Robert Friedland, the CEO and founder of Ivanhoe Mines Ltd, stated recently that producers of metals will have to renew their relationship with communities in order to acquire social licenses to increase their output for the metals needed during the transition to clean energy. Friedland said this while speaking on a panel at the New Economy Gateway Latin America event, which was taking place in Panama City. He added that mining was important for building a new economy, noting that copper was a “new oil.”
However, for the industry to gain acceptance, it has to significantly improve how it engages with communities while also decreasing its environmental footprint. This means that the mining industry will have to adopt a more holistic approach to communities by launching projects in different areas, from education to farming.
When talking about the obstructed output at the Las Bambas copper mine owned by MMG Ltd in Peru, which was caused by community protests, Friedland stated that miners needed to re-assess their enterprises to prevent such issues from occurring. He noted that companies which did right by the Environmental, Social and Governance (ESG) criteria would stay on in the mining industry while those that didn’t would be forced to close their operations.
The ESG criterion is comprised of standards for a company’s behavior that are usually used by investors who are socially conscious to screen potential investments. The environmental standards examine how a company safeguards the environment while the governance criteria focus on the company’s leadership, shareholder rights, etc. On the other hand, the social criteria consider how the company manages its relationships with the communities where it operates as well as its consumers, suppliers and employees.
Friedland, a billionaire mining entrepreneur, also urged governments to be careful not to make operating environments for mines too hostile because this would discourage mining investors from the area and push them toward more friendly jurisdictions.
In an interview, Argentina’s mining secretary Fernanda Avila stated that the country taking up mining later had a silver lining, noting that Argentina could introduce the ESG framework from the start of the life of mining projects.
This comes after the 2021 UN Climate Change Conference found that the global production of lithium was projected to increase by more than 900% by 2050, which highlighted the need for best ESG practices to become essential to mining projects, such as those being undertaken by established companies such as Hecla Mining Company (NYSE: HL).
This is in response to climate change and the urgent need to meet carbon-reduction targets while also delivering minerals required for the clean-energy transition.
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