John F.H. Thompson – ESG and mining – pandemic reflections

PetraScience Consultants, Vancouver, Canada

Honorary Professor of Sustainable Resources, University of Bristol, UK

In spite of uncertainty during the pandemic, interest in ESG continued and even accelerated with increasing focus from the investment community. The risks related to poor ESG performance have been documented, and while some argued that only a few projects had actually been curtailed due to ESG issues, the reality is that many are at risk, and efforts and expenditures related to ESG continue to increase. ESG challenges were illustrated by three developments in the last year.

Following the Brumadinho tailings dam disaster in 2019, the International Council on Mining and Metals (ICMM), the United Nations Environment Programme (UNEP) and the UN-backed Principles for Responsible Investment (PRI) launched the Global Tailings Review. In August 2020, the Global Industry Standard on Tailings Management was released along with Towards Zero Harm, a compendium of papers. Tailings facilities represent complex systems involving mining and processing, local and regional environments, and communities. Development of the Standard therefore required broad collaboration. It remains to be seen how the Standard will improve design, management, monitoring and communication of risks.

In May 2020, a Rio Tinto iron ore operation blasted and destroyed Juuken Gorge in Western Australia, a site that had been occupied for approximately 46,000 years by Aboriginal people. The horror felt by the Puutu Kunti Kurrama and Pinikura (PKKP) people was appreciated globally, and impacted the industry widely. While some anticipated that ESG issues would lose focus during the pandemic, few thought that a company that espoused values and principles in their dealings with communities would be responsible for this disaster. Many companies will need to reset their governance and management structure to make sure that there is no repeat.

The importance of critical minerals and metals for the energy transition and climate change mitigation has been the focus of attention, policies and programs for some time. The pandemic has emphasized the risks related to global supply chains and over-reliance on limited sources. As interest in specific metals grew through 2020 and 2021, investors piled in, even supporting a SPAC for the proposed deep-sea mining of Mn-Ni-Cu-Co-bearing nodules. The argument has been made that deep seafloor mining is better than land-based mining, and the lack of affected local communities is certainly a real factor. Pitting one part of the mining or resource sector against another, however, is not a sound policy, particularly when there is so little baseline data and understanding of long term impacts in the deep sea. From an ESG perspective, this debate underlines the need for consistent approaches based on the principles of ecosystem services, landscape-scale assessment, and life cycle analysis as we strive to make the best decisions on how to provide the critical materials for society without adding to the problems that we hope to solve.