Address to the World Mining Congress 27 June 2023.
POLICY AND GOVERNANCE FOR THE NEW ECONOMY
Acknowledge Traditional owners and leadership.
Charlie Sartain and the organising committee.
Ministers and other dignities.
Industry colleagues and friends.
And to borrow from my African friends, all other protocols observed.
It is certainly a great honour to be here with you today. I can only hope the papers presented and the ensuing discussions prompt both honest dialogue and some fresh ideas on how we deal with a fundamentally broken system.
- OPENING REMARKS
Let me start my few words with a question.
What makes Climate Change and Decarbonisation so special?
People who have heard me quote Empedocles, the Ancient Greek Philosopher, know I believe the Ancient Greeks understood more about mining and its critical role in society than our modern, so-called informed society. It would seem in today’s world, with greater access to information and knowledge our ignorance og how the world works grows at an exponential rate.
The Ancient Greeks seemed to understand some very important truths:
- Minerals nourish our soils to support sustainably productive crops to feed people – 8 billion or so based on latest estimates. And the mechanisation and scale of modern agriculture is fundamentally underpinned by the minerals and materials that come from mining.
- Minerals provide the building blocks for shelter and accommodation to keep us dry and warm – and to allow urbanisation to minimise human footprints so we can, in turn, protect biodiverse environments.
- Minerals provide the materials to build conveyors of people, goods and the materials that make all parts of our modern society work. And,
- Minerals provide the materials through which we purify the air we breathe, the water we drink, and they provide the modern medicines and orthopaedic aids that help keep us healthy and physically functioning.
In short, our modern industrial society and our new technologies are all built off mineral platforms and infrastructure. Minerals provide the raw materials that make life possible for 8 billion people on planet earth.
Between intense human activity (includes residential and commercial centres) and agriculture, as a species we take up 55% of the earth’s surface to support and sustain ourselves. If it wasn’t for minerals, that 55% footprint would be more like 80% – so net-net, a 30% reduction on our current human footprint is a significant contribution to biodiversity and all the things that come with protecting natural habitats. When you consider mining’s 0.3% global footprint for Minerals Extraction, our net positive contribution to the environment is stunning. One could even be bold enough to argue, the minerals industry is our most important industry in terms of environmental protection for the planet.
In other words, Mining is sustainability!!!
So, going back to my opening question – what makes Climate Change so special?
The fact we need Minerals to solve the challenges of Climate Change is not a new phenomenon. I mean, we need Minerals for almost every difficult environment and social problem we have. And its not as though we don’t have other global threatening social and environment issues.
In my view, what makes Climate Change so special is we just don’t have time – and the implications from not acting with urgency are critical – and the implications of acting with urgency on the wrong issues could be as damaging as the primary issue we are debating.
It is time for an informed debate with Governments and Bureaucrats on how we work together to solve the great challenges we face – including, our ability to support our climate related Energy Transition…and how we manage the unintended consequences of this transition. Both issues require careful thought, careful planning and some give and take as we find comprises that impact different stakeholders in different ways.
- GLOBAL MINERALS POLICY – IDEOLOGY MEETS IGNORANCE!!!
3.1 Taking Accountability – A Mining Industry Imperative
So, how do we solve for a problem that is still being questioned in terms of the scope of its threat, and how do we align actions around a key part of the solution that is still subject to ideology and basic ignorance of both the role and importance of mining in society.
First, we can’t blame politicians and bureaucrats for their ignorance. It is our job as industry leaders to explain and educate people around what we do and how we help make things work. For an industry that either supports 45% of economic activity on the planet, we are notoriously bad communicators. We cannot simply assume people understand how the world works. We must explain how the raw materials we mine are literally, the source of everything. That is, we must define the debate in terms of facts and the related science-based consequences.
Second, we need to help people understand what we need to commit capital and our limited skills to developing resources that will have the most material impact on critical supply chains.
Third, we need to help people understand the role of the Multi-Lateral Institutions, National Governments, Societal Institutions that impact policy frameworks and settings, Local Communities, and our broader NGO community. Unless we can achieve a consensus across multiple impact players, we risk expending more energy in the arguments than should be directed at solving the problems.
Fourth, we must also accept the need to promote and support a Circular Economy that needs our expertise and installed capital facilities to maximise product recovery and re-use. That is, we need to be part of the economy that is a natural competitor for our primary product. We simply can’t afford to stand back on not be part of a holistic solution.
Fifth, we must do a lot better on technical, commercial, and social outcomes. From an operating perspective, applying the right technologies to minimise water, energy and physical footprints are a starting point for building trusting relationships with our most local stakeholders, shareholders, and our broader stakeholder population. Delivering more consistent returns on capital are needed to help support new developments in the resources sector and minimising environmental and social impacts are the key to building trust with our communities on that broader scale.
Sixth, recognising access to land within local communities is about local partnerships. We must do a better job recognising and working with local landowners, be they Indigenous or First Nations land claimants, Constitutional holders of local properties or itinerant occupiers of local land – we need to find solutions that reflect fair and reasonable outcomes, where the potential for negotiation and accommodation is realistic.
In simple terms, if we don’t take accountability for our issues and lead our own transformation, how can we expect policy makers and our broader social partners, to do what they need to do to help support the development of our critical resources.
3.2 Defining What we Need from Policy Makers
At all levels across global policy makers, we see variable understanding of the industry and its needs for supportive and consistent policy making.
The nature of our industry is a good place to start to help policy makers understand our challenges:
- Resources occurring in economically recoverable concentrations are hard to find. In this context, we need access to prospective ground.
- The extraction of resources is a capital intensive and complex endeavour. Developers need time and consistent policy frameworks to give people comfort there is a good chance they can see a return on investment over the medium to longer term.
- The design and development of supporting extractives infrastructures can and should be utilised by governments and communities to build complementary community facilities to nurture and grow new and other commercial ventures adjacent to and with local mining operations. As Kathryn McPhail so brilliantly captured in her seminal piece on the global beneficiaries of resource developments back in the 1990s – those countries that develop supportive economic infrastructure for mining ventures and deploy the returns from mining towards broader community infrastructure are the great winners in modern economic development. In other words, there is no such thing as a resources curse – there is simply a curse of ignorance and greed, that reflects the worst characteristics of human nature.
- Commodity price volatility makes mining a risky and sometimes short term and unaffordable industry. Unfortunately, when commodity prices pick up and businesses have a chance to either recover stressed balance sheets or invest in longer term sustainability, policy makes decide they should skin the headline cash generation, because they can. They then cause the business to take short term positions and reduce investment which then creates long term investment and business death-spirals.
And I know the world is not as simple as I have characterised – I think I have covered quite a bit of ground that reflects why we are not where we should be – both as an industry and as a collective in society.
3.3 Policy Makers – A Recipe for Future Sustainability
So, as we look to set out our policy framework with our Policy Makers, we must also understand how their frameworks connect through global policy frameworks and structures:
- Multi-lateral institutions must engage and acknowledge the need to protect the planet and provide the basic raw materials necessary to protect the right to basic rights. Those basic rights should include clean air, water, food, medical care, and the basic elements that make life possible. Minerals necessary to protect and ensure global sustainability must become an unalienable right for every citizen on the planet!!! Today, many of our multi-lateral institutions stand in the way of delivering on those unalienable rights.
- Following the establishment and recognition of basic human rights as they relate to access to the minerals that sustain life on our planet, multi-lateral institutions need to build credible guidelines and structures to support the principles of access to minerals to support “the greater good”. That is, policies that prevent minerals extraction, or policies that prejudice the development of mineral resources need to be reworked to reflect a balance of good for broader society. At the same time, we need to be fully supportive of regulations and frameworks that define approaches to responsible resource extraction practices and the associated need to connect developers with local stakeholders. We cant have it both way!!!
- At a national level, recognition of the centrality of the extractives sector to the long term sustainability of minerals must be the starting point to frame responsible national extractives frameworks. Nations that have taken the view that it is someone else’s responsibility to support global sustainability should be identified and encouraged to play their part, as we have established for Climate Change and the need for coordinated actions. It can no longer be acceptable for countries to deny their responsibilities in this critical endeavour. Guillaume Pitron brilliantly captured this critical point in his book, The Rare Metals War. In a book where he originally set out to pillory the mining industry, he ends up challenging his French homeland to stop shirking its responsibility to develop its mineral wealth for the benefit of our global village. It seems his research led him towards a remarkable conclusion.
- As we progress into State, Provincial and Regional responsibilities – consistency and long dated applications are critical to ensure investments are made and committed. It is no longer acceptable to indirectly force the destruction of an enterprise, or an industry based on shifting demand points or the perception of “excess profits”. Unless we take a long view, the short view will always create havoc and lack of long term investment for the greater good.
- The ability to partner government and local regulatory agencies with broader business interests provides an opportunity to manage a regional model that helps build economic diversity. The term we gave such an approach when we introduced these concepts in Anglo American was “Collaborative Regional Development”. In my view, a very clear antidote to the traditional risk of the “resource curse”, better simply labelled as “institutional short termism”.
So, we all have a role to play in remaking and designing a Minerals Extraction framework that delivers for a world that is finally working out what the Greeks understood 2,500 years ago. That is, Minerals make the world work and so how we facilitate responsible extraction is the key to creating a sustainable planet for 8 billion people, and the species we share our local bubble with.
4.0 Our Broader Stakeholder Community
To ensure politicians and others feel the support to make the required changes to policy frameworks, we also need to call out those in society that are threatening our pathway to finding a balance between delivering a modern society and sustainable existence for all – we need to help other stakeholders understand how mining supports the sustainability of the planet.
To academic institutions – education for faculty and students on mining’s role in society might help broaden perspectives on how the world works and how minerals support each of their key professional programs. To even do the basic work is turning out to be quite a revelation for some great learning institutions. Some of our most ignorant protagonists inhabit some of the narrow halls of academia.
To NGOs that lobby against mining and the products we produce to make life possible – understanding that without fertilizers would mean we could only feed a little more than half the planet. I was interested to note a worldly macro economist from the Netherlands asked a group of students should stop using fertilizers. Bearing in mind the Netherlands is the largest exporter of flowers in the world, a 400 to 0 vote in favour of banning fertilizers was quite a statement. He then suggested should they shouldn’t stop at the Netherlands and so he asked about Europe also banning fertilizers. Again 400 to 0. And he continued to include the world in the question – again, 400 to 1. He then shared a simple fact, that was then debated for an hour. The simple fact, without fertilizers we could only feed 4.4 billion people. So, after some debate and discussion he asked the question again. This time, 0 to 400.
Its amazing what a little bit of context and a fact or two can make in terms of people seeing a different side of a debate.
If we want a different outcome in terms of regulation and policy frameworks, we need to get off our arses, and educate and promote the facts around how the world works and what we need to do to create a sustainable world. Everyone in this room has a role to play and has the responsibility for our industry and to the world…and most importantly…our children.
And as they say – we get the politicians…and dare I say it…the policy frameworks we deserve!!!
With that I must say thank for all being here and demonstrating you care – and to our political colleagues that are with us over the next few days – thank you for your leadership and guidance in terms of how we do a better job in supporting you make a difference…a difference that really matters.