Why should biodiversity matter to mining companies?

Biodiversity is the building block of ecosystems. Species interactions provide us with ecosystem services upon which all human life depends. The services range from food production and fresh water supplies to air quality control and the cultural significance that we associate with certain landscapes.

Our economy is also heavily dependent on ecosystem services. Biodiversity and ecosystem services (BES) has become what is known as a “material” issue for businesses – something that affects the bottom line.

Relevance of BES to mining operations

Mining operations impact on BES all the way through the mining lifecycle from exploration to closure. Direct impacts include damage to ecosystems from vegetation and top soil removal. Indirect impacts are wide ranging, such as the increased use of water as a result of migrant workers moving to the mine area.

Material BES issues for mining and mineral processing are essentially:

1) Water security

Water is used in mining, processing and mineral conveyance, as well as drilling, dust control, and minimal ore processing.

One of the risks to operations resulting from climate change is water shortages. So it is crucial to plan the location of mines accordingly and manage water use at mines. Water provisioning is a key ecosystem service and mining companies should take care to protect this communal benefit from nature.

2) Energy security

Mining uses large amounts of energy, often generated from high greenhouse gas emission sources such as coal. This presents a risk for the operations as regulatory measures aimed at reducing emissions of climate changing gases are introduced. These regulations are likely to affect energy prices and the price and demand for coal.

As the traditional energy mixes become more expensive and potentially more politically or reputationally sensitive, use of more sustainable, renewable or off-grid options such as solar becomes increasingly attractive. The location of renewable energy projects  needs to managed with BES in mind.

3) Climate change impacts

Climate change will have far reaching effects on a mine’s ability to operate, for example, it may lead to more health problems with staff or increased flooding in mine shafts. Assessing what the impact of climate change is going to be and the implications for the operation and the local stakeholders is the first step in planning appropriate mitigation.

Investing in the integrity of ecosystems such as wetlands within a mine’s zone of influence and encouraging similar activities in the wider region will help to manage and mitigate the intensity of extreme weather-related events. This should therefore minimise increased costs and reduced production levels through down time caused by these events.

Relevance of BES to mining companies

1) Investment and financial drivers

It is common now for investors to regard biodiversity and environmental management as a matter of policy or to protect reputation and shareholder value. Socially or ethically responsible investing has increased four-fold from 2009 to 2010, according to the Experts in Responsible Investment Solutions.

Investors are also looking to see which companies are actively looking for opportunities around BES. Those mining companies that are proactive are more likely to develop a competitive edge and so prove more attractive to investors.

2) Access to market

Awards of exploration or operating licences may depend on specific differentiating points between rival bids. Track records on management of BES may become a pre-requisite rather than a differentiator.

3) Reputation and brand value

The links between environmental harm caused by a company – or even the perceived harm caused by a company – and the loss of that company’s good reputation are commonly understood in the mining sector.

Loss of a company reputation and the consequent loss of brand value can have major impacts on revenue as well as a company’s licence to operate. Those companies that have damaged their reputations often have to defend themselves and could spend years and significant amounts of money doing so.

4) Legislation and liabilities

Contravention of biodiversity legislation can result in operation shut down and delays, large financial implications if fines are imposed, loss of reputation globally, loss of license to operate, loss of resources and loss of revenue.

As more countries wake up to the need to protect their precious natural resources, legislation around BES will become more stringent.

5) Cost control

By adequately identifying, measuring and managing BES impacts, critical accounting judgements and estimations of environmental costs can be more accurate.

How to take BES management forward

The earlier the BES impacts and opportunities are identified, the more effective the management of the impacts and opportunities can be.

Here are some of Fauna & Flora’s suggestions for mining companies and their operations:

• Commit to the early integration of BES management through policy and biodiversity strategies and deliver best practice with time-bound targets
• Undertake a high-level BES risk and opportunity assessment to prioritise focus and identify key company-level risks and opportunities
• Ensure that all site-level Biodiversity Action Planning (BAP) processes detail actions that avoid, minimise, mitigate and where possible, offset potential impacts

These commitments will help extractive companies to maximise opportunities to make a positive contribution to the protection of biodiversity and ecosystem services. This is fundamental to the long-term health of the business and the wider society in which it operates.

Fauna & Flora has partnered with companies in the extractive sector for over 15 years. Learn more about our achievements in integrating biodiversity into mining.