ED­I­TOR’S VIEW

Re­source com­pa­nies are be­ing judged on more than as­set qual­ity

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Can min­ing ever be seen as an eth­i­cal in­vest­ment?

We’re cur­rently in the mid­dle of Good Money Week, an an­nual event aimed at rais­ing aware­ness of re­spon­si­ble in­vest­ment. Its pur­pose is to high­light how we can use money to ben­e­fit so­ci­ety and pro­tect the en­vi­ron­ment.

While much of the fo­cus has been on the range of com­pa­nies and in­vest­ment funds which have a green or eth­i­cal slant, my in­ter­est has been piqued by the min­ing sec­tor which is prob­a­bly the last in­dus­try you’d as­so­ciate with be­ing eth­i­cal.

At face value, many peo­ple would sum­marise min­ers as com­pa­nies that go to a place of nat­u­ral beauty and ruin the land in the quest for nat­u­ral re­sources. They run dirty, great big ma­chines which pol­lute the at­mos­phere and the busi­nesses take most of the re­wards in the form of prof­its for them­selves.

This view is cer­tainly open to de­bate. Ask the gov­ern­ment of a re­sources-rich African coun­try what they think of min­ing and they’ll prob­a­bly say such com­pa­nies should pay higher taxes and lo­cal com­mu­ni­ties should have a greater share of the wealth.

Ask the boss of a min­ing com­pany for their view and they’ll prob­a­bly say the lo­cal com­mu­nity has sig­nif­i­cantly ben­e­fited from the devel­op­ment of a min­ing oper­a­tion com­pared to days gone by. That’s cer­tainly the view of Dan Betts, manag­ing di­rec­tor of gold miner Hum­ming­bird Re­sources (HUM:AIM).

AGENTS OF CHANGE

Betts ar­gues that min­ing com­pa­nies are ‘agents of change’ by cre­at­ing em­ploy­ment and teach­ing skills which can be trans­ferred to dif­fer­ent in­dus­tries once a mine has been de­pleted. ‘We help lo­cal com­mu­ni­ties by fund­ing health ser­vices, school­ing and more,’ he com­ments.

Hum­ming­bird spon­sors teach­ers and nurses in Mali near its mine and it also sup­ports a mar­ket gar­den project where peo­ple in the lo­cal com­mu­nity can cre­ate a vi­able, sus­tain­able busi­ness and one that can also im­prove the nu­tri­tion of fam­i­lies in the com­mu­nity.

Also in de­fence of the min­ing sec­tor is the fact that many com­pa­nies are teach­ing proper safety stan­dards to lo­cals who used to go it alone. Nu­mer­ous com­mer­cial mines are sur­rounded by ar­ti­sanal op­er­a­tions where in­di­vid­u­als mine by hand, of­ten in un­sta­ble pits and us­ing dan­ger­ous ex­plo­sives which present a risk to life.

Com­mer­cial mines will of­ten em­ploy ar­ti­sanal min­ers and en­able them to de­velop the min­ing craft in a safer work­ing en­vi­ron­ment. Hum­ming­bird says lo­cal peo­ple ac­count for 90% of its work­force.

Ul­ti­mately a good min­ing oper­a­tion should pro­vide sig­nif­i­cant eco­nomic ben­e­fits to com­mu­ni­ties and help en­sure lo­cals have a higher stan­dard of liv­ing. Yet there re­main vari­able stan­dards in the min­ing in­dus­try; those who sim­ply tick the boxes to get en­vi­ron­men­tal and op­er­at­ing per­mits, and those who go above and be­yond.

ESG FO­CUS

In­vestors are play­ing close at­ten­tion, much more they’ve ever done, to how min­ing com­pa­nies act from an eth­i­cal, so­cial and gov­er­nance (ESG) per­spec­tive – and that in­cludes fund man­agers who are pick­ing min­ing stocks. A miner may have plenty of riches in the ground, but ul­ti­mately the way they do busi­ness is just as im­por­tant as the un­der­ly­ing as­set.

What still needs to im­prove is how so many com­pa­nies are solely driven by eco­nomic re­turns, with ESG is­sues be­ing a to­ken af­ter­thought. The old model of fill­ing a de­pleted open pit with wa­ter and say­ing you’ve helped the en­vi­ron­ment by cre­at­ing a lake isn’t enough. Min­ers need to think more about so­cial en­gage­ment and en­hance­ment as they could be the bet­ter com­pa­nies in the long-term from both an eth­i­cal and in­vest­ment per­spec­tive. (DC)

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