Government-led industry organisation the Future Minerals Forum and US-based Rice University's Baker Institute for Public Policy have released a new report titled ‘Building Shared Value Propositions in the Minerals Industries: Getting to How’ on June 24, calling on the minerals industry to urgently move from intent to action to advance shared sector value creation.

The report was released at the World Mining Congress, in Lima, Peru, and was authored by mining industry stalwart Mark Cutifani and energy, minerals and materials expert Dr Michelle Michot Foss.

The authors argue that mining has the potential to support both local communities and national economies, provided investments and financial benefits are effectively managed and applied.

“Mining can lift local communities as well as national economies if the investments and cash dividends are discernibly managed and applied. The mining industry supports extensive supplier ecosystems. Procurement and employment generate extensive multipliers.

“Resource-owning governments must put their initial focus on comparative advantages. Value-added investment will flow as mining sectors are established and results discerned,” the authors argue.

The report also emphasises that effective supply chain logistics and linkages remain fundamental to mining success, with infrastructure capable of serving as a baseline for local and regional economic development.

The authors also note that enabling frameworks that ensure durability and sustainability of mining investments and operations are essential for value added to accrue. These frameworks, they highlight, must incorporate the distribution of benefits, or they will not ensure stability.

Moreover, the report highlights that enabling frameworks should accommodate the development of basic mining infrastructure while ensuring that such infrastructure supports broader economic activity beyond mining and improves quality of life.

Additionally, the authors highlight that shareholder value propositions are derived from mining industry investments, which depend on both the quality of mineral resources and the conditions under which investments are made.

Commercial frameworks and the industry’s ability to execute critical functions across the mining ecosystem are highlighted as key factors influencing investment decisions. Favourable commercial frameworks, the report notes, can support final investment decisions, including for projects with less attractive risk-reward profiles.

“The history of mining is replete with examples in which governments altered commercial frameworks to enable projects that meet market tests to reach final investment decisions they might not otherwise. Labour and societal value propositions together constitute above ground risks that must be resolved to win [a] licence to operate,” the authors highlight.

Labour and societal value propositions are also identified as critical considerations, with safety, health and societal acceptance representing above-ground risks that should be addressed to secure a social licence to operate.

The report also states that transparency, trust and confidence in the allocation of economic benefits make it easier to align industry interests with labour and societal priorities.

It describes alignment between governments, business and society as both an “art and a science”, requiring a shared understanding and agreement on common value propositions, and it also stresses that if any part of the mining ecosystem is unable to perform optimally, then broader value chain fragility would be more likely to occur and value creation could be reduced.

Given the economic benefits associated with mineral development, the authors argue that it is worth bridging business, government and social dimensions to leverage mining investment capital for economic development and growth.

They add that deepening the mining value proposition depends on establishing sustainability as an economic concept.

“Long-term economic sustainability is linked to seven pillars: safety and health, environmental performance, social performance, talent pools, replenishment of resources and production bases to support continued operations, unit operating costs in the lower half of global cost curves, and balance sheet strength,” the authors explain.

The report also highlights the importance of timely project approvals and permitting processes, noting that scarce and valuable natural resources are most effectively developed when aligned with demand and opportunity.

It also notes that supply shocks and persistent gaps are associated with declining efficiency and performance, with these inefficiencies extending to government policies attempting to address imbalances.

The report concludes that governments should increase efforts to create enabling mining environments, as evidence shows that investment flows will not be secured without their willingness to create supportive conditions.

It also cautions that expectations about what mining investors can achieve within specific timeframes must be managed realistically to ensure successful outcomes.