You can understand why anti-mining sentiment is so prevalent: until perhaps the past two decades, the sector has indulged in years of unabashed environmental destruction.
The backlash was always going to be fierce. Take mining laws passed in various US states, like Maine, where recent regulation forbids mining for metals in open pits of more than three acres. It’s one of the harshest in the US. Understandably so: according to The Maine Monitor, in the 1960s the Callahan Mining Corp was given permission to drain a 75-acre coastal estuary in the town of Brooksville and turn the area into an open-pit mine. By 2013, researchers found “widespread evidence of toxic metals in nearby sediment, water and fish”. The clean-up bill, eventually, was around $45m.
It means that a major lithium deposit found in Maine in 2021 and described by local news as “the richest known hard rock lithium deposit in the world” may never actually be extracted.
Meanwhile, Alaska recently sued the US Environmental Protection Agency (EPA) for blocking the development of what’s been called the world’s largest copper and gold resource – the gargantuan Pebble deposit (an estimated 4.5bn-tonne copper whopper) in Bristol Bay.
But Bristol Bay also houses the world’s largest sockeye salmon fishery, not to mention extensive bird colonies. Mining, argues the EPA, would degrade the watershed and harm fishing ecosystems. Alaska, on the other hand, argues that it’s been denied billions from taxes and royalties in a “blatant affront” to its sovereignty.
Yet, as Financial Times wrote in a recent report: “Rather than an industry that can be dismissed as polluting, destructive and part of the problem, it could be viewed as part of the solution.” It quoted Jakob Stausholm, Rio Tinto CEO, who said: “You will simply not be able to build a new-energy system and reduce the world’s CO2 emissions without getting sufficient access to a number of minerals.”
Access to Anglo American’s vast – and permitted – copper reserves, after all, are what drove BHP’s now aborted bid to buy the company.
In presenting its restructuring plan sparked by the hostile approach, Anglo CEO Duncan Wanblad said: “It’s important to note that one of the key constraints to growth in copper is not capital, geology or technology – it’s sustainability.
“The top 20 undeveloped copper resources today remain sterilised because of sustainability-related constraints, in particular communities and water, which, as we have seen in Quellaveco, are often interlinked.”
What’s more, said Wanblad, the cost of bringing brownfield expansions online “should be significantly lower than those for new greenfield projects, and so the growth potential of brownfield expansions in our assets will also be more value-accretive”.
Remining the future?
Mining’s present low-popularity status is perhaps why Keith Scott, head of mining tailings firm Fraser Alexander, might be feeling like a man in the right place at the right time. Fraser Alexander, after all, is in the business of remining metals from old mining waste.
Like other mining veterans, Scott has seen a “massive” change in the social and environmental permitting framework since he began working in the sector 25 years ago. In South Africa, says Scott, there is “a lot” of resistance to new mines, whether from the regulator, communities or NGOs. Just look at the response to Shell’s Wild Coast oil exploration proposals.
He describes mining’s problem as twofold: a crisis of relevance, and acceptability.
Mining “is no longer deemed an acceptable use of land … in (some) places you can forget getting permits.”
“In 10 to 15 years’ time I wouldn’t want to be in primary mining,” he says.
Of course, Scott is talking his book. But, he says: “There’s a tremendous amount of the resources that we seek available to us in residues.” By his estimate, there are 280 billion-odd tons of tailings, worldwide, that could be remined.
As for new mining, it creates waste, and that’s “close to untenable in developed countries”, he argues. Still, it means there are opportunities for smarter technology to extract metals from tailings, as well as water. “The people who get that right are going to find themselves permittable where others aren’t,” says Scott.
SRK Consulting associate partner and principal environmental scientist Kirsten King has a nuanced take on the permit issue. King, who also has three decades in the field, says that despite a more stringent approach by regulators, environmental permitting isn’t a key factor discouraging investment in greenfield mining projects. This is “largely because most mining companies are already geared up in their sustainability goals as part of their mining operations”.
“However,” she says, “they are likely to select those jurisdictions that deliver the most efficiency and certainty in any regulatory compliance process. Where delays and lack of clarity create too much project risk, then they are likely to look elsewhere.”
But she acknowledges that laws and regulations have become far more complex and prescriptive, especially when it comes to wetland areas in South Africa.
Wouter Jordaan, a partner and principal environmental scientist at SRK, says the problem isn’t an intractable one. Because new mines consider ESG aspects in the early stages of mine planning, they can tackle possible impacts during the design phase. Newer technology also means less waste production.
The attractiveness of the sector has never regained the investable attractiveness it had up until after the Global Financial Crisis – Keith Scott, Fraser Alexander
Jordaan is adamant that primary mining “will remain central to our livelihoods” but admits that recycling will “undoubtedly grow alongside it”.
As for the metals of the future, Scott says: “We need big copper mines, but the mining industry is very slow and inflexible and takes us an average of nine to 10 years to bring a new mine online, from discovery to production. And we know that we’re going to struggle to get a permit whether it’s for social or environmental reasons.”
You can see then why mining waste looks so appealing. “The grade in some of these historic dams is looking as good as your mine copper grade and to remine tailings you don’t need anything like the capital you would to build a new mine – and of course you are straight into production, where you don’t have to strip for years or sink a shaft,” says Scott.
But he’s also cautious on the ebullience of copper demand forecasts, pointing out that the huge development experienced by a previous metals guzzler like China means it will need less and less of the raw commodity in future, simply because it will be able to recycle far more from the millions of televisions and washing machines sold to newly affluent consumers in the past 20 years.
Besides mining with an eye on ESG, the feeling in the industry is that those companies who don’t jump on the secondary mining bus are going to lose out, big. This and recycling “have got to become bigger parts of the overall supply of these metals”, says Sibanye-Stillwaters’ Wellsted.
Mining’s crisis of relevance has also got a lot to do with how it has repaid investors over the past couple of decades. Smoothing out the wild highs and wilder lows, the returns aren’t brilliant – particularly in mining exploration.
“The attractiveness of the sector has never regained the investable attractiveness it had up until after the Global Financial Crisis. A lot of the capital invested in mining and especially exploration has gone, and is not coming back,” reckons Scott.
That’s clear from research produced by Swiss-based Pala Investments, which recently calculated that commodities account for just 2% of global assets under management, down from 9% in 2009.
“Mining investors got seriously burnt – they were sold a helluva story by the industry and a lot of it never came to fruition; the project failure rate was massiveten years ago. . I know mining brokers in London – sponsors – who no longer do mining. They’re much more interested in property or technology,” says Scott.
But there’s a big push to draw money back to the sector. Adam Matthews, chief responsible investment officer for the powerful Church of England Pensions Board, told FT recently that “mining … as a whole needs a completely different level of recognition for the role it plays in the global economy”.
Matthews also chairs the Global Investor Commission on Mining 2030. “We recognise that investors are not properly valuing this sector and in particular those companies developing the most socially responsible approaches,” he has said.