Mining Sustainability 3 – The Impact on Companies of a Changing ESG Environment

This is the third report from RFC Ambrian on sustainability in the mining industry. This report focuses on the pressures on mining companies coming from governments and regulators, NGOs and activists, as well as internal pressures from industry bodies and companies themselves.

Starting with a Tarnished Image: It is an unavoidable fact that mining causes environmental and social impacts, however, it is how these impacts are managed that is important. The mining industry is rarely wilfully negligent and usually operates with well-established ESG principles as well as adhering to relevant government safety, social, and environmental regulations. Nevertheless, every so often the industry makes the headlines for the wrong reasons, usually after an unfortunate accident or the actions of a very small minority, which tarnishes the industry as a whole and makes the industry starting point more difficult.

Pressure from Regulators & GovernmentsWhen it comes to regulating mining, most governments tend to try and strike a balance in a fair and equitable way between protecting its communities, the environment, and other national interests and allowing economic exploitation of minerals which can deliver important economic benefits. Over the past ten years, governments have begun to enact additional controls, regulations, and legislation to ensure the ESG requirements are met satisfactorily; these obligations are placing additional pressures on mining companies.

Pressures from Communities & Civil Unrest: Pressures have also been rising from local communities. Mining projects can impact communities positively with direct and indirect employment opportunities, improved community infrastructure, as well as taxes that feed back into community services. However, there are also potential negative impacts which include the damage or removal of existing community resources or indigenous heritage, and unwanted relocation. Mining companies are tackling the issues by implementing consultation mechanisms designed to empower local communities to influence decision on mining projects. Nevertheless, civil unrest has been prevalent in 2019, particularly in South America.

Pressures from NGOs and Activists: Meanwhile, confrontation appears to be increasing from activist NGOs focusing on community and environmental issues. These pressures are harder to manage, although some governments have suggested measures to limit the impacts of activists. Ultimately, the real solution for the mining industry is to convince society It can operate in a sustainable manner and has responded by developing a range of self-supporting measures as well as independent third-party reviews.

More Progress from the Mining Industry is Required: We believe that most mining companies have raised their levels of sustainability reporting across all fronts in recent years. Nevertheless, there is still room for improvement according to independent reviews. Additional work is required in the progression of ESG standards and reporting, a greater response to climate change risks is needed, and the continued introduction of new technology and the decarbonisation of mining operations is essential. This must be achieved with enhanced disclosure, verification, and transparency. The stakes are high for everyone, and the industry must move quickly.

For the full 18page report please click here.

RFC Ambrian has a track record of over 30 years of providing independent corporate advisory and investment services to the global mining industry, from both a technical and financial perspective.

David Bird
+44 (0)20 3440 6822

Corporate Broking
Charlie Cryer
+44 (0)20 3440 6834

To opt-out from future communications please click UNSUBSCRIBE
This document has been approved under section 21(1) of the FMSA 2000 by RFC Ambrian Limited (“RFC Ambrian”) for communication only to eligible counterparties and professional clients as those terms are defined by the rules of Financial Conduct Authority. Its contents are not directed at retail clients as RFC Ambrian does not provide investment advisory services to retail clients. RFC Ambrian publishes this document as non-independent research which is a marketing communication under the Conduct of Business rules. It has not been prepared in accordance with the regulatory rules relating to independent research, nor is it subject to the prohibition on dealing ahead of the dissemination of investment research. It does not constitute a personal recommendation and does not constitute an offer or a solicitation to buy or sell any security. Neither RFC Ambrian nor any of its directors, officers, employees or agents shall have any liability, howsoever arising, for any error or incompleteness of fact or opinion in it or lack of care in its preparation or publication; provided that this shall not exclude liability to the extent that this is impermissible under the law relating to financial services. All statements and opinions are made as of the date on the face of this document and are not held out as applicable thereafter. This document is intended for distribution only in those jurisdictions where RFC Ambrian is permitted to distribute its research. In particular, it is not intended for distribution in and is not directed as persons in the United States. On the date of this document, RFC Ambrian, RFC Ambrian’s holding company, persons connected with it and their respective directors may have a long or short position in any of the investments mentioned in this document. RFC Ambrian is a member of the London Stock Exchange and is regulated and authorised by the Financial Conduct Authority. RFC Ambrian is registered in England and Wales no. 4236075. Its registered office is at Octagon Point, 5 Cheapside, London EC2V 6AA.