Responsible mining report highlights effective practices, laments lacking disclosures

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Significant gaps remain within societal expectations of the mining industry, a recent report from the Responsible Mining Foundation said.

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“The performances of even the best-scoring companies fall considerably short of society expectations in all six thematic areas,” the report stated, adding that all mining companies must improve their efforts to ensure company practices are efficiently managed.

The report from the Responsible Mining Foundation, the RMI Report 2020, is a one-year study that evaluates the practices of 38 large-scale mining companies operating in more than 780 mine sites.

In the years since the RMI Report 2018, more companies have made and disclosed formal commitments regarding economic, environmental, social and governance (EESG) issues, according to the report.

“A few companies have developed new or stronger management standards,” the study said. “Yet many companies show little sign of movement and much needs to be done to translate corporate commitments and standards into successful business practices.”

An area of concern, the report states, is that most companies remain unable to demonstrate any ability to track or publicly report how effectively they oversee EESG issues.

“Even fewer companies show evidence of reviewing their performance and taking responsive actions where necessary,” the report states.

The foundation reports the mining companies considered in the study account for 28% of global mining activity based on production. The report also weighs the practices of 180 mine sites in 45 countries against 10 tenets of responsible mining.

British mining company Anglo American was recognized for using a rigorous approach to responsible sourcing, real-time monitoring of community perceptions, integrating climate-change targets into senior executive remuneration and reporting of Scope 3 emissions.

Anglo American outlines performance expectations regarding labor and human rights, health and safety, wellness, business integrity and ethics, environmental stewardship, and corporate citizenship.

Glencore, headquartered in Switzerland, ranked fourth among the 38 companies for its mine-site-level results, the report said. The company had an average score of 20% in the mine-site assessment.

The report notes that Glencore’s commitments bolster its ranking on the list. The company’s pledges to prevent bribery and corruption, respect human rights, ensure safe working conditions, and its commitment to abstain from mining in World Heritage Sites garner results for the British company.

Rio Tinto’s business conduct also stands out in the report. The company, headquartered in Australia and the U.K., is noted for its policy of publicly disclosing its taxes, as well as the company’s strategy regarding its operations in low-tax jurisdictions. Rio Tinto discloses the payments it makes to sub-national and national governments, as well, based on Canadian and U.K. regulations.

Rio Tinto ranked seventh of the 38 companies on its mine-site-level results and received an average score of 19% in the mine-site assessment, the report said.

BHP, based out of Australia and the U.K., is highlighted in the report as one of the three noteworthy results for the company’s business conduct and environmental responsibility. BHP is also noted as one of five promising companies for its efforts toward community well-being.

The company was also highlighted for its efforts in economic development, lifecycle management and working conditions — areas in which BHP’s rankings exceeded the average results of the other companies surveyed in the report. BHP ranked second among its peers in the mine-site assessment, with an average mine-site score of 25%.

Chile’s CODELCO is listed in the report as one of the three more promising companies for its working conditions and emphasis on addressing the well-being of women workers. The company provides guidelines for preventing sexual harassment of its women employees, the report states.

CODELCO is ranked 12th of 38 for its mine-site-level results and had an average score of 17% in the mine-site assessment.

ArcelorMittal, based in Luxembourg, is one of five companies the foundation said shows particular strength in business conduct. The company ranks 29th of 38 companies in the mine-site assessment and had an average score of 3%.

The report highlights ArcelorMittal’s commitment to prevent bribery and corruption, in addition to its system for identifying and assessing risks related to human rights, labor and environmental concerns associated with suppliers and contractors. ArcelorMittal is also noted for its disclosure of payments to subnational and national governments, per Canadian laws.

Antofagasta was counted among the top five results for its economic development and working conditions. In the business conduct, lifecycle management and environmental responsibility categories, Antofagasta’s results were above average among the companies assessed, the report said.

Antofagasta ranked 16th among its peers for mine-site-level results, with an average score of 15%.

As of the 2020 report, several mine-sites do not disclose site-level data regarding issues considered relevant to their communities, workers, governments and investors, according to the study.

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“Very rarely do mine sites evidence engagement with local stakeholders on EESG issues,” the report said. “To build trust with all stakeholders and reduce risks, companies will benefit from adopting responsible mine-site behaviour across all their operations and transparently sharing information.”

Comments (3)

  1. Felix Roberts says:

    Your last paragraph captures the root of the problem, perfectly.

    Many companies are happy to communicate their intent and can tell you how many training sessions they offer and whistleblower reports they have received, but they can’t (or won’t) tell you how effective those management processes are.

    My experience, with BHP’s governance system, serves as a good example.

    BHP collects an enormous amount of information from their whistleblower reports. They categorize, triage and investigate each confidential disclosure. They can tell you how many reports they receive with respect to sexual harassment, improper payments to government officials, human rights violations, etc. They can also determine how many disclosures are related to the inadequacy of their whistleblower and investigation process.

    None of this information is communicated to shareholders or potentially impacted communities, in the necessary detail required by all stakeholders to assess the effectiveness of their management controls.

    Let’s face it, all of the shareholder money spent on developing management controls is for naught, if the effectiveness of the controls can’t be transparently communicated. This can be done without breaching confidentiality.

  2. Russell says:

    I think part of the solution to becoming more transparent is allowing the communities to do more of the talking, assuming it is a representative cross section.

    For example, BHP’s actions over the past couple of weeks have been admirable, but the chest pounding and self-aggrandisement adds little value.

    Doing “something” and doing what is “needed” are two different things. And, understanding what is “needed” requires a substantial amount of engagement and “listening”. It’s a long-term investment, where success is determined by the community, not by the company.

    As part of its effort to help communities in which it operates, BHP has announced that it will move to seven-day payment terms over the next 6 months for small and local businesses and make immediate payments of outstanding invoices.

    I wonder what the communities think of that?

    I’m sure communities will remember the substantial effort undertaken by small and regional businesses over the past few years to have BHP reduce its payment terms to thirty days. There was a parliamentary inquiry on the matter (https://www.aph.gov.au/Parliamentary_Business/Committees/House/Industry_Innovation_Science_and_Resources/MiningSector/Report/section?id=committees%2Freportrep%2F024209%2F26445).

  3. Russell says:

    Also, this most recent effort may not address the concerns of a large majority of the small and local businesses (~80%) that work for the larger contractors to BHP, which are probably still on the sixty-day payment terms.

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