Ensuring mining’s legitimacy, Part 1

Ten years ago, the United Nations convened a conference on environment and development in Rio de Janeiro. The mining industry was present at that conference, but only on the periphery. In August of this year, the World Summit on Sustainable Development will be held in Johannesburg, and mining representatives are expected to assume a more active role.

Indeed, the future of mining largely depends on how well our representatives in Johannesburg present the case for sustainability.

Three years ago, the industry’s concern for its future gave rise to the Global Mining Initiative, a collaboration that grew to embrace 30 companies. The GMI included a comprehensive report on the challenges confronting the industry — a report that came to be known as Mining, Minerals and Sustainable Development. The MMSD project brought together commercial competitors in an exercise that promised no immediate economic benefits, and gave critics an opportunity to dissect the industry and discuss both its strengths and weaknesses.

MMSD was a realistic exercise: none of those involved expected it to produce unequivocal solutions to the problems that confront our industry. What was hoped for was that it would identify and explore the most important issues.

Throughout the pages of the MMSD report, one finds examples of public concerns about resource development. On the face of it, many of these attitudes are contradictory: people wanting the products of mining, such as cars, computers and mobile phones, yet reject the development that makes these products possible. But the public is neither stupid nor perverse, and the contradiction is best seen as an expression of the loss of public trust, and, to some degree, the industry is to blame.

There is a well-known story, much used in business schools, about a frog in a saucepan of water. The water temperature rises gradually, and the frog ignores the incremental rise because it grows accustomed to the situation. Eventually the water boils and it is too late for the frog.

In a similar way, the mining industry has become accustomed to gradual changes in the business world. The danger is that, at some critical point, widespread popular distrust and misunderstanding will lead to the imposition of restrictions that are onerous and harmful.

There is a growing consensus that the mining, minerals and metals industry has already reached that point. The intention of the regulators may be to promote a more sustainable economy, but their measures are so drastic as to render that all but impossible.

Among the public’s perceptions (and misconceptions) about mining are the following:

q Mining disturbs the environment — In truth, the industry disturbs only a tiny fraction of the earth’s surface, and operators have by now developed ways of protecting the environment. Nevertheless, the industry’s historical legacy hangs around its neck like an albatross, and it’s true that there are companies whose environmental record falls well short of industry-best standards.

q Minerals are a non-renewable resource; therefore mining is not sustainable — This ignores the fact that many metals and minerals can be reprocessed and endlessly recycled, and it fails to consider the benefits that flow from mineral extraction, processing, fabrication and use.

q The benefits of mining don’t flow to those most affected — There are grounds for this perception. Over the years, the claim that mining can bring direct employment has become harder to sustain as machines replaced men. In particular, we have a need to find ways of reconciling our activities with indigenous communities, whose interests have too often been neglected. Rio Tinto’s efforts to arrive at land use agreements bringing benefits to local Aboriginal communities are a positive step in this direction.

Behind all these concerns is a general feeling, held by many who know next to nothing about the industry, that mining companies are global entities whose size and wealth enable them to evade normal legal and moral restraints. This perception gains strength from concern that the gap between the richest and the poorest nations has expanded. People feel that, in some way, the global mining industry contributes to this growing disparity.

Our task, in a nutshell, is to dispel the myths about mining and demonstrate that the industry has moved into the 21st century in terms of values as well as technology. It is to show that modern mining companies are not economic juggernauts but responsible and responsive organizations conscious of the role they play in society.

— The preceding is an edited version of the keynote address presented at the Council of Mining and Metallurgical Institutions Congress held in late May in Cairns, Australia. The author is the chief executive officer of London-based Rio Tinto.