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Current Trends in Mining 17

of freely traded markets for intermediate products has gener- Simply put, it is increasingly difficult for a mine operator
ally resulted in bauxite miners producing alumina at the mine with a bad track record on environmental or social issues to
site, and then transferring it to distant, but owned, aluminum obtain or hold the license to operate that it needs to be suc-
smelters, which are generally located in areas that can provide cessful in most developed and many developing countries.
inexpensive power. This structure minimizes production costs Governments, communities, financial institutions, and inves-
but also makes it difficult to be a substantial participant in the tors do not want to support or facilitate actions that are per-
bauxite mining industry unless your operations are vertically ceived to be unreasonably harmful to people. This has resulted
integrated through alumina refining and aluminum smelting. in stronger regulation, higher levels of community involvement
Two current trends are pulling parts of the mining indus- in the approval process, strengthened laws regarding indig-
try into or away from vertical integration. Pushing the indus- enous rights, and the adoption of voluntary principles of sus-
try toward vertical integration is the desire of governments tainability and human rights by most large mining companies.
to capture maximum rent from ore bodies and maximize job It has also resulted in a bifurcated industry structure
creation. As a trade-off for allowing access to mineral rights, whereby large, public companies are heavily scrutinized and
governments are increasingly demanding construction of pro- typically seek to meet or exceed minimum legal require-
cessing facilities in-country. Effectively, governments are ments. They also tend to work closely with nongovernmental
looking to force mine developers to substantially increase organizations (NGOs) and governments. The scrutiny and
investment and job creation as a trade-off for awarding min- standards that apply to smaller companies are typically less
eral rights, even if this means processing facilities are not than for a large one. However, governments and partners in
optimally located. less-developed countries are not always happy with the big
The stronger force is toward less integration caused by company approach. This desire for quick investment supports
decreasing transportation costs, the generally lower construc- the faster approach that smaller companies typically adopt.
tion and operating costs available from locating plants in The International Council on Mining and Metals (ICMM)
Asia (especially China), and the opportunity to build larger was established in 2002, and most leading mining companies
processing facilities in central locations that can aggregate are members. Through the ICMM, the industry has put for-
feed from multiple mines. This trend toward disintegration is ward its proposal on sustainable development, including cli-
expected to continue and will make it increasingly easy for mate change, and has undertaken to report its progress and
mining companies to focus on mine-only operations, with pro- have its reports verified. Additionally, progressive companies
cessing handled by a separate company at a distant location. have been engaging directly with their key stakeholders and
making progressive decisions to enhance their licenses to
SuSTAinABiliTy operate. In many instances this involves commitment to envi-
Environment, community, and safety are major issues for the ronmental management strategies that go beyond strict legal
mining industry and the trend is for increased scrutiny in these compliance and have resulted in increased costs.
areas. The reasons for this are the following:
Climate Change
• Historic: Improperly operated and/or closed mines are
While there are some contrarian views, most of society
still a legacy of our past. Old mines with major contami-
believes that human-made climate change is causing harm
nation and/or environmental degradation problems are all
and that carbon emissions are the primary cause. Society has
too common.
therefore demanded that the subject of climate change receive
• Social: Communities, lifestyles, and even social fabric are
maximum government and industry attention. Through the
all substantially impacted by nearby mine development.
consumption of its products (primarily the burning of coal),
• Emotional: The natural resources of a country are ini-
the mining industry indirectly accounts for about 32% of
tially the property of the people of that country. A com-
global greenhouse gas emissions (IEA 2008). Given the
pany, and particularly a foreign one, profiting from the
industry’s large contribution to carbon emissions, sharehold-
extraction of natural resources is a sensitive issue.
ers, regulators, and society at large expect the industry to
• Real: The purpose of mining is to concentrate elements
reduce its footprint.
(minerals) for use by society. While the production of
Although many mining companies have made commit-
concentrated minerals (copper, gold, lead, etc.) is desir-
ments to reduce carbon emissions, this issue is expected to
able, a side effect of mining tends to be the concentration
become increasingly contentious. The likely focus will be
(and release) of some undesirable elements (lead, arsenic,
coal and uranium mining. Through its consumption, coal is
sulfur dioxide, radioactivity, etc.).
the single largest contributor to increased levels of carbon in
• Progress: Society expects ongoing improvements in
the atmosphere. Nuclear power, which uses uranium, has long
industrial performance across all industries, and the
been out of favor, largely due to issues associated with the
mining industry must keep pace with progress in other
disposal of nuclear waste and society’s long memory of early
industries.
nuclear incidents and accidents. However, nuclear power
The mining industry has been well aware of these issues, does not generate carbon, and, as a result, it is increasingly
and its performance in the areas of environment, community, coming back into favor as a source of carbon-free power.
and safety is improving. In part this change is driven by higher Technology improvements, including carbon sequestration
levels of social awareness within the companies themselves. at coal-powered generating stations and the development of
However, much of the change is also due to recognition by nuclear reactors with reduced levels of waste generation, will
senior management that a good track record on environmental, be key trends to follow.
community, and safety issues is a requirement for getting (and Although it is not clear how the balance between climate
holding) access to resources. change and low-cost energy will evolve, it is obvious that the