Social and environmental issues have become one of the mining industry’s most pressing challenges.
While mining companies consistently work to retain their social licence, BHP Billiton’s former head of institutional and government relations Osvaldo Urzúa boldly suggests the issue isn’t only reserved for miners.
Government and communities have a fair share in addressing those challenges too.
Australian Mining speaks with Urzúa, who’s currently an international consultant based in Chile, about the way forward for the sector.
What’s your outlook on the increasing standards expected by the public in respect to economic, social and environmental sustainability in the mining sector? What do you think the public and local communities really want to see?
Society’s standards and expectations are constantly evolving and usually increasing. This process is a regular historical process and should not surprise us.
First, a gap begins to emerge between the company’s performance and society expectations. Then, new issues begin to appear in the public debate and gradually more stakeholders start to participate.
Finally, what was once a concern, grew, achieved a tipping point, and new obligations and regulations that companies must comply to are set.
Along with the emergence of this new set of mandatory standard, new business models also emerge.
This is an unavoidable process, which can either be a driver of prosperity or declination shaped by the capacity of the society to collectively address the challenges of the transition between the old and new standards and models.
Probably, we are witnessing that tipping point regarding sustainability. and new standards and business models will emerge. For instance, the access to capital is increasingly shaped by ESG (environment, social and governance) consideration.
What does this transition mean in terms of what communities want to see? Probably, the direct answer to that question has some aspects similar to what was requested in the past.
Most communities seek work, to have access to procurement opportunities and to avoid damaging their environment. Probably the difference refers to the process to address those requirements.
Today collective action is an approach that is increasingly demanded.
Do you think this will bring new public concerns with where mining is going, such as digitalisation of mine sites?
That concern already exists. People are already asking what will happen with their jobs.
There is no simple answer to that question, and precisely because of that a collective approach is so important. This question needs to be tackled as a common challenge.
What do you think mining companies are doing well right now in respect to their sustainable practices?
This is a long journey that most mining companies have already started and are putting in a significant effort to.
For instance, most companies are shaping their strategies to embrace the sustainable development goals (SDGs) in every phase of the mining cycle, from exploration up to closure, aiming to avoid or mitigate environmental impacts, protect human rights and promote social inclusion.
To succeed in this, collective action is required – it cannot be done is isolation. Private-private and private-public collaboration is required.
Additionally, social issues should be fully integrated in business decision-making processes, and business leaders should be held accountable for the social and environmental performance of their companies.
The journey already started, but there is still some way to go.
The likes of BHP and Rio Tinto have made bolder moves over the past year to improve their sustainable practices across the supply chain. Do you believe these major mining companies will continue to head in this direction?
Sure, the change is unavoidable and upgrading their business model is a matter of viability and competitiveness. For instance, attracting capital is more dependent on ESG risk than before. Additionally, attracting talent is getting increasingly challenging.
Have mining companies done enough to this point to satisfy the growing social pressure on them to be more sustainable?
This is not just a challenge for mining companies – it requires companies, government and communities to work together.
It is a collective process and probably everyone needs to do a bit more, starting by first defining a compelling shared vision for the future.
How should mining companies manage or fulfil these expectations in times to come?
Business model need to be updated by integrating the definition of a value proposition to the community as a key element of the business strategy, which requires collective action for its delivery. This is not just a corporate affairs issue, but an all-in business responsibility and accountability.
Is Australia facing a unique challenge in delivering sustainable value in the future? How does the national landscape compare to the international mining sector?
The flip side of a challenge is an opportunity. I think that Australia, and in particular Western Australia, is facing a unique opportunity to lead the transition into the safe, smart, inclusive and sustainable mining that the world requires.
Minerals are essential for human well-being, but minerals production has created some environmental and social problems, generating conflicts among mining companies, communities and the society.
With declining ore grades in a business as usual scenario, the environmental conflicts are at least likely to increase, unless a new approach in mining is created.
Osvaldo Urzúa will be a speaker at the Western Australian Mining Conference held in the Perth Convention and Exhibition Centre on October 15–16, with a presentation titled, “Strategic Stream – Transiting to a Safe, Smart, Inclusive and Sustainable Mining – Using the transformative power of mining to create sustainable value in the future.”