Mining and Sustainable Development II - DTIE

Mining
most countries, but often only with participation
by domestic companies, either state or privately
owned. The security of a right to explore has generally
been strengthened in recent years, with most
mining codes now recognizing that right as exclusive
within the exploration area. The link between
the exploration right and the right to mine has
also been strengthened in most countries. In addition,
the mechanisms for settling disputes have
been made more acceptable to foreign investors,
with many recent investment agreements providing
for international arbitration of specified disputes,
and with many countries entering into
bilateral and multilateral investment treaties that
accord investors some form of protection against
unilateral actions by host country governments.
Increasing minerals production implies increasing
environmental impacts from the mining and
processing of minerals. However, environmental
impacts do not have to grow at the same rate as
minerals production. Improved environmental
management can offset the trend and reduce the
demands made on the natural environment. Over
the past two decades, environmental legislation
has been strengthened in almost all countries and
this has contributed to reducing the negative environmental
impacts of mining. However, ambitious
legislation needs to be complemented by
effective monitoring and enforcement, which
require skills and financial resources. It takes time
for information about new methods and technologies
aimed at reducing environmental
impacts to be disseminated and for the methods
to be put into practice widely.
One important aspect of the exploration and
development “boom” is the growing interest in
medium-size deposits, both of gold and base metals,
with a relatively short mine life. These mines
have a relatively short start-up period meaning
that government agencies are often under considerable
pressure to speed up the environmental
review and approval process. This could be a
source of concern, particularly since the expansion
and broadening of interest in developing countries
– to some extent a consequence of the general
trends towards globalization and liberalization –
mean that a large part of new investment is likely
to take place in countries which at present have
little experience of mine development and limited
capabilities as far as monitoring and enforcement
are concerned (for instance, in Africa or Central
Asia). The governments of these countries are of
course anxious to acquire an independent capability
to evaluate projects and negotiate with
developers as soon as possible. It will be an important
task for the international community to
extend all possible assistance to them in this
respect. Developments will be followed carefully,
particularly by the environmental NGO’s who
will be sure to alert the international public to any
cases of environmental damage or indications that
environmental management standards are not
being observed.
While the trends in developing countries are
encouraging from the point of view of world mineral
supply and growing incomes, the scope for
opening new mines in developed countries is
decreasing due to public perceptions of mining as
an inherently and unavoidably damaging activity
for the natural environment. Several well-publicized
incidents of spills from tailings dams in
recent years have reinforced these perceptions. As
a result, increasingly large areas are being closed to
new mineral development. This manifestation of
the “NIMBY” (Not In My Back Yard) syndrome
may lead exasperated planners and mining companies
to ask: Well, if not in your back yard, in
whose back yard then? More seriously, the restrictions
raise the problem of how economic and
environmental responsibilities, including both the
responsibility for environmental damage from
mining and for providing the world with the raw
materials it needs, can be shared equitably.
...as are the trends for environmental
management and its costs...
With few exceptions, the costs of environmental
protection measures have not had any major
effects on the economics of mineral production.
Estimates of the costs as a proportion of total production
costs vary from negligible to crippling.
Those who are trying to demonstrate that the
costs are low point to examples of mines where
investments made for environmental reasons have
led to higher productivity and lower costs, while
those who aim to show that the costs threaten the
industry’s existence quote the full cost of investments,
including elements that have little if anything
to do with environmental requirements. It is
easy to find examples supporting either version of
the facts, partly because it is very difficult to identify
the exact portion of the investment that is due
to environmental objectives and partly because
circumstances differ from one operation to another
depending on geology, climate and other factors,
including, most importantly, whether the
investment is made as an addition to an existing
facility or in a new one. It appears reasonable to
assume that the costs of environmental protection
are indeed positive and significant. However, if it
were true that environmental measures are a high
portion of production costs we would expect to
see some clearly identifiable effects, such as higher
metals prices, reduced profits of mining companies
or unwillingness to explore for new
deposits or invest in the development of new
mines. In 1992, a reputable consulting firm predicted
that “environmental upgrading” would
cost the mining and mineral processing industry
some US$ 6,000 million and that this would have
“an enormous effect on exploration and new
smelters as industry cuts back due to the environmental
downside”. 20 There are no signs of any of
this happening, which seems to indicate that the
industry has adapted quite well to the introduction
of new regulations.
It should be noted that compared to other factors
which influence profit levels and for which
mining companies have to make provisions, such
as fluctuations in metals prices and exchange rates,
environmental costs have the important advantage
of being (usually) known in advance. In principle,
it is therefore easier to take them into
account. The industry has demonstrated an
impressive capacity to adjust to regulatory changes
(usually after first having complained bitterly
about the costs), and has achieved results when it
comes to reducing environmental impacts that
would hardly have been believed a couple of
decades ago. This is due partly to the development
of new technologies, but above all to the introduction
of management and planning methods
that integrate environmental impacts in the project
planning process from the outset and that do
not see environmental mitigation as something to
be added as an afterthought once the project
design has been decided. Clearly, the industry has
realized that the costs of project delays and possible
closures due to the need for mitigating measures
that were not foreseen but which impose
themselves as a result, for instance, of public opinion
pressure are likely to be higher than the cost
of doing it right from the outset. Thus, the need
for costly “end-of-pipe” solutions is diminishing
as the industry catches up with and meets regulatory
requirements, often at little additional cost.
This does not mean that all is well and that the
environmental problems associated with mining
can be considered as having been solved. We still
have a long way to go to reach the situation where
a mine can be closed down and forgotten with no
need for monitoring or precautionary measures.
Moreover, new and more ambitious targets will
continue to be set for the reduction and mitigation
of environmental impacts. Mining companies
will have to be alert to new developments and
prepared to take action to deal with new requirements.
The policy instruments used by governments
to ensure that mining is carried out under conditions
that minimize the risk to the environment
are evolving rapidly, and environmental agencies
are acquiring increasing experience and sophistication
in the practical application of environmental
policies. The popularization of the
Polluter Pays Principle has had the effect of making
the need to internalize environmental costs
more widely accepted (although the principle is
often misinterpreted as referring to compensation
for environmental damage) 21 and has influenced
the way that even traditional “command and control”
policies are applied. “Classical” economic
instruments to reduce environmental impacts,
such as pollution taxes, have yet to find a wide
application in mining, for reasons having to do
both with public acceptability (the idea that you
can “buy the right to pollute” is difficult for many
to accept) and practicality, not least the problems
of quantification of impacts. At the same time,
however, “hybrid” economic instruments aiming
at defining liability and ensuring that funds are
available for cleanup, such as performance bonds
and rehabilitation assurance, have been rapidly
accepted and have become part of the mining and
environmental legislation in several countries.
This type of instrument is likely to form an
increasingly important part of the regulatory landscape
in the future. It deserves to be emphasized
again, however, that governments’ capabilities
vary, and that many developing country governments
with overwhelming demands being made
UNEP Industry and Environment – Special issue 2000 ◆ 45