Mining must be carried out sustainably

Emil Salim, Former Environment Minister, Indonesia

This is indeed an important opportunity to move the mining industry yet a further step into the realms of sustainable development. I am aware that the mining industry has been continuously moving forward in the quest to achieve sustainable development and commend all the initiatives it has embarked upon in this direction.

During the 20th century, the mining industry world-wide has played a significant role in development. Its products have contributed to almost all avenues of life. The revenue generated from this industry has been used to finance development in many countries around the world.

The World Bank estimates about 3.9 billion people live in today's 56 "mining countries." About 3.5 billion of them live in 51 developing and economic transition countries where mining contributes more than six percent to exports and domestic mining sectors are large.

Yet, having ended the 20th century we look back and see that despite all the development that has taken place, among the 3.5 billion people in these countries, about 1.5 billion people still live in dire poverty on less than US$2 a day, making up nearly two thirds of the world's poorest population.

Along side this poverty in many places the environment has also suffered seriously -- contributing even more to the impoverishment of local communities. In many cases the mining industry and other burgeoning industries, have contributed to this environmental damage.

We cannot continue this unsustainable pattern of production and development if we aspire to a sustainable future for the coming generations of humankind. For the 21st century sustainable development must become the norm.

When I talk about sustainable development, I am referring to a development supported by three equally strong pillars. A development where the same level of importance is given to acquiring economic gain, environmental protection and improvement as well as social capital enrichment. These three pillars will constitute the constraints within which any mining industry of the 21st century must operate.

The success of this industry shall not only be measured by the economic profit it is able to generate, but also by its ability to improve standards of living for local communities and to protect its surrounding environment. If in the past, mining industries and development in general were allowed to create a "coin" that on one side shined brightly with profit, with another side dulled by the legacy of environmental damage and social dislocation that often lasts long after the mining operations have ceased, this can not continue to be the case anymore.

Most important mining countries in the world belong in the "low income country" group. The mining industry operating in these kinds of countries are faced by a situation where they are dearly needed on one hand, and not demanded to stick to strict environmental and social standards on the other.

This alone puts the mining industry, especially those belonging to the multi national corporations, in an extremely powerful position, but also in a position of many serious challenges especially in relation to conflict with local communities and global public scrutiny.

If a company settles to operate "merely" within the permissible standards of a developing country, it will often come rudely face to face in conflict with local communities, and its environmental legacy will surely come under the scrutiny of international advocacy agencies. To avoid conflict with local communities and the negative impacts of scrutiny from the global society it would be prudent to always adopt "best practice" standards wherever mining is being carried out, regardless of the fact whether the host country has imposed less stringent requirements.

In this context five principles are of crucial importance.

First: Sharing benefits beyond revenue management.

It is often pointed out that resource rich countries remain to be poor in the last century. The vast amounts of revenue earned from these industries have not contributed to poverty alleviation in the respective countries. Revenue management is an extremely important factor in determining weather revenue from the mining sector actually benefits society as a whole. In this case revenue management becomes a governance issue, and often is beyond the control of a mining company.

Revenue management often does not and cannot address the issue of benefit sharing from the perspective of the local communities in which mining companies are operating.

Let us have a close look at the places in which mining companies are operating in the developing parts of the world. Most of these companies are in remote areas, where indigenous communities still live from the lands -- far away from the protection or the services provided by the state. Often times these communities look upon these lands as their ancestral domains, sometimes they are recognized, but often not recognized by the state. Even if the local community is not indigenous, it will definitely be faced the environment and social hazards that a mining operation could generate.

How should a mining company approach this situation? How can a mining company contribute to the enrichment of the local social capital that belongs to this community, and help protect the environment that the local community depends upon?

One way could be to approach the local community as a true stakeholder and partner in the company -- thus they would receive a negotiated share in the challenge as well as in reaping the benefits. More exploration needs to go into the direction of developing different models for this kind of direct benefit sharing with local communities, be they indigenous or not. Meanwhile good revenue management should continue as the responsibility of the governments.

Second: Environmental offsets and cleaner state of the art technologies.

Technologies are improving gradually. The best practice goal of closed systems operating with no significant impacts is being achieved in the pharmaceutical industries and has started to be achieved by extractive industry leaders. In terms of technological improvements in the mining industry I would like to see the environmental offset approach become one standard for best practice.

Offsets were codified for air pollution following the U.S.' 1970 Clean Air Act whereby a firm can expand or build a new plant if it reduces emissions at existing plants by more than the amount to be produced at the new facility. Each U.S. state mandates the ratio of pollution reduced to pollution added, which can be 10:1. In addition the new plant is required to install control technology to achieve the lowest achievable emission rate regardless of cost. These are not yet mandatory in most developing nations. But it is implicit in the Convention of Climate Change.

The article is taken from Emil Salim's speech in the conference entitled Global Mining Initiative on Recourcing The Future in Toronto.