​2021 – What Does It Have In Store For Mining?

 As 2021 gets underway, and we reflect back on the interesting year that was 2020, it's worth noting a few key factors, and how those may well affect what is to come. 

There's no doubt that 2020 will go down in history as a watershed year. So many things about the way we operate, particularly at a global level, may well have changed forever. Notably, during the height of the 2020 global lockdowns we were given a rare insight into what a world with less pollution, particularly air pollution and greenhouse gases, could be like. 

We also saw governments hand out unprecedented 'stimulus' packages to try and jumpstart their economies. The problem is that these 2 things – greening the planet and stimulating economic growth – have been largely mutually exclusive for most of humankind's history. Will things be any different now? If they are, the change must start immediately.

The problem with environmental and air pollution

In 2006, the World Health Organisation estimated that almost a quarter of diseases globally, and up to a third in children under 5, could be traced back to avoidable environmental causes. That equates to over 13 million preventable deaths a year! The main 'killer' diseases attributed to poor environmental conditions, particularly in developing countries, are:
  • Lower respiratory tract infections (COPD, asthma, TB etc) – air pollution (indoor and outdoor) including exposure to workplace fumes and dust (2.6 million deaths)
  • Diarrhoea – polluted dirty water, poor hygiene, and inadequate sanitation (1.5 million deaths)
  • Unintentional injuries – workplace and industrial accidents only (current global figures not available)
  • Malaria – ineffective housing and land use management of water resources where mosquitos breed (409,000)

Here's a brief recap of what happened when that most polluting of human activities – fossil fuel burning via coal fired heating systems, motor vehicle emissions, and industrial power consumption, stopped temporarily:

Whilst these statistics were good, they obviously weren't going to last forever. Indeed, as soon as China started its road back to recovery, air pollution over that country likewise headed back up to pre-shutdown levels. It was the same scenario elsewhere, although the ongoing waves of Covid-19 outbreaks are forcing ongoing rolling lockdowns around the world with accompanying reductions in air pollution, which is good news for the environment. Temporarily at least!

However, the reality is that a reduction in CO2 emissions is not an environmental magic bullet for the atmosphere because that body only absorbs around one half of all CO2 gases. The remainder is 'meant' to be taken up by ocean and land ecosystems. When those ecosystems are intact and undamaged this split works well. Unfortunately though they're neither intact nor undamaged. They are being degraded and despoiled at an alarming rate, reducing their efficiency as carbon sinks and forcing more CO2 into the atmosphere as a result.

This leads us back to probable trends for mining in 2021.

The brief glimpse of a world with considerably improved air quality will almost certainly continue to feed into public perceptions around CO2 emissions and environmental pollution in general. Consequently, we're likely to see increased agitation for industries like mining to 'clean up their act', which will impact those all-important social licences to operate. Likewise, other key influencers from the recent past will also continue to impact the industry's reputation in this regard over the coming months. They include:
  • Rio Tinto's major indigenous heritage bungle at Juukan Gorge,
  • Zambia's continued environmental and air pollution problems in the Copperbelt region,
  • Vale's catastrophic Brazilian tailings dam collapse,
  • Beijing's coal-consumption related smog issues,
  • Ongoing conflict in Tanzania's goldfields,
  • Indonesia's labour relations problems

Courtesy of these and other disasters, miners will almost certainly find themselves having to negotiate their way back into society's good graces, and it may not be all that easy for them to do. This is in part because there appears to be somewhat of a disconnect in the public mind between many of the basic necessities of life (minerals, metals etc), and the industry responsible for supplying them. Likewise, there is little appreciation of the fact that modern society's increasingly insatiable appetite for things like high-tech electronic products is precisely what drives the development of projects that can cause these types of disasters!

How the industry addresses this divergence between society's demand for products that rely on mining to produce the raw materials needed to make them, and the reputation mining has with end users of those products, will continue to be a significant issue for all stakeholders over the next few years, if not decades. It will certainly be one of the major topics on the agendas of most mining boards in 2021, and if not, it should be!

Moving towards sustainability – speeding it up in 2021

The world must of necessity move towards more sustainable solutions for just about everything. Mining will play a pivotal role in this because it supplies the raw materials needed to produce these solutions. This isn't breaking news. Most of the world's population 'gets' this concept. However, the 'how' and 'where' it sources those raw materials are still major sticking points. Polluting entire ecosystems and endangering communities to dig up commodities for manufacturing clean, green technology is simply unconscionable. Some might even say it's hypocritical!

Enter the world of 'responsible sourcing'. To meet these expectations the industry must become more eco-friendly in its sourcing of raw materials too. It won't be enough to simply 'green' the processing systems if the very act of sourcing and digging up the commodity wreaks environmental and social havoc. A growing list of end manufacturers that include the likes of Apple and Tesla are already demanding their component suppliers use only 'ethical' raw materials. Some are even investing in the mining and manufacturing sectors themselves to ensure this happens because they can't wait for the relevant industries to sort themselves out.

Growing clout in society

Societies today now wield considerable political and social clout, and they are increasingly aware of (and concerned about) environmental and social issues. It's therefore not unreasonable to think that if there is enough outrage about these things, governments could be pressured into taking action to rein in mining companies and their assets. We've already seen examples of this with the nationalisation of the mining industry in some countries.

Therefore, if the industry wants to remain autonomous and in charge of its own destiny, it must do more than just pay lip service to modern environmental and social expectations. Granted, many companies have already made significant efforts in this regard, and are to be commended for doing so, but whilst the response remains fragmented and 'company orientated' at industry level, the entire industry remains at risk. Perhaps 2021 can be the year the industry makes a concerted effort to develop a more united approach.

Government bailouts and their ongoing effects

Throughout the course of the Covid-19 pandemic, we've seen governments come to the rescue of industries with stimulus packages. The overriding intent has been to stimulate rapid economic growth first and foremost, whichever way that growth happens. Unfortunately, and this may come back to haunt industry, the packages haven't necessarily dovetailed with public expectations around sustainability and 'going green'.

China's internal stimulus packages for example have created an infrastructure-building boom. This has led to a huge and growing demand for steel products, which has in turn skyrocketed demand for iron ore. Countries, and more specifically companies, that supply iron ore to China have therefore experienced 'booming times' during the pandemic courtesy of this demand. Have they also 'acted in haste' under pressure to keep up supply? Was the Juukan Gorge disaster for instance fuelled by a need to meet China's growing demand for iron ore? Have similar things happened elsewhere because governments have pumped money into economies to create growth without necessarily stipulating any environmental conditions over how that money can be spent?

Furthermore, will the types of profits garnered during these times by the likes of iron ore majors be seen as 'profiteering' in a 'time of crisis'? Possibly, which means the industry needs to be aware of this as a potential and very real risk over the coming months, and develop strategies to deal with it should it happen.

2021 is certainly shaping up to be an interesting and unusual year. Whether we see any advances on what already happens is up to the players involved.
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Tuesday, 20 April 2021
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