Manuel Ortiz Monasterio
Managing Partner
 Jaime Martinez, Business Development Director of ERM México
Jaime Martinez
Business Development Director
ERM México
View from the Top

Mining Companies Begin to See Point of Sustainability

Wed, 10/21/2015 - 16:14

Q: What is the main challenge for the Mexican mining industry to catch up to the sustainable standards of other countries?

MOM: The main challenge is related to the high expectations from stakeholders and the relatively short time companies have to meet them. This is particularly challenging since stakeholders such as community members and governments expect an immediate profit from mining, rather than aiming for long-term development opportunities and benefits. This scenario has become more complicated due to the ascent of Internet and better communications. Stakeholders are now much more aware of what CSR initiatives are followed in other countries, as well as the environmental risks associated with mining. This generates mistrust towards the industry and requires further engagement efforts. Another challenge is the tendency of mining companies to engage with communities and other stakeholders in a commercial or transactional way. This does not allow a company to clearly define a long-term vision of impact management and community investment that actually promotes local sustainable development. Furthermore, the mining industry is still lacking a formal social impact assessment for the permitting of new projects. Although these issues may be identified and addressed in a limited way through the environmental impact assessment public consultation process, it is not done so in the formal way seen in other countries.

Q: What are the respective roles of government, mining companies, and external consultants such as ERM in advancing sustainability in the Mexican mining industry?

JM: The impulse comes mainly from mining companies that have specific corporate standards and expectations, or from companies reacting to pressure from stakeholders, such as NGOs or indigenous groups. Consultants can serve as facilitators to this end and, in some cases, may convince some clients to change for the better. However, companies have learnt more from bad experiences and pressure from stakeholders. Also, being sustainable pays off in the long term. We understand that, given the financial situation, this is more difficult as sustainability is seen as a cost rather than an investment. But addressing stakeholder concerns from the early stages, even when deciding to pursue a new development or not, is more cost-effective than addressing problems in a reactive mode later on.

Q: Could you give us some details on the international standards ERM has helped to introduce in the Mexican mining industry?

JM: ERM works according to the guidelines of the IFC Performance Standards, which provide a basis for how a company can build its own environmental and social management system. This system allows a company to identify and manage internal risks and potential impacts, as well as to act proactively to external risks. To identify these risks, the company’s social context and likely impacts are measured by looking at a variety of factors, including health and safety, natural resources, indigenous rights, and cultural heritage, among others. Furthermore, ERM has assisted companies in incorporating the standards of the International Council on Mining and Metals (ICMM) in their practices, specifically those regarding the Voluntary Principles on Security and Human Rights, consultations with indigenous peoples, and other forms of social and environmental impact management. In addition to these social standards, ERM also has lead auditors and technical experts qualified to perform comprehensive Cyanide Code audits in order to promote the responsible management of sodium cyanide used in gold mining.

Q: Why are community agreements not yet an industrywide common practice?

MOM: Most mining companies focus on developing a transactional relationship with stakeholders, rather than seeking a long-term, mutually beneficial engagement. Specifically, regarding communities, the extractive sector usually provides short-term solutions, such as payments and donations, to long-term, socio-economic needs in order to achieve immediate access to natural resources. This approach leads to a mine’s sustainable investments and initiatives becoming part of the land access negotiations, or worst, part of its social and environmental impact management. This reduces a mine’s sense of responsibility and accountability before stakeholders that grow dependent on the short-term benefits being provided