In a world which is increasingly focused on sustainability and the transition to a low-carbon economy, mining is seen as one of the leading environmental offenders.
Helder Santos, Director for Mining & Metals at dss+, spoke at business transformation event RACE21 about the main ESG challenges facing the metals and mining industry.
The mining sector is coming under growing scrutiny for its environmental, social and governance (ESG) performance, not only by the general public and local communities, but also by investors and insurers. Mining executives are under pressure to address these concerns while managing the other key challenges that are currently facing the sector, from the need to optimise costs to innovating and dealing with the current talent gap.
These challenges can broadly be grouped into three main categories:
- Branding – aspects that concern value protection from the license to operate to managing ESG and attracting sustainable financing.
- Innovation – an opportunity for value creation that addresses challenges such as decarbonisation, accessing new resources, the demands of a low-carbon economy, but also the talent gap.
- Operational Excellence – another route to creating value through cost optimisation, productivity, risk management, operating models, etc.
If the mining sector wants to improve its image with the broader public, but critically also with local communities and financial institutions, it needs to address all these aspects in an integrated approach that combines sustainability and operational risk management with a culture of operational excellence.
Branding in Metals & Mining industry
Dirty. A threat to the environment. Dangerous words often used to describe mining. Clearly, the common perception of mining is negative. Yet, at a time when we face the greatest environmental threat to human existence, low carbon technologies require us to mine more resources than ever before. While mining is named as an eco-enemy on social media, many people are unaware that the mobile phones they use to spread the word are to two thirds made up of mined materials.
How do we reconcile progress towards a low-carbon economy with the need to extract raw materials? Take renewable energy technologies, for example, many of which need copper as a key ingredient. In the last 5,000 years, humanity has extracted around 550 million tons of copper. We will need to mine roughly the same amount in the next 25 years if we are to meet consumer demand for low carbon technologies and traditional needs.
It seems like the world wants to have it both way: an endless supply of raw materials without an environmental impact. The mining sector is being forced to manage this delicate balancing act and is expected to put in place processes that drive sustainable and responsible mining along the value chain, at the same time as engaging all the stakeholders in the mining lifecycle. In the process, companies will need to do a lot of work on their branding, communication and engagement with local communities, national communities and the international community, to win the hearts and minds of stakeholders, in order to retain the license to operate and attract financing.
Innovation in Metals & Mining industry
In an ideal world, mining companies would be able to pinpoint each gram of precious metal in a ton of ore and extract it without moving any earth. In reality, that is a long way off. So where can mining innovate in the short-term? One key area is responsible and sustainable ways of mining. While new technologies are already being employed, from drones to proximity alerts and real time data monitoring of mobile assets, the challenge remains of how to scale innovation for it to have meaningful impact.
The current innovation trends in the mining industry highlight four aspects that are critical to innovation in the sector: data, extraction and processing operations, business models and people.
- Data to improve decision-making and control ecological impact throughout the supply chain.
- Operations innovations to focus sustainability and minimisation of environmental impact.
- Business models that build innovation and sustainability into the full asset lifecycle, for example by involving owners, communities, operators, EPCMs, etc. in new capital projects.
- People – one the most challenging aspects of the innovation for the industry. The pandemic has accelerated a move to remote work, leaner organisations with leadership empowering lower levels, the use of technology for the remote operation of equipment and new capability development, but new talent acquisition still remains a major issue.
The mining industry is currently clearly in a position in which it needs to be improve agility in order to be able to adapt to the many new challenges it faces from worker health & safety to sustainability, energy management, environmental risk management, community impact, innovation and, of course, profitability. That requires change, self-learning and leadership that commits to transforming operations in a responsible way. Attempting to solve each of the issues mentioned earlier individually often leads to a fragmented and disjointed efforts. An effective operational excellence management system should function as an engine for continuous improvement and best practices throughout the organisation, bringing all efforts together to achieve a lasting impact.