The creation of a new image for mining

The perception of mining outside of the industry itself has not always been positive.

In Australia, mining is a standout contributor to the local economy. During the global financial crisis of a decade ago, it was a crucial reason why Australia wasn’t as impacted as many nations around the world were.

And despite the commodities downturn of earlier this decade, mining remained one of the most influential industries in the country.

This ongoing contribution has not, however, been enough to overcome perceptions that mining causes damage to the environment, has a negative impact on local communities near operations, and it engages in dubious practices around the world.

In recent years, mining companies have increasingly focused on improving the image of the industry.

But, as Deloitte explains in its 2018 Tracking the Trends report, mining companies are still operating under a legacy of these negative perceptions.

It is an ongoing process for them to update the image of mining, and one that involves changing the perceptions of the public, employees and customers.

Deloitte Australia national mining leader Ian Sanders believes mining companies can move towards changing the perception of the industry in two ways: (1) re-engaging their employees and (2) strengthening their stakeholder ecosystem.

“Re-engaging employees is part of the cultural revolution that I believe we are going to experience in the next three to five years in the mining sector,” Sanders tells Australian Mining.

“When I think about re-engaging employees, (BHP chief executive) Andrew Mackenzie is quoted from time to time saying that’s one of the key productivity levers in their cultural environment.

“If we look at the culture in mining five years ago versus where it is going to be in five years’ time there will be a clearer focus from all organisations on inclusion and diversity.”

Sanders adds the focus on diversity is not just about gender and increasing the ratio of females in what has traditionally been a male-dominated industry.

He says this focus also includes diversity of thought, including at operations, in corporate offices and with key stakeholders.

“If I look at that agenda, organisations are really focusing on it now. They are building strategies around what they can do now, and in three or five years’ time,” Sanders says.

“They are really engaging, and re-engaging employees and saying as a group you can be more involved in helping us achieve these outcomes.

“They are looking at how employees can be more involved in helping get out into communities and into educational institutions to help us achieve these outcomes.”

Deloitte points to several efforts made in the Australian mining industry to re-engage employees and regain trust, including the mounting focus on mental health to address the internal and external pressures workers face.

In Australia, as part of a state–wide campaign to generate awareness of mental health issues, Rio Tinto’s Hunter Valley mines traded their standard yellow truck trays for blue to indicate their improved capacity to provide support and related health programs.

Glencore also introduced the Mates in Mining program in Queensland to encourage more open talk about the risk of suicide.

When looking at their stakeholder ecosystem, Sanders says major miners like Rio Tinto and BHP have been working towards bolstering their relationships with governments, employees and communities for several years to increase trust in their organisations.

For example, both companies moved to erase questions around their tax contributions in the countries in which they operate by becoming more transparent on their finances.

Rio Tinto was the first mover in this regard, setting a new standard for tax transparency by voluntarily disclosing details of the taxes and royalties it pays on an annual basis.

BHP followed Rio’s move in 2015, committing to develop detailed taxes–paid reports, making the two companies industry leaders in their goal to enhance public accountability and improve corporate credibility.

There are various stakeholder ecosystems mining companies are focusing on, Sanders explains.

“Government is first and foremost, then they have to be in the heart and minds of their employees and shareholders. And being as transparent as possible about your environmental footprint is also very important,” Sanders says.

“Rio Tinto and BHP are now really demonstrating to the broader economy what these mining giants are contributing to.”

Sanders says the social impact mining companies are making on stakeholders is top of mind more than it has been in the past.

“Organisations are making sure that they are clearly articulating how they are trying to impact not only the local communities in which they operate but working more closely with them,” he says.

“That couples into local supply chains as well. We are seeing more and more evidence of mining companies in their local jurisdiction trying to work more closely with local organisations to educate them more, to build better skills and to bring more skills in so that they can employ more people through the direct and indirect workforce within that community.”

Leading strategies to improve the image of mining (source: Deloitte):

Enhance transparency. Companies have improved the transparency of their tax disclosures. A similar spirit will likely need to pervade their broader activities going forward. Miners need to more clearly demonstrate the role the industry plays in supporting and sustaining economic growth. Companies must share examples of the efforts they are making to remediate any environmental damage they cause. They must be more proactive in sharing the impact they are making in local communities and countries, not only in terms of employment, but also in terms of infrastructure investments, improved access to education, and healthcare programs.

Up efforts to build, measure and report on sustainability. While many governments now require certain disclosures, over–reporting shows a real commitment to sustainability. Companies can only do this, however, if they invest in tools that can help them report consistently and with the same rigor used for financial disclosure.

Develop a crisis management response plan. Mining companies must continually work to educate their stakeholders about the industry and keep them apprised of corporate activities. This means staying ahead of the curve by anticipating criticism and having a ready response. To repair reputations, mining companies must consistently be honest and upfront about any incidents and how they are addressing them.

This article also appears in the June edition of Australian Mining.