Mine 2011: The game has changed

08
What’s mine
is mine
In today’s world governments
in many of the traditional and
emerging mining countries are
looking at reforms to their mining
codes, reviewing their views on
sustainability and refreshing their
approach to royalties and taxation.
At the same time non-government
stakeholders’ influence is growing.
Naturally this has focused attention
on the drivers for this activity and
what this all means to a miner’s
licence to operate.
With these issues in mind, mining
executives operating around the
world face increased demands when
assessing new and emerging markets
for investments, acquisitions or new
projects. In the attached article, the
geopolitical risk company Eurasia
Group have highlighted several
examples of where governments have
changed policy. It is clear that there
are a number of different motivations
at play in these territories and
mining companies have to become
increasingly adept in dealing with
the influencers behind changes in
regulations.
The questions around who pays
for resource development, who
benefits and how these benefits
are distributed remain. This is not
new for miners or for authorities
who have always had to balance
the elements of control over mines
and resources with the ability to
sustainably develop assets in the
investment climate. What has
emerged recently is a greater voice
from stakeholders on all sides
to challenge whether there is a
balanced, equitable outcome for all
parties and a question to miners, can
you prove your worth?
Across the industry there are a
multitude of examples of activity
where miners are doing just this,
from Anglo American’s Zimele
programme for local procurement
through to Vale’s partnership
with the Earth Institute for the
development of sustainability goals
for international foreign direct
investment. The trend is clear and
it will continue, with regulations
around traceability of products,
human rights, carbon emissions,
energy consumption, biodiversity
management and water usage, to
name but a few, all playing a part
in the story. Each issue comes with
a number of focused groups of
stakeholders keen to ensure their
opinions are heard.
It is interesting how the mining story
has been told and how integration
into a country’s industrial supply
chain is playing a greater role in
investor presentations and speeches.
The scale of mining projects has been
increasing as mineral grades are
challenged and projects have to look
to new, often more remote locations
requiring infrastructure, to expand.
Infrastructure is not only the obvious
rail, port and power networks but also
the human infrastructure, such as
medical healthcare and community
support programs. There are already
many examples where miners are
working with local partners further
along the supply chain, which is
often not fully described in the story
of the total economic impact that
a miner generates. It is here that
the collaboration between private
34 PwC