Download the report from ICMM and Palladium

A newly released report from the International Council on Mining and Metals (ICMM) and Palladium identifies external factors outside of the mining industry’s control that will shape how companies develop and engage with communities in the near future.

Ranging from climate change, the critical minerals rush, and geo and socio-political instability, these external drivers will make it more difficult for mining companies to secure social license, or a community’s acceptance and approval, to operate and heighten the already immense challenge of making meaningful contributions to community resilience in the areas where they operate.

As the report finds and recommends, mining companies must integrate ESG (environmental, social, and governance) strategies into their wider business plans if they want to meet the critical needs of their communities, consumers, and investors.

Doing so will not only meet the growing demands for organisations to make good on ESG promises amidst increased scrutiny but will ensure that the communities located near mining operations will continue to thrive in a greening, and increasingly technology-enabled economy.

More Community Resilience Makes for a Better Mining Future

The report, which is the second in a series of three, adds that mining companies must define and refine their community resilience strategies to deliver on their promises more publicly and transparently.

But what does that look like?

According to ICMM and Palladium, it means that mining companies must recognise that resilient communities are essential to the business success of the mine, not just the other way around. “Wherever a mine is located, there needs to be a shared strategy of how the community will be better off, both during the life of the mine as well as after,” says Eduardo Tugendhat, Palladium Director of Thought Leadership.

“Companies that focus on including and preparing communities for sustainable prosperity, rather than just reacting to conflict, will have a clear competitive advantage,” he adds.

At a global level, the report asserts that the global push around safety, community, and social impact has led to increased scrutiny on ESG matters, which for many mining companies could jeopardise access and cost of capital, their ability to attract and retain employees, and their relationship with downstream customers. At the local level, external shocks such as COVID and climate change threaten to increase the potential for conflict with communities, especially those that feel that social and environmental costs of mines are greater than the benefits.

Beyond investors, downstream manufacturers and organisations are thinking more and more about sustainability within their supply chains and ecosystems. “Take electric vehicle companies for example, who don’t want environmental and social issues in their supply chains to hurt their image” explains Palladium Senior Associate and Co-Author on the report, Erin Leyson.

“This creates opportunities to work collaboratively with the companies on inclusive growth strategies that provide business value for them through collectively generating social and environmental outcomes.”

From solar panels to electric vehicle batteries, many critical minerals are necessary for sustainable infrastructure. “What people often forget is that the mining industry is not in opposition to the energy transition—it is essential to it. It’s especially essential to the green economy and everything we want to accomplish in terms of climate change action, whether people want to talk about it or not,” notes Leyson.

Shifting Perspectives on Mining Communities

Further, the report reveals that these external drivers placing pressure on mining communities and companies are likely to have outsized impacts on and further marginalise women. Nearly every external force that the report identifies as a threat to community resilience and the mining industry’s ability to promote it, presents an even greater risk for women.

“Take climate change for example,” notes Leyson. While rising temperatures increase drought risk and threaten food security, decreased rainfall disproportionately affects women who represent the majority of the agricultural labour force in mining communities. In a climate changed world, women must walk farther and toil longer to collect water. Add a mine to this that draws from the same strained water sources, and women face an intensely difficult situation. "However it doesn't have to be this way," Leyson adds.

Mining companies that incorporate inclusive growth strategies can look at how investments in water quality and distribution, in partnership with local and government entities, can lead to a win-win solution that endures beyond the life of the mine.

Mining companies are already beginning to change their approach to communities. “In conducting this study, we spoke with the Social Performance teams at ICMM member companies who understand the external change drivers and are beginning to be more proactive and ambitious in their engagements with communities,” Leyson explains. “The final instalment of this series of papers will focus on practical guidelines for how mining companies can structure and implement successful inclusive growth strategies.”

“For the mining industry to move into the future successfully and sustainably, it must put their communities at the heart of their business strategy,” concludes Tugendhat.

From ensuring skills training that provides sustainable livelihoods to investing in shared infrastructure that bolsters the regional economy, mining companies must integrate inclusive growth strategies into their business plans to create an industry-wide legacy of long-term mining community resilience.

Download the full report, read the first in the series, 'The Fourth Industrial Revolution', and for more information, contact info@thepalladiumgroup.com.