Environmental and social considerations have been critical to the business of mining since long before the term ESG gained its current popularity. Mining activities are politically sensitive because they allow private companies to appropriate and profit from a state’s finite natural resources, and because they normally entail significant impacts on the natural environment and nearby communities. As a result, mining tends to be highly regulated and require environmental licences and permits, which must be supported by environmental and social impact assessments and other studies and work programmes to minimise and mitigate risks and negative impacts.
Beyond those minimum legal requirements, the term “social licence to operate” was first coined in the mining industry towards the end of the last century, to define a broad concept of public and stakeholder acceptance of a project. As well as creating employment, contributing to tax revenues, and providing materials that are critical to economic growth, mining companies invest in community infrastructure and social programmes, environmental conservation, and compensation to gain that social licence. However, much of this good work goes unnoticed, and mining continues to be viewed as a dirty and exploitative industry. Why?
When things go wrong in mining, the consequences can be devastating. Bad news, in the form of mine collapses, polluted rivers or tailings dam failures, for example, makes headlines. Memories are long, and trust, once lost, can be very difficult to regain. Moreover, unfortunately, bad practices continue in parts of the industry. For example, labour and safety standards are often ignored by artisanal and illegal miners, child and even slave labour are used in parts of the world, and human rights abuses are sometimes associated with the scramble for mineral wealth in conflict zones.
Nonetheless, mining is essential to our modern life. The world is finally waking up to the scale of demand for mineral resources required to fuel the energy transition. For example, significant new sources of copper, lithium, cobalt, graphite, and rare earths, will be needed for increased electrification and the switch to renewable energy. There are also concerns about whether supply will be able to keep up with demand, and about over-dependence on China, which currently mines and processes a very large proportion of these so-called “critical minerals”. These concerns have prompted governments in the developed world to belatedly launch policies and legislation aimed at securing supply, such as the EU Critical Raw Material Act and the misleadingly named Inflation Reduction Act in the U.S.
This new focus on mining for the energy transition has put environmental and social factors under the microscope, and is also creating tensions. On the one hand, the social pressures that are driving the energy transition, are also demanding high environmental standards in the critical mineral supply chain. Environmental non-governmental organizations (“NGOs”) like Friends of the Earth and Earth.Org have drawn attention to the environmental impacts of mining for battery metals, end consumers are demanding information on the environmental impact of their EV supply chain, and miners are installing on-site renewable power solutions and reporting on their greenhouse gas (“GHG”) emissions. Discussion of the energy transition increasingly references the need for a “just transition”; i.e. one that is people-orientated and inclusive, mindful of the employment and economic needs of society and, particularly, its less fortunate.
On the other hand, there is a pressing need to accelerate mine development with demand for battery metals expected to soar in the next decade or so, and to outstrip supply. However, a recent study by S&P Global Market Intelligence showed that the average time for development of a mine, from discovery to operation, is 15.7 years, with some countries, and minerals (including copper and nickel) significantly worse. One element in that timeframe, and frequent cause of delays, is the obtaining of environmental licences and permits, and there have been calls by some in the industry for these processes to be streamlined and more standardised.
While the particular environmental and social challenges of mining operations vary from region to region, this article takes Colombia as an example of some of the issues facing miners. It will then consider some of the global standards, initiatives and practices that may serve as a baseline for governments and the industry to seek greater consistency in this area.
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