Trust and collaboration in mining

The mining industry today faces several critical issues:

1. The industry has ignored the needs of stakeholders, harming communities, miners and ecology in the past. While this history may not reflect today’s reality, its memories persist and need to be overcome.

2. Those unfamiliar with the mining industry do not understand its complexities. To them, a well-managed large mining company (LSM) and a problematic artisanal mining operation (ASM) are both just 'mining.' Companies that champion environmental protection and those that cause pollution are viewed as one and the same. While this perspective may not be fair to the responsible actors, perceptions carry weight, and the actions of a few can tarnish the reputation of the entire industry.

3. Despite growing demand, investors are cautious about funding the mining industry. Put simply, investors do not trust that opportunities presented to them are commercially viable.

4. The vast global growing industry has a top talent shortage. Potential employees do not like what they see in terms of community and ecological impacts

Structural challenges exacerbate gaps in collaboration

Having more than one standard for responsibility increases uncertainty on what responsibility truly looks like. While both Large scale and Artisanal mining have standards describing what responsible formalization looks like, none of them describe what LSM-ASM collaboration looks like. That is a fundamental gap, but also a clear opportunity. Good news, the ICMM, the Mining Association of Canada, the Copper Mark and the World Gold Council are actively converging disparate standards, and dialogue on this convergence has raised up the need to bridge gaps between LSM and ASM standards. 

Along with gaps in standards, thegaps in validation and mineral traceability from miners to refiners were also brought up. Blockchain based technology can enable improved traceability and IRMA is an example of an organization whose work on validation can be leveraged much more broadly.

Investor expectations regarding sustainability practices and reporting must be clear and consistent, and the UN Mining 2030 Investor Commission is leading the way with transformative work in this area. The Investor Commission will catalyze significant value. Beyond clarified investor expectations on responsible behavior from large companies, this is an opportunity to clarify expectations on LSM-ASM collaboration and on the behavior of smaller exploration shops that combine a lot of razzle dazzle without a lot of substance.

A digital marketplace enters

The Blended Capital Group, Capitals Coalition, Capitals Hub Canada and Alliance for Responsible Mining are standing up a digital marketplace that will democratize access to capital for artisanal miners while also being a new financing mechanism for small and medium sized LSM’s. The blockchain-based digital marketplace, which integrates validation protocols, multiple ‘asset classes’ that support investor-miner dialogue and the ability to combine capital from diverse investors toward specific projects, increases trust and collaboration that results in improved targeting and accessing of capital.

Integration

Trust and collaboration needs to extend across the end-to-end value chain for the industry to optimize value. At a foundational level, communities and miners themselves need to trust that large miners will listen to and respect their perspectives. Engagement that increases productivity while reducing conflict risk is the goal, as solutions that are defined and delivered must make sense for miners, mining companies and the communities that host them. LSM-ASM collaboration is an aspect of this work, with large scale miners supporting formalization paths for artisanal miners in ways that generate mutual value. Minerals flow from miners to refiners, and from refiners to end customers. Is responsible conduct validated at source in credible consistent ways? Does traceability exist where the flow of responsibly validated product is confirmed, and equally so, where refiners and eventual end customers understand that no irresponsibly mined products are entering their operations?  

Investors, the ultimate owners of mining operations, need to understand what they are buying – are stakeholder relationships mitigating risks and optimizing value? Is the information shared with them materially reasonable, both geologically and socially? Opaque information gets in the way of investor commitment, transparency based on integration of expectations and reporting is an advantage, increasing capital flows that result in value.

Trust and collaboration. Top talent will of course find businesses more attractive that align to their values, reducing talent gaps. Finally and very importantly, bear in mind that many end customers of cars, jewellery, cell phones and other products agree to pay a ‘sustainability inside’ premium for products only when they know that the component materials are responsibly produced.

In Summary

Trust and collaboration make or break value.  

Mining is a traditional industry, where long-lasting behaviors are embedded into the cultural DNA of companies. Sustainability is central to some mining companies, with world class practices in place that deliver value through trust. Other companies have a lot of work to do. The industry as a whole has opportunities around converging responsible mining practices, investor expectations, collaborative expectations between LSM and ASM, as well as supporting controls that include clear validation and traceability of product flows. The digital marketplace described previouslyis an example of how process and technology can come together to support trust and collaboration, changing outcomes as investment is targeted for value and impact.

The industry is facing pressures that increase the importance of collaboration.  Soaring critical minerals demand and gold prices are a challenge as well as an opportunity – developing capacity and delivering supply involves attracting investors, developing relationships with communities, collaborating with artisanal miners and aligning with broader stakeholders. Geopolitical pressures exacerbate challenges of delivering critical minerals growth – as China, the EU and the US jockey for supply positions, trust and collaboration are strategic assets supporting growth. Social media also impacts mining, with positive and less positive realities in mining projects ending up online. Changing technology is an opportunity in this context, supporting traceability and blockchain-based digital marketplace capabilities, which supplement the bottom-line fact that trust and collaboration is about people and relationships. Now is the time.

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