Mining companies transform stakeholder relationships

 

There are a series of stakeholders that mining companies need to deliver social outcomes to. Deloitte’s Ian Sanders tells Australian Mining how they can achieve this.

Australian mining’s key stakeholders, including governments and local communities, expect companies to deliver measurable social outcomes.

The modern-day industry requires companies to identify ways to provide local employment opportunities, be more transparent financially, and meet community infrastructure and environmental demands.

According to Deloitte’s fifth chapter in the 2018 Tracking the Trends report, Transforming stakeholder relationships, this imperative will only heighten in the digital age.

Game-changing developments, such as automation, robotics and artificial intelligence (AI), have provided undeniable benefits for mining companies, but have also left the public concerned about how they will impact workforces and local communities.

Governments and industry organisations are frequently raising this alarm, making mining companies accountable as they move further in this direction.

Deloitte Australia national mining leader Ian Sanders says the move towards digital mining operations is forcing a shift of the social requirements expected of mining companies, something they are fortunately working to satisfy.

This transformation has to be used to the advantage of the country and communities, he says, by creating new education models, by improving communication, and to enhance supply chains.

Sanders points to an increased focus on collaboration between miners and these stakeholders to identify ways companies can deliver outcomes.

“We continue to see more local mining operations get more and more invested in the community,” Sanders tells Australian Mining.

“It just works – spending time, making investments, retraining people. Mining companies aren’t running away from this as a way to improve productivity.”

In Australia, companies are increasingly becoming active in their efforts to satisfy social expectations of local communities.

A company like Fortescue Metals Groups has been a regular contributor in this way since it was founded 15 years ago, providing grants to local communities in the Pilbara.

The miner’s initiatives have continued in recent months, with focus on projects that embrace education and training, improving quality of life, encouraging healthy living, and other qualities.

Also in Western Australia, Northern Star Resources last year launched plans to invest $50 million in underground gold mining to expand skills and develop innovation in the Goldfields region.

Sanders backs the focus of these miners to find innovative ways to benefit communities.

“More than ever they are looking to share information and share data — it is not just about owning a company asset anymore,” Sanders says.

“It is about becoming more available to these local communities. It can even be small things like measuring weather patterns and sharing that data with the local communities, or even local farmers.”

As mentioned, collaboration with key stakeholders is at the core of progress in this area.

An industry-wide collaboration that has emerged is the Mineral Exploration Cooperative Research Centre (MinEx CRC), which has received $215 million in funding from mining companies and the federal government.

The MinEx CRC plans to discover and define mineral deposits by pioneering cheap, safe and environmentally-friendly coiled tubing drilling to build a 3D picture of the subsurface.

Mining companies, including BHP, South32, AngloAmerican and Barrick Gold, have committed $165 million to the initiative over the next 10 years, while the federal government is providing $50 million.

Research organisations that are involved include Curtin University, University of South Australia, Adelaide, University of Newcastle, University of Western Australia and the CSIRO.

Rio Tinto, meanwhile, joined forces with the Western Australian Government and South Metropolitan TAFE last year to pioneer a curriculum required for the mining industry’s jobs of the future.

The miner and TAFE are preparing for opportunities created by advances in technology and innovation.

“There are now examples of major mining companies in Australia getting together with local governments and local universities (to achieve this),” Sanders says.

“Forming an alliance and getting involved in how they can as a wider group or ecosystem benefit first and foremost the STEM education and the image of mining within young people.

“Second, they are bringing new and innovative ideas into the supply chain. If you have got local governments or state governments investing with large mining companies it is a really positive thing for the industry when we look two or three years out.”

From an environmental standpoint, Australian miners are increasingly looking at ways to introduce renewable energy projects to their sites in an effort to reduce their footprint.

Driven by favourable economics and the benefit of carbon reductions and social licence, Australian mines are adopting renewables in regions around the country.

South32 is working with SunSHIFT to introduce a 3MW solar farm at its Cannington mine in Queensland. Once complete, the farm will be the second largest solar project for a remote, off-grid Australian mine.

Also in Queensland, New Century Resources is investing in SunSHIFT’s portable and scalable solar system to supply power for the refurbishment of its Century zinc mine. In Western Australia, Image Resources is investing in a 3–4MW solar farm adjacent to its Boonanarring mine and processing plant.

OZ Minerals, meanwhile, plans to build a solar and battery storage facility at the Prominent Hill mine in South Australia, and is looking at further investments in renewables to support other projects in the region.

Sanders says there is also potential to look at renewable projects in other Australian regions by collaborating together and with key stakeholders.

“If you look at the Pilbara as a region, could the miners within that region get together and work with the government to form a solar energy town?” Sanders asks.

“Should they all get together and form a public-private partnership. Something like this could be done together innovatively so it looks fantastic for the industry, but is also economically beneficial for all involved.”

The demands of stakeholders in mining continue to evolve but as these examples demonstrate companies are committed to the cause.

Deloitte’s strategies for ‘Transforming stakeholder relationships’ include:

Move beyond financial transparency:

Many regulators and NGOs now demand enhanced disclosures, prompting organisations to heighten their financial transparency in an effort to demonstrate the contributions they are making to governments and communities. As numbers alone don’t tell a compelling story, companies should provide more concrete examples of how their investments and activities translate into measurable social outcomes.

Provide communities with equity stakes:

To encourage communities to be more vested in local operations, it may make sense to provide them with equity stakes. In addition to strengthening companies’ social licence to operate, this approach allows communities to realise long–term financial advantages.

Strengthen local supply chains:

Local businesses often lack the scale to deliver on large procurement contracts, putting them at a competitive disadvantage. To overcome this, some organisations focus on helping local partners gain the skills needed to participate in the procurement process through business development training, mentoring and formal suppliers development programs.

Enable community–led evaluations:

Traditionally, organisations monitor their behaviours to ensure legal compliance and determine their impact on communities. Now, however, some companies are democratising this process through the use of community–led evaluations. By focusing on greater transparency between the mine and communities, companies can empower communities to select and track the metrics that matter to them most.

Collaborate:

Collaboration, both among adjacent mine operators and through public–private partnerships, can help companies meet critical public and community needs while also enhancing operational performance. While collaborative approaches will hinge on project goals, success factors commonly include building a multi–disciplinary team committed to working closely with industry stakeholders.

 

This article also appear in the July issue of Australian Mining.