https://www.miningweekly.com

Enviro issues, resource decline and enegy and water scarcity may present growth opportunities

11th July 2014

By: Zandile Mavuso

Creamer Media Senior Deputy Editor: Features

  

Font size: - +

Following concerns around mining companies having struggled to quantify the impacts of sustainability ‘megaforces’ on their mining operations, professional services firm KPMG highlights that if managed appropriately, these megaforces could provide unprecedented opportunities for growth, through new business models, cost savings opportunities and preferred access to stakeholder capital.

“Megaforces such as climate change, scarcity of energy, water and natural resources and environmental decline are some megaforces that mining companies are aware of. However, dealing with the issues that they present to the business environment has not become a core part of corporate strategy, as organisations often react to megaforces issues when they occur, rather than consciously hedging against future risks and preparing for opportunities,” says KPMG global climate change and sustainability mining leader Rohitesh Dhawan.

He adds that with the exception of carbon taxes, most megaforces have, so far, constituted little or no direct cost to businesses, but that this is about to change dramatically. This includes that where charges for external impacts of mining operations already exist, as is the case with carbon, costs are set to rise further.

“Mining companies are accustomed to a nominal financial outlay for activities that negatively impact the environment. However, taxes and penalties for air pollutions and carbon emissions are becoming more widespread and will inevitably extend to cover waste discharge, as well as the use of scarce natural resources. Opencast mines in particular use vast amounts of water, yet have not had to pay the true price, which will almost certainly rise significantly. As a result, many mining operators could find themselves facing significant, unforeseen expenses or even see mines unable to function, owing to a loss of their social licence to operate,” Dhawan points out.

However, he mentions that what could be beneficial for mines moving forward is to have a long-term outlook influencing decision-making, which will include a more proactive approach to the impact of megaforces on the life-of-mine (LoM) and beyond.

Dhawan explains that given the projected rise in traditional fossil fuel prices, over a 20- to 30-year period, mining houses could look into investing in renewable energy, which could yield positive business opportunity beyond the LoM.

Also, former mining sites are now routinely expected to be restored to their former level of biodiversity, which will also incur substantial charges in future, he warns. However, he notes that several mining firms take this responsibility very seriously, by extracting samples of vegetation and animal life from the area to be mined, preserving it in a nursery, to enable the environment to be recreated once the mine ceases to operate.

“Where there are no current charges, such as for degradation of ecosystems, new ones may be introduced. With companies increasingly expected to account for the true value of their operations beyond wages, labour, equipment, energy and services, such charges will likely become more common,” he highlights.

Also, mining companies will need to include the risk of unexpected retrospective charges that may be applied years after a mine has closed, for example, for damage resulting from acid mine drainage.

Although these have the potential to yield positive returns for mining companies, Dhawan emphasises that it remains the responsibility of managers to systematically monitor and measure energy and water use, emissions and discharges in order to deal with unexpected retrospective charges and also to be able to model future profit projections of the mine.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

Showroom

Hanna Instruments Image
Hanna Instruments (Pty) Ltd

We supply customers with practical affordable solutions for their testing needs. Our products include benchtop, portable, in-line process control...

VISIT SHOWROOM 
Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.148 0.18s - 88pq - 2rq
Subscribe Now