News Article

Technology Will Boost Effective Mining ESG Implementation

By Antonio Gozain | Wed, 07/06/2022 - 17:14

The mining industry has gone through significant changes during its history, mainly propelled by new technologies that emerged to shift the operations of thousands of companies. To respond to pressure from governments, investors and NGOs alike, the mining sector is increasingly addressing environmental, social and governance (ESG) issues as a priority matter. As these objectives to reduce carbon emissions and increase workers’ safety are clear, technology will further cement the adoption of ESG factors in the mining industry, agreed experts.

“The environment has changed much in recent years toward an ESG-oriented economy. The companies with the best ESG ratings are the most favored by investors and public opinion. Technology leads us to have more efficient processes. Much progress has been made, but there is still much more to do to understand the true impact on the environment and how to reduce it,” said Hector Garcés, Partner ESG Digital, ERM.

For the environmental criteria, companies must assess their impact on the ecosystem. This covers the company’s measuring and management of air quality, water and soil. These criteria extend through the entire operation, from exploration to extraction and post-production activities, according to insurance broker Marsh.

Then, the social factors examine how well mining companies treat and value employees and the broader communities where they operate. Some criteria include labor management policies, as well as workers’ health, safety and wellbeing. Importantly, it includes the impact of the company on the local community, where these companies usually develop basic services, schools and contribute to social growth.

Finally, the governance criteria assess a company’s corporate governance practices, from board structure, diversity and transparency to the mining company’s relationship with regulatory bodies and NGOs.

The mining industry is intrinsically linked to ESG factors, said Arturo Vaca, Director of Energy and Technology, Peñoles. He divided the most important criteria into three different categories: social licences, safety at work and environmental issues. “The social license is the most challenging. Society and government have a negative perception of our activity. All human activity has an impact on the planet, but balance must be sought. Although the industry has improved significantly, problems regarding communication and trust-building persists,” said Vaca.

While companies’ commitment to ESG criteria remains crucial, the workforce must believe in the same principles for the implementation to have success, said Kimberly Nery, Community Relations Manager, Sapuchi Minera, part of Osisko Development. “During the year and a half we have been operating in Mexico we have faced a major challenge: culture. The country has a great mining potential, but we must learn from more advanced countries and train our staff to get them really engaged [with ESG criteria],” Nery said.

Although most of the industry agrees on the importance of ESG and sustainability, there are several challenges to implement this transition. In a recent survey by Marsh, 90 percent of the global respondents within the mining industry ranked climate change and ESG as either an important, or the most important, issue for their operations. However, 44 percent of them said they have an ineffective process, or no process at all, for identifying, responding to and implementing changes based on climate threats and ESG-related factors. “It is key to define metrics and standardize processes here,” said Garcés.

A responsible operation permeates everything at an ESG level, said Diego Torroella, Director General, Takraf. A growing number of companies are investing more in development to reduce carbon emissions and increase safety. “It is a matter of conviction. For instance, if we manufacture equipment that helps with water purification and recovery for the operation, it helps the mine reduce costs and provides benefits to the community. Our main focus is safety,” said Torroella.

ESG and business must go hand in hand, they cannot work differently, asserted Nery. Tech implementation requires talented, trained people and time. “[Mexico] needs a certified regulatory body. The entire industry, NGOs, government, shareholders, communities and companies must join to create this regulatory body,” she concluded.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst