Gold miners reflect on the changing landscape of mining investments
With increasing pressure from investors, customers and regulators to integrate environmental, social and governance (ESG) goals into corporate strategy, mines are increasingly focusing on demonstrating their commitment to these goals.
How these goals manifest themselves differs from company to company. For example, gold miner AngloGold Ashanti, vice president of corporate affairs and sustainability Stewart Bailey says supply chains have become a focal point for the company.
With investors and governments increasingly requiring miners to report Scope 3 emissions, which are those related to supply chains, the company has started influencing its supply chains, like fuel for example, to make sure they are produced in a cleaner way.
Additionally, Bailey explains that AngloGold provides its host governments with procurement details, especially local procurement, and helps build local sourcing and skills capacity wherever possible.
The company prefers to create engineering joint ventures with local companies to perform skills transfer and local procurement – even for sophisticated equipment and services.
Bailey further notes that governments are increasingly checking the legitimacy of local businesses benefiting from mining operations, making sure there is no facade and circumvention of policies.
He adds that, from an investor perspective, mining companies will need to continue to push for and report on ESG targets.
“Donors underpin standards such as the Climate-Related Financial Disclosures Task Force. And a $ 6 trillion voice is the one you typically listen to. “
Bailey believes that some sort of rationalization will take place in the many standards that have been launched.
The gold sector, for example, is bound by guidelines from the World Gold Council and the International Council on Mining and Metals. Bailey says it’s critical to understand what these standards are aimed at in the first place, which helps clarify what should be implemented.
CEO of the young mining company African Gold Group Danny Inexperienced says he has observed a move away from traditional investors.
For example, with the European Union having issued new legislation that requires mining companies to report where raw materials come from, which hands they pass through and where they end up, this shows the changing priorities of investors.
He points out that by 2030, more than $ 10 trillion in investment capital will be in the hands of millennials, the majority of whom will rank ESG as their top concern.
“As a small business trying to raise money, if you don’t have these credentials in place – an understanding of environmental sustainability and social license to operate – you won’t get that money anymore.”
Callow believes the playing field is not level for junior minors to adhere to ESG expectations. He hopes that institutions, producers and governments can be on the same wavelength as to their expectations, and realistically, so as not to prevent the emergence of new mining companies.
“From a sustainability standpoint, there are additional input costs to doing things the world wants.
“West African mining companies, for example, do not benefit from the low-cost power supply that other gold-producing regions have, which is an example of a more difficult playing field for sustainability.”
In addition, the chairman of the sustainability committee of Centamin, Gold miner Catharine Give birth says ESG affects all industries, albeit in slightly different ways, but remains a handy fruit for the mining industry.
She says tailings management, carbon footprint and water efficiency are three things miners should understand, but admits it can be difficult to find the right partner on these issues.
“ESG has to adapt to your ability to generate returns. Mining is already an industry seen as a destroyer of capital. I don’t think the journey to ESG needs has to be value-destroying.
“It is common knowledge that the safest mines work the best, and those that respect environmental and social programs the most are often the most profitable.”