Roger Dixon, Chairman and corporate consultant of SRK Consulting weighs in on the big issue facing mining: Low commodity prices coupled with high expectations. Not to mention the misplaced focus on in-house compliance instead of the far more pressing social and natural environmental issues. At the Mining Indaba, he says, there is a lot of talk about the problem, but perhaps more inward mumbles of a solution. – CH
By Roger Dixon of SRK Consulting
Mining is being squeezed between low commodity prices and rising expectations from government and civil society, but is still struggling to find practical strategies out of this predicament.
A number of speakers at this years’ Mining Indaba have highlighted the dilemma that the sector is facing – trying to ride out the commodity slump while needing to address its social licence to mine.
It is argued by some that mines have failed to invest sufficiently during the good times in technology and training, which would have created a sounder foundation for higher productivity in tough times like these.
The solutions to balancing the demands made by shareholders and society are likely to come from more constructive partnerships between mining companies, government and NGOs – a point made strongly at the conference by former British prime minister Tony Blair.
These relationships often remain adversarial and strained, when they should in fact be the foundation for mining ventures and other positive economic spin-offs.
Growing levels of disillusionment around the globe with traditional models of capitalism also fed into current trends in resource nationalism that affect the terms on which mines are started and operated.
It is also apparent that many mining companies have reverted to a stricter compliance-focused approach as their margins come under increasing pressure, even though the broader political environment demands that they pay more attention to their social and natural environment.
Innovative solutions are now urgently required, as the challenges are clear to see and many of these are being well aired at the Indaba. Certainly there are many opportunities in Africa to contribute to infrastructure development, which is needed to underpin broader economic growth. In particular, the improvement of Africa’s electricity infrastructure is vital for all other sectors.
Better technology infrastructure – such as the roll-out of broadband access – will boost economies by facilitating efficiencies and raising productivity; it could also ease the cost of doing business generally, while contributing significantly to education and national skill levels.
The mood at the conference suggests that improvements in the macro-economic environment are still some way off, but continued population growth is still a global factor that bodes well for future demand in mineral commodities.
A more immediate and concerning trend is the increasingly inward focus of many larger economies such as China and the US, as this is in sharp contrast to the steady globalisation of the world economy over recent decades – a trend that was hoped to benefit continents like Africa.
*SRK Consulting is a global network of consulting engineers that offers sustainable solutions in technical, environmental and social spheres to mining and other natural resource sectors.
