GHG emissions.
Some of the examples are:
Becoming TSM compliant
Protocols under each of these focus areas are measured using a set of indicators and performance rates. Implementing TSM with its accountability and traceability will require miners to re-visit their existing processes and re-align them in line with the TSM framework. There will be a need for systematically measuring and reporting the performance. Being a sustainable miner is not only about measuring the performance but also taking the right action to improve it.
Considering the amount of work involved in becoming TSM complied, in addition to the internal assessors, miners will need to work with external consultants/advisors who are TSM accredited. Such consultants will be able to independently review existing performance and processes to identify potential gaps that can be corrected.
Here's what the consultants will do to help a miner become TSM compliant.
Conduct due diligence of current processes to identify key potential risks impacting the organization’s conformance readiness
Supporting process redesign and improvement of the controls of key processes and transactions for conformance
Improvement to the current processes
Implementing the Assurance Governance model
Coaching teams for achieving organizational conformance
Review and advice on process, procedure, and control documentation
Further, the consultants will be able to review existing performance and establish governance by conducting assurance through desktop review, site visits, interview as necessary. Apart from advising teams on how to operate in optimized controlled environment, they can do the following:
Provide detailed report on assurance level along with recommendations
Do readiness assessments for assurance certification
Add an internal audit function or re-engineer an existing one to enhance capability for achieving conformance
Organise certified reviewers for conformance audit
Miners can implement a TSM Assurance and Reporting Tool that will keep track of their progress. The tool should be able to conduct assurance through desktop review, site visits, and interviews as necessary and record the data against each of TSM KPIs with supporting evidence as well as maintain historical records and compare past and present performances.
Once enough data is available, the tool can be further developed to build simulation models to analyse past and predict future performance.