Navigating the Future: The Rise of ESG Practices in Mining Industry

The mining industry faces various issues when it comes to sustainability or the ‘green’ agenda. This is where ESG comes into the picture. The term might be slightly unfamiliar with common people but it is well-known to miners and professionals in the mining industry. 

In this blog, we will explore the ESG practices in the mining industry and how these will impact the future of this industry.

What is ESG and how is it related to the mining industry?

The full form of ESG is Environmental, Social, and Governance. Responsible corporations implement these principles to guide corporate behaviour by ethical, sustainable, and corporate governance issues. 

Exploration and mining activities have a potential impact on the environment. This is the reason that ESG has been a concern with NGOs, governments, and industrial organisations along with other key stakeholders, who are deeply involved and concerned about the social and environmental impacts of the mining sector. 

Mining companies have to adhere to the various ESG codes, regulations, and principles which address the various concerns of this industry. Senior mining executives have ESG goals at the top of their priority list. ESG for miners covers operational and strategic ESG goals along with the quantitative benefits of reaching these goals successfully.

Issues covered by ESG in the mining industry

All mining issues will not be covered under ESG. Mining companies must know what is important and which issues need to be reported. Here are the issues which are covered by ESG in the mining industry:

1. Environment – Issues which are categorised under ‘environment’ include ecosystem services, biodiversity, hazardous substances, climate change including greenhouse gases and carbon footprint, noise, energy, air, water management, mine closure, and mine tailings/waste. 
2. Social – Items under ‘social’ issues are vulnerable people, community/worker health and safety, resettlement, land use, human rights, security, mine after use/closure, gender, artisanal miners and labour practices. 
3. Governance – Anti-bribery and corruption (ABC), legal compliance, transparency and ethics are issues which are classified under ‘governance’. 

Mining companies have to consider if risks in any of the above-mentioned fields might impact obtaining permits, raising capital and funds, protecting assets from impairment and working with communities, NGOs and various regulators. 

By implementing and practising ESG, mining companies can enhance operational performance, reduce carbon emissions, minimize energy and water bills, manage closure viability and improve regulatory and community relationships. 

Also Read: The Scope Of Iron Mining Industry In India

Reasons why ESG practices are on the rise in the mining industry

Now that we have a fair idea of ESG and the various ESG issues in the mining industry, let us now understand why the mining industry emphasises ESG practices so strongly. 

1. There is a strict watch from the regulators, government bodies, communities and NGOs

   External as well as internal stakeholders demand performance and transparency on various ESG issues. Stakeholders in the mining business face challenges on various fronts including ecosystem services, land use, climate change, sanitation, local infrastructure, food, water, energy, corruption, etc. Priorities vary according to individual mining sites and mining companies. However, when stakeholders are aligned with the same ESG agenda and interests, the whole mining industry benefits from the same. 

2. Lenders, investors and customers care and know about ESG

   Very few transactions in the mining industry take place without reviewing ESG issues. Investors, purchasers or lenders involved in the mining industry prefer to confirm and remain informed that various ESG issues have been handled and there are no compliance issues. Demonstrating good ESG performance and a positive track record is highly appreciated as this increases access to funding and more customers. The failure to show good ESG results will increase the funding cost and vice versa. 

3. Strong ESG performance opens up significant opportunities

   ESG not only helps in managing downsides but opens up significant opportunities as well. Some of them are as follows:

   1. Better use of water, reduced energy costs and efficient and effective management of various other resources. 
   2. Strong stakeholder relationships and good performance records open up access to new clients, funding, resources and other quicker development schedules. 
   3. The ability to retain the best people in the mining industry. 

4. Helps in avoiding risks associated with poor ESG performance

   Taking unnecessary risks in the mining industry might halt a critical project or bring in disruptions. The mining company can avoid certain ESG risks by managing this agenda properly. 

   • Poor design and planning leading to climate change risks
   • Unhappy communities hampering mine site operations or expansions
   • Inefficient use of energy, water, etc. disrupting business continuity
   • Environmental pollution and failed tailings dams cause operations disruption, license loss and criminal or civil liability
   • Poor workplace safety and health conditions

With the rise of ESG practices in the mining industry, mining companies can assess their risks better. They can make necessary preparations to evade the risks and make the workplace a safer one for the miners and other professionals in the mining industry. 

Sree Metaliks Limited – the most trusted name in TMT manufacturing

Sree Metaliks Limited has carved a niche for itself in the mining industry and has been dedicated to following ethical mining practices. Dealing with different varieties of iron ores and stainless-steel products, Sree Metaliks Limited diligently adheres to all regulatory measures including ESG practices. Visit the company website for further details.