How social licence and clean energy will change the mining industry by 2030
The famous Kalgoorlie Super Pit gold mine, WA. Mining industry experts say social licence will have a major influence on Australian miners for the next decade. (ABC News: Jarrod Lucas) Amid growing global concerns for the environment and climate change, industry experts say social licence is a formative challenge Australian mining companies will need to overcome this next decade. In contrast, the mining industry also has a crucial role to play in the world’s continued digital transformation and transition to clean energy. Can companies in the business of profiting from a finite resource fix their image problem by 2030? International mining expert and BHP Billiton’s former manager of external affairs, Osvaldo Urzua believes so. Social KPI Two police officers on horses charge a crowd of protesters outside the Melbourne Exhibition Centre on a sunny day. Environmental protesters clash with mounted police outside the Melbourne Exhibition and Convention Centre, Melbourne, Tuesday, October 29, 2019. (AAP: James Ross) Dr Urzua said an increasing number of private companies were focusing on the value they can create for broader society rather than just shareholders. “I think we’ve achieved a tipping point and most of the companies are heading towards this emerging approach, but it will require at least a decade to consolidate this new model,” he said. In future, Dr Urzua said mining executives were going to be held more accountable for the social value, or lack thereof, generated by business decisions. Pressure to change is also coming from customers and governments around the world, according to Dr Urzua. Alan Bye is standing in the Perth Convention Centre. Curtin University Professor Alan Bye said keeping a low cost of production and maintaining a licence to operate are not exclusive. (ABC Rural: Jon Daly) “We are seeing the markets are already reacting, the car manufacturing industry is requesting minerals with low carbon footprint,” Dr Urzua said. Alan Bye is the Director of Digital Value Chains at Curtin University and former chief executive of the Cooperative Research Centre for Optimising Resource Extraction. Dr Bye said large superannuation funds were already changing investment decisions in the resource sector based on environmental stewardship and carbon emissions. Market pressures Dr Bye said the mining industry was under increasing pressure to evolve the way it does business. “Quite often total shareholder returns, and the focus of business improvement initiatives, is about the lowest cost of operation,” he said. “As we move over the next 10 years, the licence to operate within our ecosystem is going to be the most important factor.” Rural news in your inbox? Subscribe for the national headlines of the day. However, Dr Bye said addressing social licence and maintaining the bottom line were not mutually exclusive. For example, production costs could be reduced by finding efficiencies in water and energy use. Dr Bye said reinvesting and upskilling the local community and supply chain would, in time, create better services and support for the technologically-advanced mine sites of the future. “The mining industry needs to collaborate, we need to work with other industries to build the capabilities to bring the bright future in 2030,” he said. Rare earth samples Australian Industrial Transformation Institute Professor Goran Roos said society’s demand for tech-metals is on the rise. (Supplied: Northern Minerals) Green mining Rising concerns for the environment pose a challenge for social licence, however, the decarbonisation of economies around the world also represents one of the mining industry’s biggest opportunities of the next decade. Australian Industrial Transformation Institute Professor Goran Roos studies sectorial changes occurring in mining because of the decarbonisation of economies and the material demand that will drive. “There will be an increasing demand in some metals and a decreasing demand for other raw materials,” Dr Roos said. “In essence, we’re going to move from a coal-and-petroleum-based economy, to a metal-based economy to a higher extent than today.” Dr Roos said mining company portfolios would increasingly shift to metals used for batteries and digital technology, such as lithium, cobalt and what is known as “rare earth” minerals like neodymium and scandium. “All their importance will increase, and the reason is that these new materials, of which we’ll have increasing demand and dependency on, are much more concentrated in where you can find them,” he said.