The mineral exploration and mining industry is challenged with the task of resourcing future generations within ever growing social, environmental and economic constraints. Changing governance, investor and consumer trends confirm that there is a need for the mining industry to reposition itself as part of the solution to key socio-economic and environmental issues we face on a global scale rather than the problem. These industry challenges are felt strongly by the junior explorers, the first and often overlooked, stage of the mining lifecycle. They are also often the first “interface” with any artisanal and small scale mining (ASM) activity that may be present in a region. ASM communities are considered the second largest producer sector and a vital rural livelihood, yet remain largely overlooked.
This presentation is informed by:
- Over 6 years in the mineral exploration industry and government geological surveys
- Field experience at the interface between artisanal mining and junior exploration
- Interviews across a range of stakeholders (e.g. government, academia, NGO’s, private companies and consultants from a range of industries including mining, investment and mineral exploration) to gain a 360° understanding of the perception of the junior sector for a MBA thesis investigating the
- Business case for junior mining companies to redefine their business model.
- Two years working in artisanal and small scale mining through international development and social ventures.
The junior exploration sector faces a multitude of challenges: temporality, commodity price cyclicity, declining discovery rates, and increasing operational expenditure. This is compounded by increasing public, regulatory and investor pressures and expectations. At the foundation of any project is the need to secure capital, and licence tenure to define an economically viable resource before cash flow is exhausted. In addition, they must obtain and maintain the social license to operate, this is now ranked by Deloite as the number 1 risk to the mining industry. Of course, there are many differences between a junior exploration project and an artisanal mining site but at the core there are similarities. Artisanal and small scale mining enterprises also need to find viable deposits, secure capital and retain access to their prospective ground while they mine.
While the relationship between Junior Explorers and ASM may begin as an informal co-existence it often devolves into one of competition for access to land. Interactions often, but not always lead to conflict with one or both parties losing out. Conflict and legal uncertainty can lead to significant financial losses for Junior Explorers, loss of social license to operate, reputational damage and in the worst case stranded assets. This will affect a company’s ability to raise capital and ultimately undergo a successful merger or acquisition with a major mining company. Artisanal miners can lose access to their mining projects and livelihoods.
Is there an alternative outcome? To date there have been various attempts at co-existence models but little evidence of sustainable solutions. While these innovators may have not yet managed to sustain or scale solutions, they are necessary first steps towards change. Increasingly it seems the industry will struggle to continue with business as normal. Can we leverage geology and business strategy to find build upon previous solutions to generate a win-win that is sustainable in the long term?
The Junior Explorers and ASM communities that are able to manage their relationship successfully through shared value solutions will ensure a longer term sustainable, competitive advantage, social license to operate, and the ability to focus resources on innovation and operational efficiency improvements. Success in these areas may also increase the likelihood of a junior company in securing further land tenure in favourable areas to increase the mineral wealth of a company’s portfolio and increase shareholder value. For ASM communities the security of land tenure provides opportunities and incentives to start investing in better business practice with shift from short run to long run business strategy.
Sources
Caven, S. (2017). “The business case for innovation in the relationship between Canadian mining companies and artisanal mining communities”. (Unpublished) MBA Thesis.
Davis, R, & Franks, D, M. (2014). “Costs of Company-Community. Conflict in the Extractive Sector.” Corporate Social Responsibility Initiative. Retrieved from: https://sites.hks.harvard.edu/mrcbg/CSRI/research/Costs%20of%20Conflict_Davis%20%20Franks.pdf
Deloitte. (2017). Tracking the trends in 2017, the top trends mining companies will face in the coming year. Retrieved from: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Energy-and-Resources/gx-er-tracking-the-trends-2017.pdf
Mining Association of Canada. (2015). Towards Sustainable Mining 101: A Primer. Mining Association of Canada. Mining Association of Canada. Retrieved from: http://mining.ca/sites/default/files/documents/TSM_Primer_March_2015.pdf
Biography
Sarah has substantial experience in both private sector and government as a mineral exploration geologist. This is complemented by her more recent experiences in international development and social ventures, specialising in artisanal and small scale mining, access to finance and indigenous equity. Her experiences to date span Europe, Canada and Africa where she has demonstrated ability to deliver impact and add value at all scales from remote field programs to the corporate level, and, from national mineral prospectivity studies to deposit scale exploration and resource definition.
A natural translator at the government, community, industry interface, she chose to augment her mineral exploration expertise by taking a MBA to enhance her business strategy skills while gaining insights into the ecosystem in which the mining industry operates including the commodity supply chain, policy and indigenous communities. Her multifaceted experience allows her to bridge different aspects of the natural resources industry to identify unharnessed opportunities for the sector to reposition itself as a catalyst in solving the resourcing future generations challenge. In today’s rapidly changing extractives sector, mining companies that can combine technical excellence, business model innovation and collaborative business strategy will have a competitive advantage as they become partners of choice, both domestically and internationally.
Sarah holds a first-class master’s degree in geology from the University of Leicester and a Master of Business Administration degree from the University of British Columbia, where she specialised in Innovation, Entrepreneurship and Sustainability. She also completed the executive education program on extractive industries and sustainable development at Columbia University, New York.
Sarah Caven Consulting,Vancouver, Canada; Email: sarahkcaven@gmail.com; Twitter: @sarahkcaven; LinkedIn: linkedin.com/in/skcaven
Any questions: hello@responsiblerawmaterials.com
