Ethical Investment: Mining

Ethical Investment: Mining

23rd February 2017, 19:00-21:00

Hurtado Jesuit Centre

This seminar was the second in the series of three. They were aimed at investors, treasurers, and those directly related, either practically or academically with investment.

Speakers:

Andy Whitmore of the London Mining Network

Responding:

Tom Bulter CEO of the International Council on Mining and Metals

The talks ended with a discussion on what ethical investment in mining would look like. Practical advice was offered by the speakers.

 

Report

Ethical Investment Seminar II:   Investment in the Mining Sector

February 23rd 2017 @ Hurtado Jesuit Centre

 

(more information on the speaker – see endnotes)

  1. Andy Whitmore[i]

from the London Mining Network

First, a couple of apologies and clarifications; I am sorry I am not my colleague Richard Solly, who was initially invited & featured in early advertising!  Richard asked me to stand in for a number of reasons and is in the audience.  I hope he will be able to intervene in questions given his experience in this area.

Also, those of us in London Mining Network would always prefer that you were hearing from a representative of a mine-affected community, but obviously that is not often possible.  Please note I will speak in a personal capacity.  I work for London Mining Network, but owing to the nature of the talk it is easier for me to express personal opinions.

For those that don’t know, the London Mining Network is an alliance of human rights, development, environmental and solidarity groups.  It works in support of communities around the world who are badly affected by mining companies based in, or financed from, London. Those of us who set up the organisation saw the key role of London financing to be of equal importance to dealing with the London-based mining companies, or their support organisations that are also based in London, such as the ICMM.

So I have been asked to share my concerns around ethical investment in mining, particularly for faith-based investors. I will start by making a general argument around the ethical problems associated with mining, then review examples of engagement / disinvestment and then – assuming that at least some investors may have still wish to invest in some mining – look at specific areas of concern, such as around climate change or conflict minerals.

General comments

The ethical issues around mining are well known, as indicated in a number of declarations from international gatherings of mine-affected communities and their supporters. A good example is the London Declaration, a founding statement of the Mines & Communities network. It articulates a civil society rejection of certain myths around mining, including the claim that mining catalyses “development”, the belief that technical fixes could solve almost all problems, as well as the myth that those opposed to mining are ignorant or “anti-development”.

These valid concerns exist because of legacy issues, such as the historical lung diseases of black workers in Southern Africa, and the acid mine drainage which is threatening Johannesburg’s water supply, both of which can be linked to successful companies who are still in existence. There have been more recent large-scale mining-related calamities, such as the Rio Tinto-related insurrection on Bougainville from1988 – which led to the deaths of 15-20,000 on the island – to the on-going civil unrest over the expansion of Newmont’s Conga project at Yanacocha in Peru. Statistically there seems to be no reduction in major tailings (waste) dam disasters, with even an increase in catastrophic incidents in recent decades.[1] Freeport McMoran’s vast Grasberg copper gold mine still pours waste directly into the rivers of Indonesian-occupied West Papua. The most notable recent tailings incident is the Samarco disaster at BHP Billiton/Vale’s mine in November 2015, which released an estimated 50 million tons of waste into the Rio Doce river, killing 19 people.

Mining has long been a concern to church-related groups. Personally many of the community-focused mining activists I have worked with have been part of church-based networks. Participants in a meeting with the Vatican over mining noted in a follow up letter that “the Church is one of the few institutions capable of awakening the critical vision of the people, to put an end to indifference, to contribute to a real paradigm shift. When the church is located next to those whose rights have been violated … a powerful tool of checks and balances will serve the integral human development.”[2] Pope Francis in 2015 called for the entire mining sector to undergo “a radical paradigm change.”[3]

Given this, the Churches & Mining Network echoes calls from affected communities for a campaign of divestment of the shares of major mining companies by religious congregations and dioceses that are investing in them.[4]

I think it is key to stress that in my experience these concerns are not all to do with small ‘junior’ companies, and/or informal mining. It is true they have their own problems, but the examples I have given so far are all from major companies listed on key stock exchanges, in pension portfolios and also I believe members of the ICMM. The same is true of the majority of cases listed in the aforementioned letter from the Churches & Mining network to the Vatican (which for the record include references to Goldcorp in Mexico, Cerrejon in Colombia and Anglo American in Brazil).[5]

It is undeniable that the larger companies – and the ICMM – have improved policies, which often sit alongside a growing network of voluntary commitments. The policies in my own area of expertise on indigenous peoples have undoubtedly developed over recent years, particularly the growing acceptance by the industry of free, prior, informed consent. However, there seems to be an increasing gap between policy and practice. The ongoing conflict and complaints at the community level point to continued problems, even while company reporting shows nothing but solutions (accompanied by glossy photos). Company reports can be verified by – so-called independent – third parties, but valid complaints from the ground can still continue. That makes it more difficult for an investor to assess how ethical a company’s actions actually are. The power imbalance and intimidation in many jurisdictions where mining takes place often makes it difficult for honest critique to get out.  This is exemplified in the increasing concern over murders of mining-related environmental and human rights defenders.[6]

My favourite example of this disjunct is in the Philippines where a large local company called Philex frequently asks to be considered the ‘poster-boy’ of ‘responsible mining’ in the Philippines. Yet this is the company that in 2012 was responsible for the country’s biggest mining waste spill by volume from its Padcal mine, which was the fourth such incident in the history of the mine.[7]

To Engage or to Divest?

The obvious question if you have ethical concerns as an investor in mining is whether you use your influence to affect change in direct advocacy or whether you disinvest. As already mentioned many of our allies on the ground are calling primarily for disinvestment, and it is worth listening to their calls.

Personally I think there can be room for attempting to influence company policy as a shareholder. After all one of London Mining Network’s main strategies is to invite affected community representatives to address the public forum of company annual general meetings. Positive examples include where ethical investors have led shareholder resolutions, for instance around disclosure on the closure plans of Goldcorp’s Marlin mine, and for Newmont to report on its impact for local communities (the latter of which was almost unanimously supported)[8].  Even where the resolutions are not successful they can open up space for dialogue.

However, it is worth noting that such actions can only take place where they have been initiated by those directly affected. Otherwise they could be potentially divisive, which is true for all ‘behind-the-scenes’ advocacy. Also these actions, by their very nature, tend to focus on initiatives to do with reporting and transparency, which – although important – can still not necessarily tackle problems on the ground, given the aforementioned gap between reporting and reality.

Also I think engagement can only work if it is on specific issues in support of those directly affected, as an initial stage of advocacy, with divestment as the ultimate sanction. It seems to me that the threat of divestment has to be there, has to be credible and should not be open-ended, i.e. it has to have a clear set of asks, which, if they cannot be met, should trigger divestment. A recent critique noted that investors and customers had been liaising with Lonmin, post the 2012 Marikana massacre to very little effect.[9]

It is also worth noting how effective divestment can be. Probably the most famous institution associated with ethical divestment is the Norwegian State Pension Fund. On the advice of its Council of Ethics it has divested from a large number of major mining companies, including Barrick Gold, Freeport McMoRan, Rio Tinto, Norilsk Nickel and Vedanta. The Pension Fund’s decision on Vedanta has made a difference, being quoted within the reasoning of an adjudication of a successful OECD complaint, as well as being lauded by local groups.[10]

Focus on Specific Issues

One specific area where divestment seems to have struck a particular chord is over climate change. There are church-based campaigns focussed on this issue, such as Operation Noah. They have had some success, with the World Council of Churches calling for divestment from coal, oil and gas in 2014, and the Church Commissioners of the Church of England deciding in 2015 to divest from tar sands oil and thermal coal. It seems there is significant momentum behind these calls, not least given economic arguments around ‘stranded assets’ and “King Coal” being referred to by an asset manager in Deutsche Bank as a ‘dead man walking’.[11]

However, I believe that one should be careful of thinking of investment in uranium is a ‘solution’. It is true that nuclear energy is seen by some as a stop-gap or alternative to fossil fuels, but – even leaving aside the problems of safe storage of nuclear waste – it is worth considering the impacts of uranium mining, mostly on lands claimed by indigenous peoples, many of whom reject it outright.

Conflict minerals is another area of clear concern for investors, often concentrating on so called 3TG minerals (tin, tantalum, tungsten & gold) extracted from areas of armed conflict, most notably in and around the Democratic Republic of Congo. The concerns are of course valid, but may be difficult to implement with regard to investment because the mining is often informal, and – despite improving transparency – it is not always easy to trace the source of conflict minerals upstream in the supply chain. It is something that may be better worked for through credible regulation, to stamp out bad practice on the ground, which churches have been actively supporting.[12]

For me the key point is to have broad view of what constitutes a conflict mineral. I would argue it is certainly wider than central Africa, and also wider than any specific minerals. Although mining in areas of armed conflict is obviously uniquely problematic, there are many incidents where low level conflict abounds that may not make it into a definition on conflict minerals. In fact in my experience, primarily in the Philippines, I have seen mining introduce armed conflict into an area that had otherwise been free of it, with reports of companies paying extortion money to armed groups that shouldn’t even have been operating in the area.[13]

Civil and political rights abuses are often widespread in certain countries, and often only become visible where it surfaces in some form of violence, as has happened recently with the armed state of emergency to protect the Panantza-San Carlos exploration project in Shuar territory in Ecuador. It is seldom in the interests of companies in such situations to report these openly – either within or outside the company – so it is difficult to know how best to ensure such projects are an ethical – or even profitable – investment. Civil society monitoring is likely to face the same intimidation that communities themselves are, so I can only advise caution.

Conclusion

Although there are other issues I could focus on – e.g. mining in protected areas or area of high biodiversity – I think I need to close. So I want to thank you for your time. I hope I have made some strong arguments for you to consider all, or some, of any investments you may have in mining. If you plan to keep your investments then I would urge you to link up with community activists who seek justice and/or redress to support their complaints. If you find you cannot directly support their demands for whatever reasons, then maybe you should consider divestment.

 

Response by Tom Butler[ii]

Introduction – about ICMM (International Council for Mining and Metals)

  • Thank you for the welcome and opportunity to present this evening, and particular thanks to Andy for your thoughtful paper.
  • Let me from the outset say that there is common ground between us on a couple of your central tenets – turning good policy into good practice and influencing the industry through engagement.
  • Andy has identified a key challenge in what he has called the “gap between policy and practice”. The uniform and consistent application of ICMM’s policies and guidance is an area of focus for us, both in assisting our members with its uniform application, but also in reaching the broader industry to improve practices across the board.
  • I would like to tell you a little about the organisation I lead – the International Council on Mining and Metals, or ICMM – and also outline the challenges and opportunities for the sector.
  • We are a CEO-led membership group that was established in 2001 to bring about improved performance on sustainability in the mining and metals industry. Setting up ICMM was recognition that society was demanding changes in the way the industry operated.
  • Our membership currently stands at 23 of the world’s leading mining and metals companies and 34 commodity and national associations.
  • Member companies are a small fraction of the total number of mining companies, but they represent about a third of global production and employ about one million people.
  • They have committed to implementing a sustainable development framework based on 10 mandatory principles and 8 position statements – the most recent being on water and tailings management – reporting and independently verifying progress annually.
  • It is a tough ask and you don’t have to be a member to apply these principles, and if you don’t know our organisation I’d encourage you to visit our website.
  • We have made progress over the past 15 years, but have much more to do applying an approach that involves –
  • Leading through performance
  • Listening and engaging
  • Enhancing understanding
  • Shaping the policy environment

Ethics

  • I won’t go into ethical issues in detail as I am not an expert, except to say there are two sides to a story – I note Andy referenced Pope Francis’ 2015 encyclical on the environment, Laudato Sí (section 129), highlighting the environmental impacts resulting from human activity. He also states:

“Business is a noble vocation, directed to producing wealth and improving the world. It can be a fruitful source of prosperity for the area in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good… We need a conversation which includes everyone”.

  • Ethical issues are central to the work of ICMM and its members – the first of our 10 mandatory principles is to:

Apply ethical business practices and sound systems of corporate governance and transparency to support sustainable development.

These include:

  • Developing and implementing company statements of ethical business principles, and practices that management is committed to enforcing
  • Implementing policies and practices that seek to prevent bribery and corruption
  • Complying with or exceed the requirements of host-country laws and regulations
  • Working with governments, industry and other stakeholders to achieve appropriate and
  • Effective public policy, laws, regulations and procedures that facilitate the mining, minerals and metals sector’s contribution to sustainable development within national sustainable development strategies
  • In addition, our collaborative approach offers greater opportunity to be catalysts for development in the countries in which our members operate deliver – helping them meet SDG 17 which deals with partnerships for meeting the goals.
  • Throughout its millennial history mining has proven to be a resilient and transformative industry, withstanding the impacts of highly cyclical markets through its ability to adapt.
  • Mining drove the European and American industrial revolutions supplying coal and iron ore for steam engines that powered factories and transportation.
  • Today it provides the metals that power the information revolution – platinum, copper, zinc and nickel and others.
  • Iron ore, coal and copper are enabling China and India to transform their economies within one or two generations lifting hundreds of millions of people out of poverty.

 

  • The low carbon economy is becoming a reality thanks to minerals and metals like iron ore, platinum, copper, coal, nickel and others. A wide variety and high volumes of metals will be needed.

 

  • I mention coal because we should avoid falling for simplistic arguments about its immediate demise. The move to a low carbon economy will in years to come mean less coal will be used for generating power. However, until there are alternative technologies, coal will continue to be used for making steel.

 

  • So, when posed with the question of whether to invest or disinvest I think Andy’s point about the ability to effect change through your investments is key.

 

  • The mining industry will better hear the message through influence rather than disinvestment – constructive engagement works.

 

  • Andy has provided some good examples around the Marlin mine and company reports on impacts on local communities, and there are many more –
  • The ICMM member commitment to FPIC was a result of active engagement and consultation with civil society, NGOs and multilaterals such as the UN.

 

  • Potential investors should also consider the reliance of a low carbon economy on the solar panels, wind turbines, energy storage (batteries) and greener cities built from the products of mining.

 

  • Also reflect on this – why would you disinvest from an industry that is making and will continue to make a significant contribution to meeting the SDGs – such as #1 No Poverty, #6 Clean Water, #9 industry innovation and infrastructure – particularly in poor countries, some of which lack any other transformative industry? I’ll come back to this point in a moment.

 

  • Remember – mining goes into places where few other industries of such scale would be prepared to go because the risks are too high.

 

  • The 23 CEOs that sit around our Council table are fully engaged and putting these and other big issues like water and community relations at the top of their priority list.

 

Impacts

  • Yes, mining can have negative impacts and, as Andy has highlighted, there have been tragic incidents such as the 2015 Samarco tailings dam collapse in Brazil.
  • We have set ourselves two clear objectives. First, to maximise the positive benefits of mining and second to minimise the negatives. Our work to mitigate impacts centre on five areas:
  • Environment: Maintaining ecosystem integrity, biodiversity and appropriate land use and rehabilitation –
  • Members committing to a policy of no mining in World Heritage Sites despite business impacts.
  • Communities: More sophisticated engagement and inclusive decision making –
  • ICMM Company-Community Toolkit and FPIC commitment.
  • Communities resilience to climate change –
  • Climate change position statement; water position statement; work on contribution of minerals and metals to achieving a low carbon economy.
  • Water: Prioritising the efficient use and competing claims to access for water –
  • Water management framework and catchment-based approach.
  • Mine closure: Planning for closure (including financial assurance for closure) at the time of developing a new mine.

 

Contribution

  • Mining continues to be a catalyst for development and prosperity – I don’t agree with Andy that it’s a myth.

 

  • The sector allocates vast amounts of capital around the world:
  • The top 40 mining companies spend $531bn each year on operating their mines.
  • Another $103bn is spent on plant and equipment.

 

  • It also makes a significant contribution to the their host countries at national, regional and local levels –
  • Macro examples:
  • Tax: The combined tax contribution of ICMM’s 23 members was more than $24bn in 2014 with about 30% ($5.4bn) paid in developing countries.
  • Investment: In 2015 alone new mining investments totalled $93bn
  • Peru: The impacts of such investments can be transformational – over the past 10 years poverty levels in Peru have fallen by more than 30%, largely attributed to a surge of investment by the mining industry.
  • Botswana: Diamond industry has been transformational. From independence in 1966 to 2014, GDP per capita growth averaged 5.9 per cent a year (third highest in the world – WB 2015). In 1966, 40 university graduates and 100 secondary school graduates. In 2013, 10,668 tertiary and 8,268 secondary school graduates.

 

  • Local/regional examples:
  • Skills development: Harnessing and developing top talent in local communities, providing opportunities to young people they wouldn’t otherwise have had. In a region of West Africa 20 years ago there were no engineers. There are now 7 engineering graduates.
  • Community development: Anglo American’s Zimele programme supports the establishment and growth of small and medium enterprise (SME) in South Africa, particularly around mining communities. Over the past 15 years 1,885 companies have been established employing over 38,000 people, with a combined turnover of over £350m. Almost 50% of the SMEs are owned by women. The businesses are not linked to mining, they are self-sustaining.
  • Shared infrastructure: At Cerro Verde copper mine near Arequipa (Peru), Freeport built a half billion dollar waste water treatment plant to clean up the waste water from a city of one million people. In exchange, Cerro Verde would receive a portion of the treated wastewater for mining operations.
  • Multiplier: In Ghana every mining job supports 15 indirect jobs and 105 jobs are generated for every $1m increase in local procurement.
  • Communities in a number of the countries in which our members operate may not receive the share of benefits from mining that they should – often because government entities lack capacity or at worst are corrupt. This is why we are leading supporters of the Extractive Industries Transparency Initiative.

Challenges

  • Our Romine study published in 2016 found that for about 25 poor countries (mostly in Africa), mining is a critical part of the economy:
  • FDI 60-90%
  • Exports 30-60%
  • Govt revenue 3-20%
  • National income 3-10%
  • Employment 1-2% of the workforce

 

  • So I put out a challenge to you – if you are an ethical investor seeking to invest in these parts of the world, where business can make a real difference, which sectors other than mining would you invest in? And if you accept to invest in mining, how would you select your investment?
  • A place to start would be ICMM member companies progress made over the past 15 years on improving sustainability performance:
  • Examples:
  • Commitment to our third principle – respect human rights and the interests, cultures, customs and values of employees and others affected by our activities.
  • Principle three turned to practice through our binding position statement committing on FPIC – respecting the rights, interests, special connections to lands and waters, and perspectives of indigenous peoples, and working towards the Free Prior and Informed Consent of Indigenous Peoples.
  • Understanding company-community relations toolkit – It’s not enough to “do” community relations, companies need to assess the quality of their community relations – questioning assumptions about what communities might need or value and ensuring companies contribute what communities require.

Summary

  • ICMM seeks to adapt to evolving expectation through collaboration with all stakeholders –having done significant work in recent years with NGOs (WWF and Oxfam) and multilateral organisations (World Bank and the United Nations) on major issues such as FPIC, water management, biodiversity and measuring the impact and contribution of the sector.

I don’t think we’re there yet, there are many issues.

  • My concluding message to you is this: you can have more influence by staying engaged – keep up the pressure and dialogue to help us improve.

 

 

 

Questions and Comments

Frank Turner: I’m Frank Turner, I’m a Jesuit Trustee, but my question comes from my many years living in Brussels working in the Jesuit Office on the European Union and we had an advocacy project on mining, and its effect on development.  Because we were in Belgium our focus was the Congo we had excellent partners on the ground there.  We started in 2006 which was the first democratic election and because the EU had many millions invested in peacekeeping forces and so on.  I’ve got one main point and one subsidiary,

One is issues around corporate social responsibility in terms of the comparative advantages of a voluntary framework which on the whole governments have been determined to adhere to and some kind of binding regulatory framework and it’s not an easy case because we heard from a member of the directory of human rights and development for the UN the difficulty in achieving a regulatory framework is inevitably … the lowest common denominator, the Chinese, and Indian and Indonesian and Australian companies all working… in Congo as well as human rights in European companies.  And one of the worst mining operations in the Congo was a European company in Belgium who wanted nothing to do with ethical investment bodies.   So on the one hand the lowest common denominator danger and on the other hand voluntary frameworks mean that no company remains accountable in a straightforward sense, you can’t hold companies accountable, every company ends up with a rather different framework and all we can do is criticise after the event rather than regulate for good practice.  So this is not simply an issue between the two of you, so I’d be very glad if you have any comments on where is this issue moving, I’m about two years out of date on this.  Is there some progress towards a certain element of clear regulation effective at EU level or elsewhere?

Just for the record if I could add one second, very brief question; what about the issue of trying to retain the maximum added value within the country?  One of the problems with Congo was the mining product was shipped out in its raw form and there was almost no involvement within the Congo other than the sheer mining operation.  It all went through Zambia for processing elsewhere.

Tom   On the first question, I haven’t been following the legislation, so I can’t comment on where, on whether there’s been any evolution on legislation.  I think from my members’ point of view, they would say, well, I’m sure they would feel that they are in terms of CSR contribution to, for example, community development funding, you know, I mentioned the Zimeli, but most of our members have got similar examples, that they feel they’re doing more than many non-members including the ones that you mentioned in the Congo.  And they would also say that they have to think very carefully about CSR initiatives as opposed to initiatives that will create sustainable livelihoods that would outlast the mine.  So they tend to focus if they do have a CSR initiative, they tend to focus on trying to build capacity, transfer skills, support initiatives that will generate, support the development of alternative sectors.  And that can be very case by case, and very difficult to codify and regulate, so I think it has to be more along the lines of living up to your commitments and in the case of the big companies, that move from one country to the next, wanting to be seen as the development partner of choice, by pointing to how responsible they’ve been in the last country.

The beneficiation question is an interesting one.  It’s not just the Congo.  It’s many other countries that would like to see more downstream beneficiation and it’s a very difficult thing to get right, I think it has to be fundamentally economic may be not in the short term, but in the medium term to longer it has to be something that’s fundamentally economically viable otherwise you end up subsidising an industry which ultimately doesn’t go anywhere.  It’s also not necessarily an industry that generates a lot of jobs, so smelters are capital intensive, they don’t generate many jobs and tend to be lower margin businesses than mines, so the tax revenues from a smelter are normally not going to be as high as the revenues from a mine.  So I think countries need to think pretty hard about whether that’s the way they want to go, and I’m not saying that they shouldn’t, because there are some examples of where it might work out, so for example Botswana has leant very heavily on Anglo to introduce beneficiation in country and perhaps that can work with diamonds but then if you look at Indonesia, they seem to have made a bit of a mess by introducing a policy then rescinding it.  A lot of people very upset about having made investments based on policy now that it’s been rescinded you’re likely to have a lot of white elephants around, so it has to be something that is very carefully thought through.

Andy Whitmore   Thanks; I’ve got three points to pick up on there really.  On the voluntary versus binding regulation, obviously, it’s difficult sometimes because it’s so wide ranging, but I think in general, most of the people we work with would nearly always argue more for the binding regulation.  I think there’s an increasing network of different voluntary schemes.  To the point where I’m pretty sure even the industry is getting confused by the conflicting levels of voluntary codes [Tom: there are about forty].  And you have to ask in a way why so many voluntary codes have been done.  Obviously part of it is their done for different things, but also perhaps there are so many and there’s so much overlap because they’re not as effective as they could be.  And I think there’s often an argument that actually binding regulation in theory could be, should be good for industry because it should create a level playing field, an understandable clarity.  Often when we’ve spoken to companies obviously one of the key things they want is clarity.  So I would always argue industry reasons for wanting it.  But I also think it’s primarily because a lot of these voluntary mechanisms don’t seem to be working from the point of view of communities.

On the conflict minerals issue we had been following, we had been lobbying with regard to that.

The latest is that the so called EU trialogue, which is basically where the council of Europe, the parliament and the commission come together, has issued a new set of rules.  In some ways it seems a victory for those who are calling for more binding legislation and it is indeed.  There are some binding factors on it but unfortunately it’s only really for further downstream and it’s only really for the bigger producers.  One of the big arguments we have is that there are particular loopholes especially around small use of imports of gold and they’ve set the height so much that effectively you can import millions and millions of Euros worth of gold and still go under, fall within the category where you wouldn’t have to do the necessary due diligence on the supply chain transparency.  So, yes, I think it’s a little bit of a win and a lose and even unfortunately the latest thing, people may have heard is a specific section of the Dodd-Frank act in America that covered this, they’re now talking about repealing it as well, so it’s not just pushing forward, sometimes it seems for some of us that work in civil society that we have victories and we’re moving forward, but there’s always the roll-back that’s the worst thing really.

And on beneficiation, there’s an interesting one.  Again many of the groups we work with, particularly national level groups are asking for this.  It’s one of the clear asks that’s coming from civil society.  I think there are clear reasons and I take the job issue most definitely, although I’d also argue that in many ways modern mining, particularly open cast mining outside of the construction phase is not necessarily that much of a job intensive industry, particularly if you’re talking about, your likely to get skilled workers not necessarily from the local community coming in to do those jobs to the point now where obviously Rio Tinto is trying to develop in Australia mines which are effectively automated and coming down to very, very few workers.  So the other interesting thing is if you look at the, that’s looking at it from a national level again, but if you look at it from our perspective which is working with communities, I’ve worked with communities that have actually been trying to stop smelting plants etc because, even if there are national groups that believe the national patrimony will be improved by having more beneficiation in the country you still have to locate them somewhere, they’re still potentially polluting industries, and there are quite a few communities we work with that are objecting to smelters and the like as well as mines, so it’s just another perspective really.

Bishop Michael Doe:   I’m Michael Doe, I’m here as the Vice-Chair of ECCR, the ecumenical council for corporate responsibility.  It’s really good to hear about transparency and codes of ethics but they don’t always mean much unless there is some real independent monitoring on the ground.  My own first hand involvement in the area is with the Philippines, where in our Anglican church we’ve now had six priests and a bishop killed because they have stood up for indigenous communities against the mining companies.  And they all say often, local government and the official and unofficial armed groups are in the pay of the government.  Some times an NGO will raise an issue here perhaps at an AGM and if only for reputational reasons promises will be given.  What is lacking all the way through, they would say to us are people with weight who will actually be there and who will actually see what’s going on and will challenge the reporting, which often they would say is rhetoric rather than reality.

Tom Butler:   Well thankfully none of my members have got operations that are in the Philippines, so at least they’re not on the list for that.  But one thing that I, there are set of principles called the voluntary principles for security and human rights (VPs), which most of our members, the members who’ve got projects in high risk areas where this kind of thing can happen or where security forces need to be used, have all signed up to and that is a code which, I don’t know how many of the companies in the Philippines have signed up to that.  That is quite a demanding code for, to which companies submit in terms of how they engage with security forces, whether it’s their own security forces or whether it’s the police, where the police are involved, so one of the questions that I would ask in the case of the Philippines is whether any of these companies have submitted to that and I would and similarly in Peru where you see the same kind of examples that you’re referring to.  One of the things I would ask is are the companies members, signed up to the VPs and are they applying them, because I think that goes some way to mitigating the points that you were raising.

Andy Whitmore:  Thank you for mentioning the Philippines.  This is great; this is my area of speciality as you say.  On the Philippines specifically it is interesting because obviously there’s a great deal of mention in the press at the moment about the war on drugs that’s happening and the terrible human rights situation.  But it’s interesting that underneath that there’re still the killings of anti-mining activists going on; two in the last two weeks.  And that’s been a constant, maybe not at that rate, but a constant that’s run all the way through.  I’ve worked in the Philippines a good fourteen, fifteen years and interestingly many of the ICMM companies were in the Philippines and effectively all of them have left, one way and another, many of them interestingly, I think all of them really, they may not say that’s the reason, but one of them had community based campaigns that were effectively asking them to leave and all of them did.   The last one being Glencore, Xstrata which was Tampacan* project.   And interestingly, from that point of view I don’t know what the situation with the voluntary principles was there but certainly that was a fairly large potential project that never got off the ground.  It was one where a large multi-national corporation should never have been in the position of being there because it was a high conflict area.  It was an area where it was proved that the company was paying money to the local government, which was then paying paramilitaries, private security etc.  So, it’s a situation that just seemed insane to us and all of our campaigning there seemed rather easy.  I think many of the companies left because we told them they shouldn’t be operating in those situations and I think either eventually they believed us…

Stephen Power:  Is this an argument for investing in the good companies world wide, because they are responsive?

Andy Whitmore:  It’s interesting and I think it comes back to the divestment argument in a way.  I mean Richard often makes the joke that I’ve got nothing left to do now because so many of the companies that were British based companies have moved out and it’s an interesting one for us because obviously we have those discussions with the community and in the case of the Tampacan mine people were saying only Chinese investment will come in and we won’t have the same standards.  But then many of the community will say, well that doesn’t matter.  What we need is to deal with this company.  As far as we’re concerned this company isn’t operating according to high standards, and I think that’s absolutely true of what was happening when Glencore Xstrata were in control of that mine so it is a real problem and monitoring – coming back to your first point, I think that was really the point I was trying to make, that the issue of monitoring is absolutely crucial and I don’t know, it’s strange, for those of us who have been working, I intended to work on indigenous people’s rights and somehow or other by luck I got sucked into working solely on mining, but for those of us who’ve been working on it for a quarter of a century now, it is interesting how the asks have changed.  We’ve been going to company AGMs for a long time, but I think we were asking initially for points to be recognised by the company etc, now I think, we go there and we’re reaching a point where the reports are all saying that everything’s fine, but the people we are with are still saying, that things are no fixed on the ground.  And it’s a really interesting thing, and I’m not sure what shareholders make of it these days, because they sit and hear two completely different things inside these meetings.  And where is the truth, where does it lie?  Very interestingly at a Vedanta AGM recently, an activist got up and said, here’s the company report, we got the report, it shows a happy people with the cows the company has given them.  I’ve been to that village and they said that’s not us.  We’ve never seen that before.  And so you actually have, in some ways it’s just so strange that, I know we’re in the world of fake news, but it’s so strange that this should be, I don’t know the challenge I guess now for activists and for others for investors even is to try and get the capacity to check what’s being done on the ground.

Stephen Barrie:  Stephen Barrie, I work as deputy secretary to the Church of England’s ethical investment advisory group and also treasurer of a small charity.  I’ve been working for the Church of England on one of our policies on extractives, which is under development, one of the questions might reflect one of the themes of this policy though we haven’t published yet so, I’ve got one question for each of you. For Andy, are there any good standards, any set of commitments that you or the London mining network, would endorse and point to as the kind of standards that investors and engagement teams working for investors can point to if needed occasionally, to say to companies, look here’s the standard, why aren’t you doing it?  So to understand in terms of practice.  For Tom, what’s your view on joint ventures?  And in particular non-operating joint ventures and sustainability reporting and health and safety reporting or effectively projects that a company might own fifty percent of but might not report on health and safety stats, so when you benchmark statistics, does that include non-operating joint ventures?

Rebecca Morgan:  My question is, I suppose for both of you, but particularly for Andy.  Obviously within the UK the closure of mines was something that people, poor people, were very against.  Those were also probably the poorest communities in the UK and the closure of mines just made them poorer.  And mining was in the UK something that also involved fatalities, you’d have typically, a mines rescue team for a mine, because you expected there to be accidents and nevertheless communities were very averse when mines were closed to having those closed.

Do you not have any experience of the opposite of communities, either of you, communities who are averse to mines closing for economic reasons?  And also is it that you want the mines not to be owned by international companies perhaps but by governments?  Similarly to *Iran UK* and is that really a realistic thing that’s going to happen in many of the countries you’re talking about?

Andy Whitmore:  The good standards; I mean it’s interesting because obviously because I keep going on about the fact that in some way the standards are kind of there and it’s the practice, but obviously many of the standards are particularly good and those around free, prior-informed consent I mentioned that talk about the problem of implementation, but interestingly for us and for civil society and particularly indigenous peoples.  I think there’s been a history of a cycle of different multi-stakeholder initiatives and for me what is important in a lot of those is actually the process, so although I haven’t read the latest version of it, I’ve commented on a previous version of it, the IRMA, as it’s called, the initiative for responsible mining assurance, I think is a pretty watertight piece of work, but I think particularly importantly is it comes out of what I regard as a proper process.  It’s one of the few processes early on that actually had designated representatives for communities and indigenous people and not NGOs, and this idea that you have NGOs, charities and campaign groups who can – so it’s that direct representation again.  You know it took years of work.  My previous job, we weren’t sitting on it, but we were working with groups that were and supporting them, and I know how long it took because they said we want to deal with the really difficult issues and we want something that’s watertight, that may make it difficult to apply in lots of places and I think they’re going to pilot it and run it out.  But I think it is quite tight and it is quite difficult because it has come out of that process of having the unions, NGOs, communities and companies and jewellers, users, customers sitting around working on it.  So for me, I think, there  again it’ll be interesting because all that needs to be piloted and sent out.

Mine closure is obviously a really interesting and difficult one absolutely.  I mean on one issue, obviously in this country we’re talking about coalmines.  I mentioned obviously the divestment campaign.  Clearly if you’re having divestment out of fossil fuels, you’re talking about closing mines.  And it’s been interesting again for the London mining network, we’ve tended to be a very broad organisation and we’ve worked with unions in different countries.  We’ve had relationships working with different unions, which is quite interesting because obviously they don’t always run, you know sometimes they run contrary to the desires of local communities for the very reasons you mention.  I think that’s why it’s interesting for us working with purely environmental groups in this country is to focus on that idea of just transition.  And I think that’s the key, there is a theory about it which is basically, that started it around campaigning about the arms trade that was basically it’s not just about shutting it down, it’s about shutting it down in such a way that there’s a just transition, so people have moved jobs and not lost as a whole.  And I think that’s obviously what most definitely happened in this country was that it was very much an unjust transition.  So, yes, whole areas really were wiped out, but it is interesting that there is that conflict there, again I can only give a personal opinion.  For me it’s not so much about who the company is, it’s about their activities.  I know for some of our partners they would believe in nationalisation.  For me, again, because we’re working with communities, I don’t necessarily see that in some cases that nationalisation has improved the situation.  It may not or in some case even has [not] improved the situation. So it is a difficult one.  And even in the China case it’s quite interesting.  Because again, I mentioned earlier that I think there’s almost a sort of bugbear within the industry that China will lower standards etc.   I think, in many ways there’s just concern over that, but a case we often mention is that there is company called *Zhizhun* mining that’s registered on the Hong Kong stock exchange.  They actually took over  *     Regal Metals* which was a British registered company, and they effectively,  the Chinese company, certainly in the short term actually acted in a more responsible way, certainly in the short term, than the British company.  And interestingly that registered on the Hong Kong stock exchange, they actually, not specifically for that incident, but for an incident that happened in China were fined and had their shares withdrawn at various points, actually had a stricter code of conduct than the London Stock Exchange.  So it’s not absolutely simple.

Tom Butler:  Maybe I can also just come back on some of the comments.  So our members for the most part are not that keen on IRMA as currently drafted.   There are some big issues in there.  Partly because it was such a multi-stakeholder group.  For example, they’ve specifically said in the standard that if you mine coal you are inherently irresponsible and therefore no coal-mining company can qualify and that’s a big issue for a number of our members.  I think, as you mentioned earlier, there’s a huge number of initiatives, voluntary standards and so on.  Whilst there are many good things in IRMA I think if you’re going to design something you want to design something that is actually going to be taken up by a reasonable portion of the industry, otherwise it just ends up being another standard that only five or ten percent of the industry apply.

On the joint ventures that’s a very good question and it’s a gap right now.  So we’ve got three or four big projects which are jointly controlled by our members, but each one has thirty percent, so they kind of fall between the cracks and, you ask the question, I was discussing it this morning with Aidan because we’re putting on the table, putting the issue on the table with members and asking them how, you know, they’re going to say, well you can’t double count it because it doesn’t belong to all three of us, but you do need to capture it and at the moment we’re not.  I think we captured San Marco because that was fifty percent, but I don’t think we’ve captured where you’ve got three or four companies owning.

On the communities, it’s a very interesting question.  I don’t know how many of you saw the BBC documentary on the last underground coal mine in England, but if you haven’t seen it, it’s a really interesting two hours, each programme is one hour, so it’s two hour programmes.  And what was most striking was just how desperate the miners were not to close and it really sort of came through very strongly and I actually think the UK is not a good example of mine closure, you only have to go anywhere north of Sheffield to see that and it’s not like the UK government didn’t have enough warning.  Perhaps if the mines had lasted another thirty years, they would be doing it a lot better, but there was very little effort to reskill, to develop alternative livelihoods for all of those miners.  And you only see that starting to happen now but in between there’s been a lot of poverty and misery in some of these communities.  So I don’t often talk about the lesson of the UK when I talk about good examples of closure.  But there are some good examplesI think British Columbia has got some good examples of closure where they’ve successfully adapted mine-towns for other purposes.   So for example one mine town in British Columbia has been converted into a retirement resort, a resort/retirement community for the over fifties and quite successfully and, you know, I think you have to be creative because it’s very much case by case.  The other interesting thing that some of our members are doing is depending on the context, they are trying quite hard to avoid creating mine towns, so that you don’t after thirty years run into a situation where you’ve got a captive community living around the mine, with nowhere else to turn for their livelihood.   So for example the *      * mine which is a very large mine in Mongolia operated by Rio Tinto made a very explicit decision.  They started off planning to build a town and they rethought it and made a very explicit decision to do fly in, fly out.  So they fly people in from Ulan Batur, on two or three week shifts and of course that brings other issues, but what it does mean is that they’re not going to have a huge town building up around the mine in an area which is incredibly water scarce and not really the sort of place where you’d want to have a town.

John Arnold: from ECCR.  I’m interested in terms of the Modern Slavery Act and how your members are addressing that.  And you just touched on this about creating villages and when you start doing that there are clearly issues of the miners who are there, male or mainly male and trafficking of women into those sorts of situation can be a risk.  Has there been some very good practice in terms of any of your members about analysing the risk of human trafficking in their supply chains.

Tom Butler:   I don’t know the answer to that second question actually.  I’m sure that some people have thought through it but I can’t give you a specific answer, I can find out though and get back to you.

Andy Whitmore:       Just one tiny thing, I’d like to come back in on various points (my passion for the subject), but the one thing I would say in answer to your question, you know what do you invest in if not mining.  Well one obvious thought is recycling really.  Well the mining industry is still built on this industry of extraction and I think we are moving at the moment in the world towards cradle to grave and I think there is, there are opportunities for the mining industry to move in that way, and I think what’s interesting, in situ mining and nano-technology could mean that we’ll have mines in the future that won’t effect people and the environment as badly, and in some ways I would support the creation of that, but I think for the moment I would really support issues like urban ***** going back to landfills and particularly as I say obviously increased recycling.

 

End of session

Stephen Power (Chair):   I want to thank our speakers very much.  I think with the degree of agreement at the end especially on mine closing that there’s an element here of great unity; on how to deal with certain issues.  But there’s a great contrast too in between what people see as possibly destructive to the environment and also what possibly could build up an environment by good practice, so I think both our speakers have indicated the contrast in clear ways and it leaves us as church investors to pursue the path of deciding from ethical standpoints and the practical standpoint – what can be done and what we should do.  I hope the evening gives more depth to the arguments and I thank Tom and Andy.

 

ENDNOTES

[1]    Newland Bowker & Chambers, http://earthworksaction.us7.list-manage.com/track/click?u=8f98b851e94f659be52c775d5&id=0ae9fa20c3&e=449559953c & Chen Wang, David Harbottle, Qingxia Liu, Zhenghe Xu, http://dx.doi.org/10.1016/j.mineng.2014.01.018

[2]    http://www.cidse.org/publications/business-and-human-rights/letter-from-church-and-mining-to-pope-francis.html

[3]    http://globalsistersreport.org/news/environment/closed-mines-haunt-two-towns-honduras-threats-against-activists-mount-41521

[4]    http://www.cidse.org/publications/business-and-human-rights/letter-from-church-and-mining-to-pope-francis.html

[5]    http://www.cidse.org/publications/business-and-human-rights/letter-from-church-and-mining-to-pope-francis.html

[6]    https://www.globalwitness.org/en/reports/dangerous-ground/

[7]    http://news.pia.gov.ph/article/view/41479463646/ceo-offers-philex-mines-as-poster-boy-of-responsible-mining &  https://ejatlas.org/conflict/philex-padcal-mining-disaster-benguet-philippines

[8]    www.goldcorp.com/English/blog/Blog-Details/2012/Update-on-Shareholder-Resolution/default.aspx & http://www.prnewswire.com/news-releases/916-percent-of-newmont-shareholders-support-resolution-for-mining-company-to-report-on-its-impacts-on-local-communities-58746357.html

[9]    German Panorama documentary at https://vimeo.com/166196539

[10]  http://www.oecdwatch.org/cases/Case_165/753/at_download/file &

[11]  http://www.minesandcommunities.org/article.php?a=12847, http://www.minesandcommunities.org/article.php?a=12713

[12]  http://www.euractiv.com/section/development-policy/opinion/europes-unique-chance-to-clean-up-its-trade-in-minerals/

[13]  https://vault.sierraclub.org/sierra/200405/terrorism/printable_all.asp

[i] Andy Whitmore is currently coordinator of London Mining Network’s collaborative ‘Stop Mad Mining’ Project and is the managing editor of the Mines and Communities website.  Andy is undertaking doctoral research at the University of Middlesex on Indigenous Peoples’ Rights.  Andy has worked on the issues of mining and affected communities since becoming a founder member of the Minewatch collective in the late 1980s, most recently as coordinator of Indigenous Peoples’ Links (PIPLinks).  He is the editor/author of Pitfalls and Pipelines: Indigenous Peoples and the Extractive Industries, co-author of Indigenous peoples and the Extractive industries: Towards a Rights-respecting engagement, as well as various articles or chapters on those issues.

[ii] Tom Butler became CEO of the International Council for Mining and Metals (ICMM) in July 2015.  Before that, he spent 18 years with the International Finance Corporation (part of the World Bank Group) in the infrastructure and natural resource teams.