Building trust in the mining industry

Building trust in the mining industry

Tailings dams. It’s a no-brainer… isn’t it? If they break – or leak – it’s an environmental and social nightmare. So why do mining companies allow it to happen… again and again? We count 147 times.

We saw the impact of failure four years ago with the collapse of the Samarco tailings dam, co-owned by Vale and BHP. And we see it again now with Vale, the world’s largest iron ore miner, where a tailings dam has collapsed producing a wave of mud that bulldozed nearby structures and has left 169 people dead and another 141 missing.

With trust in the mining industry already low, the guarantee of it never happening again has been shown to be nothing more than a hollow promise. It’s a loss of trust that a severe bout of openness and transparency will not even begin to turn around.

In part because the industry used these strategies last time there were major tailings issues in the mid-1990s. It was then that the industry promised higher environmental standards that would take into account communities to reduce the risk of extra-territorial regulations being placed on them after a series of tailings controversies from BHP’s Ok Tedi riverine tailings controversy in PNG to Placer Pacific’s Marcopper spill in the Philippines and Romania’s Baie Mare cyanide spill.

So the industry has been moving to address the issues through:

– last year’s ICMM’s guidance note on minimising catastrophic failures;

– South 32’s chief executive, Graham Kerr, last week calling for common reporting framework; and

– this week BHP’s chief executive Andrew Mackenzie, endorsing the consortium of pension funds led by the Church of England recommendation of a global independent public classification system for miners’ tailings dams.  He raised the bar saying that dams needed to be as safe as nuclear.

However, Brazil’s banning of upstream mining dams this week demonstrates it is now critical that the industry start to acknowledge that there’s not just a technical, reporting and transparency issue any longer. There’s now a social licence issue which could spread to other nations and undermine their right to operate.

It cannot be solved by “managing stakeholders” or “working on the message” or “explaining the technical changes”. We need to understand the worst case scenarios for the communities and our environment as well as controls are in place to reduce risk prior to or in the event of a failure.

Rather than yet another technical review, with the inevitable follow-up announcement of changes, companies must engage fully and openly with the communities that might be impacted before any technical review is undertaken and enable them to engage with the review process to build up their knowledge and reduce risks. It’s also time for management and their boards to look at their operations – including tailings dams – and ask themselves: “What is the risk faced by the community” for each and every operation.

Here’s the challenge: companies must undertake genuine and open reviews of the strategic and social licence risks concerning their companies. They can begin with tailings dams. And the larger challenge: talk to the communities – openly and honestly – about the operations, including tailings dams, in their areas. Embrace the communities’ concerns and incorporate those concerns in solving problems or in plans for building the facilities as well as the outcomes should there be a problem. It’s only when companies actually admit to a possible problem, or admit mistakes, and engage communities in the solution, that trust begins to build.

This strategy is particularly difficult for management that needs to feel “in control”. But it’s up to management – and their boards to encourage them – to admit mistakes, bring the community into the fold and openly discuss the challenges, and the solutions.

There is much work to be done to rebuild community trust in the mining industry, but with the right approach – not with technical reviews and incessant defensive explanations – it can be done. It’s time for mining companies to embrace a new approach and genuinely engage with communities.

By Kristina Ringwood, director of Futureye and former global lead for water at Rio Tinto and Katherine Teh, managing director of Futureye.