Mining must be carried out sustainably

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.