The fundamentals of creating social value and environmental resilience

Rohitesh Dhawan, President and CEO, International Council on Mining and Metals (ICMM)

The fundamentals of creating social value and environmental resilience that supports shared prosperity

This speech was delivered as a keynote at 2023's IMARC event in Sydney.

"The fundamentals of creating social value and environmental resilience that supports shared prosperity”. That’s a lot of BS, isn’t it? And by BS of course, I mean “business speak”; I don’t know what you were thinking I meant by BS!

I think this somewhat wordy title is, in fact, very worthy. It gets to the heart of a simple but profound question that society is putting at the feet of all companies: when the world is literally on fire and billions of people are living at the edge of survival, can we trust you to make it better, or at the very least, not make it worse?

We are called upon to show that society will prosper because of mining, not despite it.

That’s a relevant question for all sectors, but for mining, it is existential because of what is to come. By now, we have said and heard a thousand different ways that mining has to grow exponentially to meet the world’s demand for critical minerals –so I won’t repeat those numbers here.

Even the general public increasingly understands this fact.

And so, we are called upon to show that society will prosper because of mining, not despite it. That the natural world and people’s rights and aspirations won’t be collateral damage in the growth of mining to meet this demand. And that when it comes to critical minerals, the ends – important as they are – do not justify any and all means.

I am confident that this is possible, and I want to share with you some real-life examples of mining that create shared prosperity – and the lessons those hold for the future of mining. But before doing that, I need to level with you, and we collectively need to level with society. The honest truth is that, as an industry collectively, we have not always acted in ways that create shared prosperity.

• We abandoned hundreds of thousands of mines when we should have responsibly closed and rehabilitated them.

• We waited too long after disasters such as tailings dam failures to create better standards to prevent them from happening again.

• We have, for too long, tolerated discrimination, bullying and assault against women and underrepresented groups in our workplaces.

• On too many occasions, we have disrespected cultural heritage and communities' rights to self-determination.

• And we have failed in our primary and solemn duty to keep people safe at work, with people dying and getting injured with unacceptable frequency.

These are harsh realities that have caused trauma for many people across generations. And we must acknowledge this in any discussion about building shared prosperity in the future. If we don’t, we’ll fail to learn the lessons of the past and be unable to build common purpose with those who have a stake in mining.

So, what does mining for shared prosperity look like?

I want to share five key principles and a story about each. I’ve tried to avoid any BS with them, but you decide.

First, mining for shared prosperity means recognising that just because you can doesn’t mean you should. A legal license tells you that you can mine; a social license tells you if you should. This doesn’t mean getting every person to agree, let alone support mining activities – but to do what it takes to get a sufficient majority to that place, and maintain that support throughout.

Anglo American’s Quellaveco copper project in Peru gives us a blueprint for how to think about this. At the time of receiving their legal license for the project, the company did not have the community’s broad support. Instead of pushing ahead, they delayed the start by 18 months to hold Dialogue Tables with the community to get to the point of solid consensus.

Of course, this would have cost the company in the short run, but communities today feel the project helped them achieve the lives they want, and the company enjoys their broad support.

Second, mining for shared prosperity means valuing things that don’t have a price. Razor-sharp financial models are essential in an industry with thin and often variable margins, but if we’re not careful, they can lead us to destroy intangible value and in that process, everyone loses.

The antidote to this lies in thoughtful and principled leadership of the kind demonstrated by Sigma Lithium. Their financial model told them to build one big super-pit at their mine in Brazil. That would have meant diverting and disrupting a river that was not only important for the sustenance of their downstream communities but held significant intangible cultural value, too.

Recognising this, Sigma decided to build two smaller pits on either side of the river, which was operationally and financially less efficient. However, the community has the water they need and want, and Sigma Lithium has its enduring support.

Third, mining for shared prosperity means staying true to your word. Even when things get tough – in fact, particularly when things get tough – following through on past promises is the surest way to build a shared future.

Vale shows us what this means in practice. Nearly 40 years ago, Vale committed to protecting nearly 800,000 hectares of Amazon forest while mining iron ore within a tiny proportion of it.

Over that time, deforestation has ravaged the surrounding areas, but the forest protected by Vale still stands, thanks to huge investments in monitoring, protection, enforcement, and scientific research. Brazil and the entire world benefit from this most precious ecosystem remaining healthy and intact, and Vale from the support of the people that are directly and indirectly connected to it. I also know that staying true to their word is also the principle guiding the reparations from the Brumadinho and Mariana tragedies.

Fourth, mining for shared prosperity means going above and beyond. Sticking to what is only strictly required of us and being oblivious to the challenges that others face is not what this moment calls for.

Instead, the actions of Antofagasta Minerals and Teck Resources related to water in Chile show what it means to go beyond what is strictly necessary to support the communities that they, in turn, rely on.

Both companies have voluntarily given up part of their allowance to use fresh water in Chile so that precious water can be used for communities and conservation. They did this by investing billions of dollars into desalination plants or gearing their operations to use raw seawater.

Finally, mining for shared prosperity means being the change you want to see in the world. On almost any issue, it is easy for one stakeholder group to blame others for not creating the conditions for progress.

Some companies choose to be the source of change rather than victims of circumstance. Take BHP’s goal in 2017 of achieving gender parity by 2025, for example. It was remarkable not only in its ambition but its departure from the conventional wisdom of the time, which said that companies would hire more women if the education system produced them and if society encouraged them to work in mining.

Instead, BHP chose to do everything in its control to make mining a place where people from all backgrounds can thrive, and in doing so, has reshaped the attitude and ambition on this issue for the wider industry and society at large.

So,

1. Recognising that just because you can doesn’t mean you should

2. Valuing things that don’t have a price

3. Staying true to your word

4. Going above and beyond, and

5. Being the change you want to see in the world

These are the five principles that I believe underpin a mining industry that helps build shared prosperity. No BS, right? We know it can and is being done by the companies I mentioned, and many more. But we also know we’re a long way from these being the norm. That’s a challenge too big for any of us individually to solve – but if we each move our little corner of the industry towards these principles, great change is possible. And great change is what this moment calls for. 