Miners often walk a tightrope

Miners often walk a tightrope

It’s a balancing act of driving operations down the cost curve and improving shareholder returns while holding the responsibility of corporate guardianship of the environment, and the local communities in which they operate.

Deloitte’s Tracking the Trends 2019 identifies Driving Sustainable Shared Social Outcomes as one of the key challenges for the mining sector. There is an increasing need to appeal to a broader and more diverse stakeholder set to rebuild trust.

Miners recognise Corporate Social Responsibility extends beyond a tick-the-box compliance and vanilla reporting exercise. It is key to miners’ social licence to operate, not to mention their brand and reputation. There is no doubt social licence is increasingly important, with value beyond compliance growing for miners.

Australia is witnessing a noticeable shift in investor culture. A rise of the ethical investor means investors are increasingly examining community and social issues of mining operations when weighing up the risk exposure and business case of an investment. Miners need to appeal to this environmentally active investor base. They need to demonstrate the value they bring to shareholders AND the broader economic and societal benefits.

The mining industry is shifting in response, with an increased willingness to engage proactively and publicly on environment, social and governance issues.

Notably BHP and Rio Tinto have recently thrown their support behind the Uluru Statement. This comes in the wake of Rio Tinto Jacques’ speech at IMARC in Melbourne late last year, which focused on the need for the industry to redefine the way it collaborates with communities, customers, suppliers and governments. Anglo American touts “guaranteeing GDP post-mining” in jurisdictions where it operates as a way to achieve social licence.

There is a growing expectation and requirement to invest beyond the life of the mine and companies are seeking to think beyond simply mine rehabilitation. Glencore has demonstrated innovative mine rehabilitation and community work in the NSW coalfields. Nearly 20 years after reforestation began at Mount Owen coalmine in NSW, there are now 430 hectares of native forest in an area previously devoid of native woodland.

Brand is more important for miners now than ever. It is a vehicle to reinforce the value mining brings to local communities and economic growth. Brand strategy, investor relations support, responsible business reporting (audit) and sustainability improvements (risk) are all key to miners demonstrating their strategy and actions.

We have seen Rio Tinto exit out of coal, a move less about future earnings growth and more about appealing to ethical investors. Intrinsic to BHP’s ‘Think Big’ campaign is the importance of brand and image to strengthen stakeholder relations.

Tracking the Trends also identifies the need to deal with two key talent issues: the changing talent landscape arising from the relentless drive to digitisation of the industry and moving the dial to ensure better diversity of the workforce.

Digitisation will result in many low level jobs being automated, but this will give rise to new types of jobs requiring different skillsets. The new breed of workers will need to be attracted, managed and retained in very different ways. Miners will therefore need to consider what the employee experience will look like and the role innovation will play in that experience.

Mining as an industry also has a woeful track record of attracting female talent with just 16 per cent of the 220,000 mining jobs nationally held by women, according to the federal government’s Workforce Gender Equality Agency. It’s the lowest rate of female participation of any industry in Australia, with women accounting for 10 per cent of the workforce as machinery operators and drivers, 4.9 per cent of technicians and tradespeople and 7.1 per cent of labourers.

St Barbara’s head of recruitment has blamed mining’s “blokey” image as a barrier to entry. The task for the industry is twofold: change that image and reputation, and focus on education – for example, forge stronger ties with schools, TAFEs and universities.

BHP has an ambitious 50-50 gender balance target by 2025, while St Barbara has a gender balance target of 30 per cent by 2022. Through a strategy of flexible work and an attractive parental leave policy, St Barbara has boosted the proportion of women in its workforce from 16 to 24 per cent since 2007 and female representation on its board from 16 to 40 per cent.

South 32’s CEO Graham Kerr has also been vocal about the broad operational and cultural benefits a more diversified organisation can bring.

“The benefits that result from a diverse workforce and gender equity in particular are largely about the diversity of thought and experience that these differences bring. Creating a workforce that is as vibrant and diverse as the demographics of the countries and communities where we operate and live, contributes to a high performing and inclusive culture.”

Deloitte’s Shaping Future Cities A new WAy has actively engaged mining industry leaders to come together to encourage industries and education providers to build a new brand of education combining technical training with practical experience for the jobs of tomorrow.

So it may be a matter of juggling for the mining sector, walking the tightrope of meeting greater expectations from investors and the communities they operate in, all the while simultaneously honing in on the importance of attracting (and retaining) the best and most diverse talent into the industry.