‘Mining – not a conversation for polite society’

To open my conversation, I wanted to share three somewhat random personal moments that tell a story of perceptions and how people tend to see mining:

• My family view… how my career in mining started – the story behind how I broke the news to my father and his reaction. Their view of my decision… wasted potential…
• PhD Environment students in Canada – why do we need commodities? Underlining the profound ignorance and weaknesses in our education institutions…
• The Baroness Barker story and “the most environmentally net positive industry on the face of the planet”. The line piqued her interest, and the conversation made her think of us in a different light… maybe not convinced, but a little more open to possibilities.

While not recognising it at the time, my father’s view of mining was not random, nor was it atypical. He was simply reflecting a broader social view of our industry.

In putting forward the title for this evening’s conversation, it was a chat with Prince William that prompted the sentiment around “polite conversations”. In meeting him for the first time and after appropriate introductions he looked me in the eye, “I hope you are a responsible miner”. In that statement I heard a question, an expression of hope, and an expectation.

It also made me think of something the Archbishop of Canterbury highlighted in a press statement back in 2017, or thereabouts. To set some context for his statement, when leading the International Council on Mining and Metals in 2012 we set about connecting with a range of industry stakeholders, to better understand how we could connect and align our development practices to garner their support for our industry.

As part of our engagement with the UNDP, IFC, the World Bank and other institutions, we also engaged with the global faith-based groups in meetings at the Vatican, Lambeth Palace, London and on selected mine sites around the globe.

In the period 2012 to 2017 we learned about how a group of institutions, collectively representing more than four billion people, saw the mining industry. After five years of engagement, the Archbishop of Canterbury observed: “after five years of intense study of the bible, we have not been able to find one negative reference to the mining industry. Based on our work, we now conclude that we can support mining, if it is done responsibly”.

So, the moral to the tale on perceptions, whether I start with my father or end up with the future “King of England”, the story is pretty much the same. While most people believe we provide materials that are used in some places somewhere, we are at best tolerated, and at worst we are viewed as a pack of environmental vandals destroying the world. But as the story of empathy and engagement demonstrated with global faith-based groups… this is a story we can reset. And if I borrow Archbishop Mahoba’s wonderful community engagement processes, used to engage mining communities in South Africa, his Courageous Conversations program was the practical manifestation of a new approach to mining partnerships with communities and was the forerunner to the successful Collaborative Regional Development programs in South Africa. And this was the model that set the foundations for the successful Quellaveco development in Peru – commissioned on time and on budget in 2022, despite COVID and Peru’s difficult history with major mining developments.

And with today’s focus on Critical Minerals, we have a new and very public platform to explain how we contribute to society.

However, when I reflect on what I’ve learned over almost 50 years, it is not simply about telling our story, there is a need to connect three critical moving parts to convince a community, we can and should be trusted as a future development partner.

Whether society understands it or not, the world needs us to be successful. So, how do we create the room for mining to deliver on its potential, to help create a richer, more fulfilled and sustainably improving society?

I think there are three things we need to do to navigate us towards that end:

To unpack those three points, let me scope the task and start with how I describe the role of mining in society.

Something I learned very early in my career, while we are all stakeholders in some form, no-one likes to be called a stakeholder. In mining, like all real world experiences, words matter. Shareholders correctly point out they are not stakeholders, they “own the business”, employees implore “we are the business” and local communities are quick to point out our use of their land. We must treat each of our key constituents as partners, in their individual and respective forms and we must be focused on their needs considering that characterization. I also make the point, there are many other interested parties, as those who had a view on our business and must be managed. But let’s not confuse those with an interest in our affairs with those that are committed and impacted directly by what we do. So, to start with, let’s not confuse critical business partners with stakeholders or interested parties. That is, we need to be deliberate in our relationships as no one owes us a living!!!

I characterise our industry as a “Materials Solutions Industry”. That is who we are and it describes how we make a contribution to society.

That starting point for a “polite conversation” must be connected to a clear purpose, a reason for being. To use one example that has been well documented, at Anglo American we took 18 months to align seven words, “To reimagine mining to improve people’s lives”. And while those seven words were important, it was as much about how we got there as it was about what the words meant. Helping people understand mining’s role in society was as important as defining how we would go about our work.

So, as an industry we need to have a clear view of the business we are in, and for whom we need to deliver outcomes that are valued in their specific context.

So, for us to deliver on a Value Proposition that is grounded in the concept of being the world’s Materials Solutions Industry, we need to work across those three domains I opened with:

• As mines develop, we are generally captive to at least five primary structural cost drivers:
  • Exploration costs per unit of payable product – doubling in metals over 20 years;
  • Increasing mine depths at a rate of around 40m per year;
  • Lowering mined grades at 1.5% per year for the last 100 years;
  • In mine development costs per stope or bulk mined tonnes extracted; and
  • Input costs rising above average inflation rates reflecting energy and labour intensities in more remote regions, compared to major population centres.

And what does all that mean – in most mining businesses, we need to improve 7% to 15% each year, just to stand still.

• As we constrain mine development and approvals, we hasten our descent into unaffordable social development models – with our structural cost offsets being more compelling by the day:
  • Materials sciences identifying opportunities for thrifting and commodity substitution.
  • Circular economy developments where the cost of recycling becomes increasingly more attractive compared to primary mining.
  • Structural mining innovation facilitated by new approaches, using AI and any other tools we can find to help modernize and legitimise mining as a “Materials Solutions Industry” that serves the greater needs of society.
• In my view, the pace of progress on structural transformation is way too slow, leaving us at risk of failing society in the most fundamental way. We must balance short term returns with long term innovation and improvement – the balance in this commitment can be achieved and will likely have shorter term benefits that will surprise to the upside.
• Consistent with us delivering on our core social contract, we also need to reinforce the importance of project approvals and permitting processes. There’s no point in being blessed with valuable resources if they can’t be developed when demand and opportunity are presented.

If we don’t deliver on our basic responsibility to society, we will be judged harshly, and we will deserve that harsh judgement.

• As we bring mining proposals to the local communities and approving authorities, we need to demonstrate we can be community development partners. We bring infrastructure, business opportunities and skills that can be leveraged to support targeted community developments.
• In considering the configuration of mining operations, the relative environment, social and business impacts for local communities must be taken into proper account in designing, constructing and operating those assets.
• On a broader basis, the concept of Collaborative Regional Development has proven to be a game-changer for states/provinces where mining companies have teamed with other businesses and the government to plan infrastructure developments that support both mining developments and community infrastructure for broader economic and social developments.

• All things come from the earth, either direct or indirect. That is, if it isn’t grown it is mined.
  • The concentration of mining around areas of higher concentrations of targeted minerals and metals minimizes the use and cost of key inputs (water, energy and labour) and cost of raw materials, while reducing our physical mining footprint. Remember my Baroness Barker story.
  • The more we constrain mining the more we increase the costs of food, materials and the cost of doing all business.

In the last 20 years, across the globe, we have collectively lifted 1 billion people out of poverty. In terms of mining’s direct and indirect contributions, I argue that mining has driven at least 45% of that remarkable outcome.

In 2011, in my role as President of the ICMM and Chief Executive of AngloGold Ashanti, I sat with Geoff Immelt (CEO General Electric) as he asked me to help him understand what he should be thinking about in relation to mining and how it might impact his company in the future. In those conversations I explained how the convergence of physical constraints, ignorance of mining’s critical development and environmental protection role in society and the weaknesses in our leadership in understanding how to develop workable responses to come to grips with these existential threats – I expected major industry sectors and governments will need to intervene to drive us towards building more progressive materials supply solutions.

And in leaving you with a final thought, Mark Zuckerberg recently observed, the highest risk position for any business to take is to not take risks to continuously drive improving business performance.

In mining, the very nature of our industry, within our current social context, requires us to be bolder than we’ve ever been before.

I’ll leave you all to reflect on whether you think we are collectively up to that task and if you think we may not be, I can only hope you personally commit to helping the industry be what it can be.

The future of our children is too important to be left to those that don’t care about how we shape our future, and/or those that don’t understand what we do. For those that understand what is possible and have the courage to make a difference, there remains a key role for you in our great mining industry.

At this pivotal moment in society, we need all hands on deck!!!

Dr Mark Cutifani CBE is co-chair of the Global Foundation’s Global Alliance, contributing to business leadership and partnership with civil society for a sustainable planet