Standards provide bridge to mining’s tomorrow
- 17 December 2024
Mining in a simplified, “decluttered” standards landscape in a year or two could be in a better place, Resourcing Tomorrow 2024 in London heard. But a key question also raised at the conference was, should the industry already be in that place?
While a lot of industry weight has rallied behind the Consolidated Mining Standard Initiative (CMSI), the public consultation period for which has just ended, the conference heard that a “gold standard” for mining already existed in the form of the Initiative for Responsible Mining Assurance, or IRMA.
That six-year-old standard, or set of standards, has the essential elements to define “best practices for what responsible mining should look like at the industrial-scale” and help the industry unlock trillions of dollars of investor capital that currently avoids it, according to proponents.
A version 2.0 IRMA Standard for Responsible Mining and Mineral Processing is due to land early next year.
Meanwhile, heavyweight CMSI backers, including the International Council on Mining and Metals (ICMM), World Gold Council, Mining Association of Canada and The Copper Mark, say “the urgency for consolidation” of their respective mining standards has risen because “society expects those mining, recycling or converting metals into products to follow responsible standards backed by independent assurance and transparent disclosure” and the number of producers following no standards “far outweighs those that do”.
After more than two years of work to consolidate standards generally observed by copper, gold and diversified mining majors – critically in consultation with groups such as the Global Investor Commission on Mining 2030 – the CMSI is nearing its launch date.
“It is a consolidation effort, bringing four existing standards together, so we’re not starting with a blank sheet of paper,” Copper Mark executive director Michele Brulhart said at Resourcing Tomorrow.
“It is really critical to hear from all different stakeholders, whether that is the investors, the industry, NGOs [and] indigenous peoples’ representatives, to get the breadth of experience and expertise and knowledge that will help us refine what we have put out in the public space.
“There is a second public consultation in this process as well, so that really gives us the opportunity to work through the feedback that is received together with the stakeholder advisory group and the industry advisory group … and provides a second opportunity for our stakeholders to weigh in.
“If you read very carefully through the documents that are in the public space now, the proposal is for the [CMSI] governance structure to include an independent and diverse board with a composition that we have discussed and debated over months to get the composition right, to represent all different types of stakeholder voices, from non-industry, from affected stakeholders to commercial stakeholders, the value chain, mining, etc.
“That diverse board is intended to be established before the standard is finalised.
“The intention there is to really put an independent governance structure to this process as soon as we can so that we can again address some of the criticism that we've received in this regard.”
The criticism is not new to the groups behind the CMSI.
“This [independent governance] is something that the industry has not been overly quick to adopt over the last decade,” said Mining Association of Canada senior vice president, Ben Chalmers.
“The decision to adopt a board that Michelle talked about is a major change for the industry, and I think a huge step in power sharing around these standards.”
Independent voices
Church of England Pensions Board deputy chief responsible investment officer, Stephen Barrie, one of the outside voices on the CMSI stakeholder advisory group and a Global Investor Commission on Mining 2030 advisor, said he was encouraged by the CMSI governance shift.
“If we want mainstream institutional capital to flow into the mining sector in ways that are actually going to support the [global energy] transition ... we need the sector to be trusted and not seen as ESG challenged,” he said.
“There's an opportunity here for the consolidated standard to be calibrated in a way that it promotes and encourages trust and acceptance.
“There are huge impacts from the mining sector but having good operating standards is a core fundamental step.
“[It has been] mentioned that simplification of current standards is not a goal in itself [but] I think it probably is actually.
“I think having mining executive teams spending so much time on different reporting standards that are not necessarily comparable and not interoperable is a waste.
“We’d much rather, from an investor point of view, have mining teams operate well and report well.”
While the weight of the Global Investor Commission on Mining 2030 and the circa-US$15 trillion of financiers’ funds under management it says it has galvanised behind its push to accelerate moves toward socially and environmentally responsible mining practices cannot be understated, it is clear that not all investors see a need for new accreditation and assurance schemes, or further delays.
A Resourcing Tomorrow panel discussion on what green and impact funds want to see from miners to garner more positive attention was illuminating. The panel reflected on a survey by Swiss-based Pala Investments that indicated about 2% of total assets under management with more than 350 global funds were commodity-focused, versus 9% in 2009.
The period saw some very public ESG failures involving mining’s largest companies, but also manifest improvement in profitability and shareholder returns.
Were ESG-focused investors seeing a big enough shift in mining industry behaviour and outcomes to warrant greater allocation of funds to the sector?
Emerging Markets Investors Alliance director Pavel Laberko saw standards and governance as central issues.
“There are several areas which are particularly material for the industry,” he said.
“You can find targets and best practices in each of them.
“I would highlight the IRMA standard as the most comprehensive set of best practices which was created and governed on a multi-stakeholder approach, taking into consideration the interests of different groups of stakeholders.
“Probably the best way for mining companies to start is to adopt the IRMA standard and submit their assets to an IRMA audit.
“There are also more specific targets that mining companies should adopt and verify, such as decarbonisation, with SBTi [Science Based Targets Initiative verification]. Then in the area of social responsibilities you can publicly adopt the United Nations Declaration on the Rights of Indigenous Peoples.
“[But] adopting an industry standard that is inherently risky in terms of conflict of interest or greenwashing is probably not the best idea if we look to the future.
“My call to action for everybody in the audience who belongs to the mining industry is to look at the IRMA standard, to adopt it [and] to submit your assets to IRMA [auditing].
“It will not just send a strong positive signal to investors but it also will help you to see the areas for potential improvement for the current and the future performance of your assets.”
Laberko also pointed to a report released earlier this year by the Lead the Charge advocacy-group network, titled, An assessment of third-party assurance and accreditation schemes in the minerals, steel and aluminium sectors, which “showed that the IRMA standard is by far the best on almost all measures”.
The report published before release of the CMSI public consultation and its proposed governance structure was described as a “tool for automakers and other automotive supply chain stakeholders … to make informed decisions regarding their use of these accreditation schemes for the mining sites, smelters, refiners, steel and aluminium plants and other facilities in their supply chains”.
“It seems pretty clear to me … that IRMA is the gold standard in terms of mines accreditation,” Stewart Investors senior investment analyst Chris McGoldrick said on the green investors panel.
“It also doesn't have the clear governance hurdles that the [CMSI] panel took quite some time to explain they were going to overcome.
“As a lay person looking at it from the outside it just seems very peculiar that when a very high standard is already in existence and arguably flourishing they would take three years to put in place something that is going to be, on the face of it, inferior.”
Stewart, backed by Japan’s Mitsubishi UFJ Financial Group, is listed among IRMA members along with mining companies such as Anglo American, Albemarle and Arcadium Lithium and a number of the world’s car-making and technology giants.
Work still to do
Albemarle external affairs VP in Europe, Francesco Gattiglio said at Resourcing Tomorrow the lithium and chemicals producer was “the first leading company having a mine audited by IRMA”.
“We are very proud of this,” he said.
“It was a long process, but rightly so.”
Gattiglio complained about what he saw as continuing “gaps” between groups striving to improve sustainability performance standards and outcomes, and those administering relevant laws and recognised cross-sector codes. He and others indicated this was an area requiring earnest multi-stakeholder consolidation.
“Sustainability is actually a bit of a paradox because we have, from one side, our willingness to have a positive impact on all the things that we are trying to do to improve our ESG and credentials, versus regulatory compliance, which is actually a very different thing, and maybe it should not be a very different thing,” he said.
“Every OEM is asking us different things.
“We have the IRMA certification, which should be recognised. We hoped that would be enough and now we are in a situation where we might be asked to conduct I don't know how many audits to prove what we already know that we are doing.
“So I think this is really a massive problem because we are focusing more on the compliance and on proving compliance instead of having a positive impact on the ground, which should be the main thing at the end of the day.”
Anglo American sustainability certifications manager Sarah Makumbe saw light at the end of this tunnel.
“We are starting to see an increased number of conversations with the downstream,” she said.
“With the release of our IRMA audit reports we definitely saw a lot of interest from some of our customers where they had really specific, targeted questions. So we’re now having detailed conversations that we wouldn't have had because there’s transparency [and] there’s language.
“I would love to have investors on the journey as well but I think, to be fair, we've had to find partnerships and they've taken time to develop.
“When we started doing IRMA audits customers wanted IRMA 100 [high-level certification] … and we had to explain how we’re doing the IRMA audits. We've done webinars. We've taken them along and now they know that as long as you've done an IRMA audit you’re in the game. There's a report we can talk about and then we'll work on the continuous improvement to improve our performance and achievement level.
“I think it is time for us to have similar conversations with investors.”
IRMA deputy director Rebecca Burton told Resourcing Tomorrow the organisation brough together “six different houses”: mining, finance, users of mined materials, NGOs, communities living near mines, and mineworkers.
“It was actually the other five houses in IRMA who voted as a board to bring the finance sector on as the sixth governing house five years ago,” she said.
“In terms of the finance community we are actually seeing greater and greater engagement.
“[But] there is still some work to be done in the finance sector to really understand how important mining is [to] a great majority of the companies that they invest in and that they do need to understand it better and engage better.”
Burton said IRMA’s very public auditing process was key to achieving higher levels of transparency and ultimately trust along production value chains and beyond.
“We've [six member groups] been working together on this for 15 years and when we started it was a vision. If you brought everyone that's impacted by mining together, named the expectations, set a North Star and work toward it together, could you actually transform practice?
“What we’re seeing 15 years later is, absolutely.
“And even more, we are actually building trust.
“I think the biggest learning is, when you build a system by and for all houses, it benefits all houses.”
Vicente Mello, senior VP and Brazil country manager for engineering major AECOM, said quality assurance and independent auditing would be crucial to the industry’s efforts to restore its reputation after a tumultuous decade.
“We've been acting as the auditor to the Brazilian authorities for nine years and we audited the two biggest mining disasters in the world and all the changes in the regulatory framework in Brazil,” he said.
“I think companies and investors are starting to realise that the same level of effort that has been put into discussing standards needs to be also moved to the assurance process, the process by which you audit whatever standards are out there.
“In many industries standards have not prevented disasters from happening.
“We need to invest the same amount of energy to make sure that the assurance process, once the standards are consolidated, or whatever standard a company or an investor selects, means the reports that go out to society really describe [the] reality, not only what is on pieces of paper.
“How things happen at the community level, at the site level; how the risks from the interaction between production and engineering are dealt with, and the governance.
“Otherwise, we may not end up with standards that are beautiful.
“And disasters will continue to happen.”
