How can mining become more sustainable?

Opportunities are sometimes found in the most unexpected circumstances. The metals and mining industry is going through a difficult period, with companies cutting back and focusing on cost-reduction programmes. However, as we move towards a sustainable world, there are key trends emerging which will critically influence the future success of mining and metals companies. The industry leaders in 20-30 years’ time will be determined by who takes action now to drive sustainable growth.

What will a sustainable world look like? I firmly believe we can live within the planet’s resources and continue to grow, but in order to achieve that governments and civil society groups will have to collaborate more effectively with businesses. Value will be driven not only by growth trajectory and revenues but also by the social and environmental performance and impact of an asset. Success will be measured by the sustainability of economic development. Consumers will have greater influence and be more engaged across the value chain.

The metals and mining sector is in a unique position to play a vital role in making a sustainable world a reality. Why? For one thing, the industry’s impact is global – it operates on every continent except Antarctica and provides materials found in nearly every product. The industry has a long history of meeting daunting technical, environmental, logistical and energy-related challenges giving it the experience and skill sets to build sustainability into operations.

Finally, with projects that often span decades, the industry is accustomed to operating with the kind of long-term perspective that is at the heart of sustainability. The sector is already familiar with the impacts of recyclability. For example, it is estimated that 80% of the copper that has been mined is still in use or is available for use today.

By leveraging these strengths, the industry can move beyond simply complying with sustainability mandates to taking a proactive leadership position. Metals and mining companies have a chance to become a driving force behind the sustainability solution and leave behind the all-too-common perception that they are part of the problem.

In a recent Scoping paper, entitled Mining and Metals in a Sustainable World, the World Economic Forum highlighted the key drivers and trends affecting the transition to a sustainable world. Critically, the paper explored several key actions that metals and mining companies need to keep in mind as they move forward. There are a number of items to consider, but two principles stand out:

• Think in terms of shared value. Metals and mining companies will need to adopt a fresh perspective on what it means to create value, or more precisely, shared value. Some companies are already using this language. However, the industry as a whole needs to move beyond traditional financial performance measurements, such as profitability, which basically present too narrow a view to drive sustainability. Companies will need to consider the full range of financial, social and environmental factors that will have an impact on the business over the long run. Executives should ask, “What drives shared value with the communities in which we operate? With customers? In our partnerships with other companies?” In addition, collaborative relationships with various stakeholders will be key to delivering shared value to the company, the industry, governments and the community. Shared value needs to be the touchstone for measuring success, and it will be increasingly recognized by the marketplace and investors as a hallmark of a thriving business.
• Transform to succeed in a circular economy. In today’s linear economy, products are manufactured from raw materials, sold, used and ultimately discarded. A circular economy, on the other hand, is one that is virtually waste-free, where products are constantly repaired and materials are almost always reused. Operating in a circular economy will mean creating closed-loop supply chains that encompass the full life cycle of products through improved product design, extending asset life, reuse and recycling. Metals and mining companies will also have to build the skills and close relationships with suppliers and customers that allow them to collaboratively focus on eliminating waste. Adapting the business to work in a circular economy is not only environmentally sound but also fosters the kind of greater efficiency that can make companies more agile and cost-competitive. There is no time to waste. A third of CEOs interviewed in the UN Global Compact – Accenture CEO Study on Sustainability 2013 reported that they are actively seeking to employ circular economy models. Automobile manufacturers, for example, are already working to meet the European Community End of Life Vehicle Directive to achieve a recyclability rate of 85% which will have implications for steel and aluminium manufacturers. In addition, customers are actively looking for “low impact” suppliers. Apple announced in its Supplier Responsibility 2014 Progress Report that all active, identified tantalum smelters were verified as conflict-free by third party auditors and that it will publish a list of smelters and refiners in its supply chain along with their verification status.

Getting from today’s reality to tomorrow’s sustainable industry will not be simple, and it will take time. As the Forum report says, the industry needs to “re-emphasize the journey” to a sustainable future. In a very real sense, metals and mining companies are at a critical juncture. The manner in which they respond to the issue now will affect their market position, reputation and value for years to come. Given the long lead times for projects in the industry, companies need to get started today, to set a vision, identify the path they want to take, and then actively follow that path.

As we all know, this is a cyclical business – and a heightened focus on sustainability during today’s tough times is likely to pay off in tomorrow’s growth markets.

If you’d like to find out more about the Forum’s view of the metals and mining industry’s opportunities in a sustainable world, you can download the scoping paper, Mining and Metals in a Sustainable World.

Author: Rachael Bartels is the Global Mining Lead at Accenture

Image: Gold alloy bars are seen at Altyntau gold mine extraction factory outside northern Kazakhstan’s town of Kokshetau REUTERS/Andrey Lunin