Olivia Morgan l Palladium - Mar 28 2023
ESG Takes Centre Stage at this Year’s Mining Indaba

Investing in African Mining Indaba (or simply “Mining Indaba”) is an annual four-day convening in Cape Town, South Africa dedicated to mining interests throughout Africa. The event includes matchmaking, technology exhibitions, networking, and panel discussions. Attendees include mines both large and small, investors, technology companies, NGOs, politicians, and the largest gathering of African mining Ministers.

In recent years, Palladium has worked increasingly with mining companies looking to create long-term positive impacts in their host communities. “After several years of paused travel due to COVID-19, we took Mining Indaba as an opportunity to finally meet with our partner mining companies face-to-face,” explains Eduardo Tugendhat, Palladium Acting Managing Partner for Inclusive Growth.

“The event also enabled us to hear directly from other companies about the challenges and opportunities they see in working with their host communities.”

For Tugendhat and his team, what was most striking – and encouraging – was the strong emphasis put on environmental, social, and governance (ESG) issues across the board.

The opening ceremonies talked about inclusive growth and the need to uphold human rights. “[Companies should] “have an intent to contribute proactively and meaningfully to our societies in which we operate and be an active force for good in everything that we do,” said Frans Baleni, Chair of the event’s Advisory Board.

Tugendhat himself focused his panel on how to operationalise ESG by “partnering and co-financing interventions to ensure that efforts are long-term and do not solely rely on the mine.”

Indeed, mining, companies, politicians, NGOs and nearly every other speaker touched on ESG, marking what Tugendhat sees as considerable progress even over the past several years.

But why is there such a focus on ESG now?

Part of the emphasis is because investors and consumers are (finally) demanding that mining companies be better stewards of the natural resources they oversee and the communities in which they work.

There is also an enormous rise in the demand for critical minerals that are required to shift to renewable forms of energy, and many of these critical mineral deposits are located across Africa. Historically speaking, many African countries have not benefitted economically from their natural resources, so much so that there is a term for this – “the resource curse”. There was a strong throughline during the conference that with the rise in critical minerals, there is another opportunity for mining companies, investors, and politicians to come together and ensure that mining operations generate value for the communities they are located in and are good environmental stewards.

Mining companies’ public commitments to upholding ESG principles and practices is a step in the right direction. As always, the next step is for companies to deliver on these commitments.

The key to mitigating the resource curse for communities lies within a company’s ability to operationalise ESG commitments and create a real step-change in their communities’ livelihoods. This will require companies to proactively invest in host communities from day one, and to partner with other funders and stakeholders to ensure that any community projects are long-term and can sustain themselves without financial support from the mine. Otherwise, programming will end when the mine closes, which could be devastating when compounded with the economic effects of the mine’s closure.

Palladium is seeing real progress in companies’ willingness to take these actions.

Most recently, Palladium worked with Gold Fields, a multinational gold producer with eight operating mines across the globe to develop a pipeline of sustainable development programs designed to leverage capital from partners to address community-identified issues around water, energy, poverty, health, education, jobs, and cultural heritage.

“It is in everyone's best interest for mining companies to have strong ESG principles and for us to enable the implementation of these principles,” Tugendhat explains. “Communities have higher standards of living, the immediate environment is protected, investors get strong returns with a secure social license to operate, consumers can feel good about the end product, and globally we can shift towards renewable forms of energy.”

For more information, read 'For Mining Companies, Legacy Investing is the Way of the Future' or contact info@thepalladiumgroup.com.