ESG Is Already in Mining’s DNA, But Communication Can Improve

You can watch the video of this panel here.

Mining is in every sense an essential industry, but in modern times scrutiny on its operations has increased significantly. Miners stress that environmental and socially minded best practices have long since been a cornerstone of their work, nevertheless, communicating the efforts of companies to become more sustainable could be enhanced.

Environmental, social and governance (ESG) criteria are a cornerstone for doing business in 2021. Not only do they inform government regulation and the handing out of crucial permits, but they also guide investors and serve as a major benchmark on funding decisions. Yet ESG goes beyond these considerations, said Jim Norine, Director Minerals of the Americas at Ausenco. “The ESG initiative is about doing the right thing; doing what you are supposed to do. There should not be a cost associated when it comes down to ESG since this is a big part of what we do.”

Mining undoubtedly has an impact on the environment and on communities. For Euridice González, Country Manager of Coeur Mexicana, this means that mining companies must leave a net positive impact behind. The industry is crucial to the global economy, after all, mining simply must happen. “Without mining, we would not have most of these products that we rely on so much,” she said.

Mining industry insiders often look at the capitalization on ESG criteria with some amusement, even though they take the issue very seriously. For miners, this amusement comes from how the term has been defined in recent times. “A lot of ground that ESG touches on is something mining companies have been doing for years, if not decades, but perhaps we have not been tooting our horns about it,” said Norine. González agreed with the sentiment: “We have been doing ESG before the concept even materialized,” she said, recognizing at the same time that mining companies might not have sufficiently emphasized the benefits they have generated.

Whether framed in the sense of ESG criteria or not, environmental and social standards are at the core of what the company does “We pursue a higher standard in integrity and ethics in all our operations,” continued González. In Mexico, Coeur Mining has been ramping up the drilling activity at the Palmarejo complex: the company plans for nine drill rigs to be active there in the third quarter of 2021 and expects to maintain that pace for the remainder of the year. In 2020, Palmarejo  produced 6.3 million oz of silver and 110,608 oz of gold.

ESG has also been at the top of the mind for Barry Quiroz, President of Sapuchi Minera. The Sapuchi project hopes to get crucial permits approved soon. “We expect our environmental permit to be approved in late October 2021 and a second permit needed to go toward our construction and production to be approved by the end of2021 or 1Q22,” he said. Getting a permit is not what Quiror worries about the most, he said. His focus is to ensure communities think positively about a project so that everyone wins: the project is successful and the community will be happy.

“ESG practices can change negative perception of mining. If we implement effective practices, we can mitigate the greatest risks that companies face, which are related to social and environmental issues,” said Quiror. To this end, the company aims to leave behind helpful but expensive infrastructure, as well as boost education. “This positive approach is how we will bring more investments into our states too. We want to be seen as a partner that really wants to make a positive change,” emphasized Quiror.

ESG criteria will only continue to grow in importance, highlighted Kenneth McLeod, CEO of Sonoro Gold. “A new set of laws will soon be presented to us as a result of the 2015 Paris Agreements on climate change,” he said. Tackling climate issues is inherently difficult for an industry like mining. “There is no way a mining company can be truly net zero, so we must be prepared to take on a certain amount of pain to deal with this issue,” McLeod added. No matter the pain involved, he does believe that mines must become more sustainable. In Mexico, mining companies face some problems when looking to tackle emissions. “Mexico is not rich in renewable energy when you look at it,” explained McLeod. Mines use a lot of energy in their operations, after all. Having to buy carbon credits with “arbitrary, even predatory” prices is not a feasible approach, but mines can take measures to become more energy efficient by turning to state-of-the-art equipment.

To enhance the social license for Sonoro’s Cerro Caliche project, which the company hopes to get to production next year with a production of 15,000 tons per day and a yield 15,000 oz of gold per year, McLeod believes in relying on local workers. “I never liked the idea of parachuting in workers and executives when a company enters a country,” he said. Instead, the company prefers to hire locals. “A high-paying job in the mineral sector is one of the best social licenses you can get.”

All industry leaders agreed that even though a good mining company already does what it can to keep an optimal ESG track record, miners could do more to report on their efforts, both to communities and to the rest of the world.

“We need to use modern communication technologies to spread the word about what mining really does and can mean for the world,” said González. McLeod sees that investors demand more access to information as well. “Lenders demand that we spell out how we will handle social licenses and environmental matters in much greater detail,” he said. It is the task of mining companies to demonstrate their achievements and communicate them clearly.