How data can help mining companies tackle their trust deficit

Mining companies have acknowledged for the second year in a row that their trust deficit with affected communities – the lack of a ‘social licence to operate’ – is their number-one risk. While society’s expectations are constantly evolving, companies often lament the delays and costs to their operations caused by conflict with local communities, and are increasingly using early warning systems to track negative perceptions within local populations and plan mitigation measures. At the same time, shareholders, financiers and financial institutions together with end-users of minerals and metals are putting more pressure on large-scale mining companies to disclose public-interest information at the level of individual mine sites. But most companies continue to resist these calls for asset-level disclosure, even though proactive disclosure of public-interest information at mine-site level, along with open and honest engagement with local stakeholders, is a first and crucial step in building trust and demonstrating respect for their neighbours.

The generalised lack of mine-site-level data is one of the key findings of the RMI Report 2020, which was recently released by the Responsible Mining Foundation. The Report is an evidence-based assessment of the economic, environmental, social and governance (EESG) policies and practices of 38 large-scale mining companies and a more focussed assessment of 180 of their mine sites in 45 countries.

The report highlights a disconnect between company-wide policies and standards versus on-the-ground actions at mine sites, where the impacts of mining are most evident. Companies often show little or no evidence of sharing mine-site-level information on issues of strong public interest for neighbouring communities, workers, governments, investors and end-users. Likewise, there is scant evidence of companies engaging with local stakeholders on these issues, which include, for example, local procurement, grievance mechanisms or air and water quality. Of the 180 individual mine sites assessed, only one site scores more than 50%, while 145 sites score less than 20% and 45 sites score zero on all 10 indicators (see Figure 1, below). And none of the companies show consistent performance across the mine sites they own or operate.

The RMI Report 2020 shows that it can be done: mining companies are collectively demonstrating a range of good practices and are proving that responsible mining is achievable both at the corporate and mine-site levels. If one company were to achieve all the highest scores recorded for each of the 71 indicators, it would reach more than 70% of the maximum achievable score. Similarly, if one mine site were to achieve all the highest scores seen for the asset-level indicators, it would score over 80%. So if companies were to act more intentionally to systematically adopt the good practices already being seen across the sector, they would go a long way towards meeting society’s expectations.

In addition, the report highlights some 70 examples of leading practices, including several relating to mine-site-level disclosures that align with the open data principles – that is, making the information accessible, understandable and useful for investors and local stakeholders.

See, for example the cases summarised below that highlight open data sharing at mine-site level:

Local employment

Anglogold Ashanti’s Iduapriem operation in Ghana published a Community Employment Disclosure Report that shows employment data for the period between January to July 2019. This report includes detailed employment data by gender, number of persons recruited per host community, categorized by skilled, semi-skilled and unskilled employees. In addition, it also discloses data on the number of people employed compared to the number of people from host communities having requested employment in the mine.

Local procurement

Rio Tinto’s Oyu Tolgoi operation tracks its procurement and reports comprehensive data by actual spend against targets set to promote suppliers within Mongolia. The recent data shows the performance in financial year 2017, with local procurement disaggregated by types of goods and services procured, and total spend for national suppliers and suppliers from the South Gobi region.

Community grievances

Newcrest Mining’s Cadia Valley operation in Australia has a formalised process to register and report the number and nature of community complaints. In its annual environmental management report, the company itemises the complaints received, including the date and location and detailed nature of the complaint, as well as the actions taken to resolve them. Furthermore, the Cadia Valley website provides access to the community complaints register, which is updated on a monthly basis.

The report shows that stronger-performing and more transparent companies tend to be subject to specific requirements set by investors, or either the producing country or the home country’s governments. A recent external driver of transparency came in the form of a request from a group of investors for detailed information on mining companies’ tailings storage facilities (TSF) in the wake of the Brumadinho tailings disaster in Brazil last year. The investors, led by the Church of England Pensions Board and Swedish Council of Ethics of the AP Funds, requested over 700 extractive companies to publicly share information on the location and safety of their TSF – generally large dam structures that pose huge risks to people and the environment in the case of failure. The RMI Report 2020 found that nearly half of the 38 companies assessed had publicly disclosed the number and exact location of their TSF (see Figure 2, below), mostly through their response to the investors’ request.

The bottom-line finding of the RMI Report 2020 is that performances of even the best-scoring companies still fall considerably short of society’s expectations. While the COVID-19 crisis has shed greater light on the need for transparency and open information-sharing, stronger efforts are required by all companies to develop robust and transparent systems for implementing their EESG commitments and to work on tracking, reviewing and acting to improve the effectiveness of these actions. Because ultimately, companies won’t be able to fully tackle their number-one risk without being able to ‘know and show’ how responsibly they are addressing issues that impact the lives and livelihoods of community members and workers, and the environments and economies of producing countries. Responsive and efficient practices are already in place at some mine sites, but goodwill and perseverance are now required to normalise them across the industry.