BHP chief executive officer Mike Henry has warned that the mining industry is at a crossroad and miners must adapt to tougher social expectations to remain successful.
Henry, speaking at the Financial Times Commodities Mining Summit last week, stated that “In the end, there is little choice about whether mining happens or not. There is a tough choice about how it happens and who does it.”
The industry has reached a fork in the road where the world must return to growth – using mined commodities to improve living standards, Henry said, but it needs to do this in a clean and sustainable way.
According to Henry, BHP’s path ahead is dependent on finding the commodities that the world needs more of to further decarbonise its operations.
“Decarbonisation is going to require a whole lot more of many commodities,” Henry said.
“We all feel the increasing expectations and scrutiny from employees, governments, communities and civil society. They’re demanding better standards and when those standards aren’t met, the repercussions can be significant and quite immediate.
“As we seek to meet the shifting and growing demand for some commodities, we are needing to deal with more complex social dynamics.”
The mining industry is feeling the pressure from industries, businesses and individuals that demand for cleaner products and supply chains.
This was reflected in the Ernst & Young Top 10 Business Risks and Opportunities – 2020 report, where license to operate was named the number one risk to mining for the second year in a row.
Forty-four per cent of business risk survey respondents ranked this as a top concern due to uncertainty brought about by extended periods of government elections and changes, greater scrutiny from end consumers and intensified demands from broader stakeholders.
Henry summarised this under three interrelated trends: shifting expectations, evolving power dynamics and escalating technical complexity.
“We will need to be better in how we use water, energy and resources, in how we manage emissions and how we better meet the rapidly evolving expectations of the societies in which we operate,” he said.
“This mix of increasing stakeholder complexity, greater technical challenges to accessing and developing resources, changing commodity mix and faster pace of change is likely to mean there will be clear winners and losers in our industry in the decade ahead.”
Henry said the winners would be companies that build and maintain technical and social capabilities as well as long-term relationships, have the financial means to consistently fund resource discovery and development and deploy the latest technology for value.
The mining industry must deliver the commodities essential to daily life and progress that were also positive for economic and social empowerment, he continued.
“Global growth, decarbonisation, renewables, electrification… none of this happens without the commodities we produce,” the chief executive concluded.
“The only choice for the industry and the world is how we do this. Overall standards must continue to rise.
“We need to ensure we are operating ever more sustainably and that we are creating value for all our stakeholders, we need to support the economic and social empowerment of those around us.”