An extractive industries panel at
the UK House of Commons in London said in October that mining
companies need to acknowledge their corporate social
responsibility (CSR) reporting obligations, under a revision to
the UK Companies Act 2006.
The Companies Act amendment came
into force on 1 October 2013, and requires that quoted
companies report on their social, community and human rights
issues to the extent necessary for an understanding of
the development, performance or position of the companys
Mining companies listed on the
UKs FTSE 100 include Rio Tinto, BHP Billiton and Anglo
American. According to James McNally, technical director at
mining consultancy, Wardell Armstrong, very few businesses are
comprehensively reporting on their CSR, although miners are not
necessarily among the worst offenders.
Access to water was highlighted as
one of the key areas of conflict between miners and
communities, with panellists saying that the extractive
industrys use of this limited resource needs to be
balanced with direct human needs.
Members of the panel noted how
water access was more than a technical issue, and that how a
mining company approaches the potential challenges of water
supply can significantly alter its social licence to operate,
as well as its economic viability.
Water security is a growing
risk for mining companies as environmental regulations become
more stringent, Elizabeth Adey, principal community and
environmental specialist at Wardell Armstrong, said.
She also pointed out that the
ratings agency Moodys last year named water scarcity as
one of the key factors that could negatively affect a mining
companys credit rating.
Benefits of good water CSR
Access to water was acknowledged by
all panel members to be a human right, and speakers highlighted
the importance of appropriate usage in countries with arid
climates. The panel said that, ultimately, the lack of a social
licence to operate through poor community engagement can result
in delays, or in the some cases, project cancellations.
Problems often occur with
junior miners moving into mining from exploration,
McNally told IM. They get locked into
wrangles with local communities as the demands of different
groups increase, he added.
McNally also said that
Anglo-Australian miner, Rio Tinto, was at the forefront of good
CSR. They have to be - its part of their business
model, he said.
The production of shale gas via
hydraulic fracturing (fracking) is one extractive industry at
the heart of water usage concerns, given the large input
Many countries such as Algeria,
despite their large theoretical resources, are unlikely to be
able to develop their shale gas potential without significant
changes to water use policy.
An iterative management approach
was encouraged by Ken Haddow, a former 28-year Rio Tinto
employee, now working as an independent consultant on CSR, who
said that compliance with guidance on human rights cannot just
be procedural, and noted the delaying effect on projects that
fall short of the required level of community engagement.
Almost all mining companies
will have a CSR section on their website - the problem lies in
delivery, he said. CSR is not integral enough to
the execution of mine development plans, he added.
He further noted that this approach
requires active consideration and criticism of each development
and new piece of information.
The 2013 amendment to the Companies
Act applies throughout a companys supply chain, the panel
explained, a step unanimously regarded to be a positive
Harrison Mitchell, director of
consultancy and auditing firm, RCS Global, considered that this
legislative push is encouraging companies to consider their
supply chains outside of the four main conflict minerals -
gold, tantalum, tin and tungsten - outlined by the US Dodd
I think we will see ripple
effects spreading out to affect other minerals, Mitchell
said, especially given the developing trend towards greater
public scrutiny and consumer engagement with the ethics of raw
Chiles Minister of Mines,
Aurora Williams Baussa, noted how water use in mining/unit of
ore processed had fallen in her country as a direct result of
investment in metallurgical processing research.
According to calculations by
Baussas office, Chile has the worlds largest
lithium reserves and is the second largest producer of this
mineral, as well as hosting the worlds second largest
boron deposits, of which it is the third largest producer and
the sixth largest potash reserves, of which it is the eight
Water is a significant concern for
Chilean miners, given that the Atacama Desert, in which many of
the countrys lithium, iodine and other mines operate, is
the driest place on earth. Water must therefore be supplied by
pipe from the sea, following purification, and this involves
pumping it up to heights often over 2,000 metres above sea
In Chile, 74% of water used in mining projects is now
recycled, Baussa explained. Given that this is technically
possible elsewhere, its usage was encouraged by the panel.