Sustainability and integrated reporting

Implement mine sustainability early to secure long term investor confidence

Failing to engage with project stakeholders on mining sustainability risks, from the first stages of design and pre-feasibility, can be detrimental to building overall project feasibility and investor confidence.

James Brice, head of Sustainability services at Grant Thornton, says that mining companies need to highlight from the outset how the pre-feasibility study and mine design process should be integrated with the environmental and social risk assessment for lower project costs in the long term.

“By bringing the ESG – or environmental, social and governance – issues into the project design phase as soon as possible, mining companies will reap the long term rewards of improved stakeholder inclusivity, lower surface infrastructure and closure costs and a stronger project brand in the longer term,” he adds. “A company always reports higher than expected closure or remediation costs: poor initial planning always comes back with surprises.”

Brice advises that planning for these risk benefits means inclusivity – i.e. involving as many stakeholders as possible to achieve true collective decision making.

Publicly listed companies, particularly those in the Western world, have learned the benefits of having open dialogues with stakeholders and balanced sustainable reports.

“It is our recommendation that even exploration companies, privately-held businesses and Chinese and Indian developers, for whom external reporting is not mandatory, would benefit,” says Brice. “They would do well to embark on these programmes voluntarily because research indicates that sustainability reporting is critical to building a social license to operate and protection of shareholder value.”

In most cases Indian and Chinese mining companies are privately held or have a state ownership structure which means they are not subject to reporting requirements that publicly listed and externally-funded companies are subject to.

Africa has a window of opportunity to use its mineral wealth to build sustainable communities, but opportunities are being missed even without considering the benefits of beneficiation.

“Of course, government plays a critical role in disseminating this wealth to the broader community, but the role of the mining company itself is vital too,” says Brice. “Hiring and procurement policies, CSR projects, effective closure and post-closure social and labour plans are vital to ensuring a lasting legacy.”

Integrated reporting further enhances credibility by communicating a holistic picture of the business. Reporting on financial performance and reserves should be woven into the overall sustainability of the business, from exploration, mineral tenure, right through to the environmental and social context. Given the recent debates surrounding mining rights, indigenisation and nationalisation of mines, legitimacy is critical to building a good case for investment.

“Our experience has shown that the earlier a mining project begins building its story, and telling that story in a balanced and credible fashion, the more informed and comfortable its stakeholders and shareholders are. In business in general, but especially in mining due to long lead-times, surprises are not well received,” Brice concludes. “Investors and stakeholders want to know that there are no uncertainties in a project. This helps significantly in their planning and pricing strategies. Building and telling your story according to benchmarked standards is an efficient cost saving opportunity. It gives you differentiation at both the project development and operational stages.”