Ensuring mining’s legitimacy, Part 2

The question remains: How does the industry regain the public credibility that, ultimately, underpins legitimacy?

The answer is simple: it openly acknowledges the criticisms leveled at it, engages with its sternest critics, and does what it can to set things right.

I can think of two examples that show that this approach works. The first is the Australian Minerals Industry code for environmental management, launched by the Minerals Council of Australia in 1996 in order to be open and transparent in its dealings with the community.

The code has been signed by companies responsible for 90% of Australia’s mineral production. Most people concede that the code’s insistence on the publishing of environmental performance reports by signatories is a positive development. Such reports invite comparisons between years and between companies. As a result, they are a powerful incentive to improve performance.

The second example is in the area of health and safety. Any concept of sustainable development that ignores the toll exacted by unsafe working conditions and practices is flawed.

At the very heart of the concept of sustainable development is respect; respect for the environment and for the community. For a minerals company, that respect must start with concern for the health and well-being of its own people. Today, companies publish their occupational health and safety statistics and are jealous of the reputations as safe employers. Such openness ensures that good practice will spread and that standards will rise.

Other challenges lie ahead, an important one being how best to manage the social impact of resource development. Again we have made progress, but, as an industry, we have arguably not yet brought to this area the same professional standards that the best companies apply to their environmental activities.

There is one challenge that is going to become more pressing with each passing year. I refer to the environmental and social costs of closing an operation.

Companies such as Rio Tinto have, for some time, made provisions for environmental and social rehabilitation in the planning stages of a new operation. These provisions are updated on a regular basis in collaboration with government authorities and other stakeholders.

This is not yet universal practice throughout the industry. For those who have inherited old mines or plants, the potential costs of closure are the stuff of nightmares. And when one hears voices demanding retrospective compensation from today’s industry for the consequences of operations that ceased production many years, if not decades, ago, there is a natural tendency to put the issue in the too-hard basket.

But that is something we cannot afford to do. Legacy issues, or “orphan sites,” are going to stay with us so long as they concern the wider community.

I don’t have an instant solution, but I am sure of two things: companies that don’t give adequate thought to the social and environmental costs of closure will one-day wish they had done so; and a solution to legacy issues will only happen when the boundaries of responsibility are accepted.

Make no mistake: it will not be easy. There are people who are loath to abandon entrenched positions. For instance, within the industry one hears an understandable concern about the costs of the shift to more sustainable practices. The concern is a sensible one. There is no doubt that changes that are not well thought through could be expensive.

Yet the risks attached to the status quo become increasingly untenable. Our licence to operate is threatened. Therefore, let us seek affordable ways to make the transition to sustainability, rather than fighting a ruinous rearguard action.

Developing a sustainable development policy is an obvious start. Such a policy can relate to other policies, such as those on environmental issues, health and safety, community relations and ethical standards. Sustainable development should be a philosophy that is reflected in every facet of a business.

Only when employees understand why a company is incorporating the concepts and language of sustainability into its policies, systems and processes can there be a sincere engagement with the wider community.

Obviously, there is a big job ahead for our industry. Companies can do a lot, but they need help from the institutions and associations that exist to maintain professional standards and to represent them. As an industry, that is what we are asking the world to do when they view minerals, mining and metals. Surely, we can ask no less of ourselves.

— 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.