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Day 2 - Session 6: Sustainable Mining & Conflict Resources
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Day 2 - Session 6: Sustainable Mining & Conflict Resources

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Day 2- Session 6: Sustainable Mining & Conflict Resources …

Day 2- Session 6: Sustainable Mining & Conflict Resources

Objective Capital Global Mining Investment Conference 2010
Stationers' Hall, City of London
28-29 September 2010
Speakers:
Andy Bone - World Diamond Council
Aidan Davy - International Council on Mining & Metals
Andre Van Zyl - Oak Ridge Solutions
Mike Davis - Global Witness

Published in Investor Relations
  • Full Name Full Name Comment goes here.
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  • any inverstor ready to invest,there is cocession which we need investor to help extract much gold.
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  • There are a lot of concessions rich with gold ore awaiting potential investors.
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  • 1. Investment Conferences GLOBAL MINING INVESTMENT CONFERENCE 2010 DAY 2 - SESSION 6: SUSTAINABLE MINING & CONFLICT RESOURCES What next for the Kimberley Process? Andy Bone – Director, World Diamond Council Sustainable Mining Aidan Davy – Senior Programme Director, ICMM Transforming Artisanal & Small Scale Mining Andre Van Zyl – Managing Director, Oak Ridge Mining Solutions Conflict Resources Mike Davis – Chief Campaigner, Global Witness ● CITY OF LONDON ● TUESDAY-WEDNESDAY, 28-29 SEP 2010 STATIONERS’ HALL www.ObjectiveCapitalConferences.com
  • 2. GLOBAL MINING INVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:
  • 3. GLOBAL MINING INVESTMENT CONFERENCE 2010 What next for the Kimberley Process Andy Bone – Director, World Diamond Council
  • 4. GLOBAL MINING INVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:
  • 5. Sustainable Mining: Extracting value from ESG performance Aidan Davy, Senior Program Director www.icmm.com
  • 6. Overview of presentation  Growing pressure on ESG disclosures  Mining sector risks overall and ESG issues  Investor interest in ESG risks  Selected ESG risks and ICMM activities/ members performance  Conclusion www.icmm.com
  • 7. Growing pressure on ESG disclosures  Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) includes provisions to:  Report payments by project and by recipient government (1504)  Provide quarterly reports on a variety of Health & Safety related matters (1504)  Due diligence measures on “conflict minerals” from the DRC (1502)  SEC issued guidance on Climate Change Disclosures (02/10):  Requires listed companies to disclose impacts of climate change  ‘Physical impacts’ includes changes in water availability or quality  Investor-led calls to listing authorities and stock exchanges to require companies to consider the sustainability of their business model www.icmm.com
  • 8. Mining sector risks  Life cycle aspects, e.g.  Political instability recyclability, disposal  War/civil disturbance  Chemicals management/  Expropriation inherent HSE risks  Breach of contract  Supply/value chain  Market access  Resource access –  Business interruption land, energy, water  H&S and ESG  Access to capital &  Failure of systems talent  Regulatory non-  Climate change compliance  Reputation  Commodity price  Currency Risks  Interest rate risks  Equity risks www.icmm.com
  • 9. Risk convertibility in the mining sector  Life cycle aspects, e.g.  Political instability recyclability, disposal  War/civil disturbance  Chemicals management/  Expropriation inherent HSE risks  Breach of contract  Supply/value chain  Market access  Resource access –  Business interruption land, energy, water  H&S and ESG  Access to capital &  Failure of systems talent  Regulatory non-  Climate change compliance  Reputation  Commodity price  Currency Risks  Interest rate risks  Equity risks www.icmm.com
  • 10. ESG operational issues in mining Ethical Business Practices Labour & Working Conditions Anti-corruption stance Labour relations Transparency Diversity and equal opportunities Political involvement Occupational Health & Safety Labour issues in supply chain Environmental Responsibility Energy and Greenhouse Gases Water resources (use, pollution, management) Biodiversity Land (use, contamination, management) Tailings management Solid waste management Air emissions (excluding GHG) Emergency Preparedness Closure Social and economic contribution Artisanal and Small Scale mining Communities (impacts and social investment) Conflict and security provision Involuntary resettlement of communities Cultural heritage Local economic development www.icmm.com
  • 11. Top 10 Global Pension Fund Markets ($20.4 trn) Source: UNCTAD (2010). Investment and Enterprise Responsibility Review www.icmm.com
  • 12. Scope and influence of Responsible Investment UNCTAD analysis of world’s 100 largest pension funds: Average AUM per fund (SUS bn) 51 135 No. of pension funds 27 73 66 22 No. of Responsible No. of Responsible Investment indicators Investment indicators As of February 2010, PRI had 700+ signatories (currently 800+) with AUM of over US$20 trn Source: UNCTAD (2010). Investment and Enterprise Responsibility Review www.icmm.com
  • 13. Do sell-side analysts give a XXXX?  Investigated overall impact of CSR strategies on securities analysts recommendations (16yr horizon)  Examined perceptions of analysts on value creation (or value destruction) potential of CSR strategies  Initially, CSR strategies perceived as value-destructing. Later, CSR strengths seen as value-creating: shift from sell to buy recommendations  Higher ability analysts more likely to reward CSR strengths www.icmm.com
  • 14. ESG risks and project finance  International Finance Corporation Project finance rise.... and fall (IFC) has set the standards for addressing ESG risks  IFC Performance Standards 35 US$ billions (mining) US$ billions (total) embraced by EPFIs – represents 30 over 90% of project finance deals 25  Mining investments of over $26 bn 20 between 2005 and 2009 15 10  Despite a dip in 2009, likelihood is that activity will increase 5  IFC Performance Standards under review – bar likely to be raised Source: Harvard Business Review (2010). An overview of project finance and infrastructure finance www.icmm.com
  • 15. Value of global mining sector M&A deals (US$ bn) (September) Transaction service providers increasingly address ESG risks as part of M&A due diligence Source: PwC (Sept, 2010). Mining Industry Briefing: M&A in the Global Mining Sector www.icmm.com
  • 16. Carbon Disclosure Project – Global 500 (2009) Includes mining & metals Performance scores Disclosure scores Note1: Materials includes: Metals & Mining (45%), Chemicals (35%) and Construction Materials, Containers & Packaging, and Paper & Forest Products (20%). Note 2: As of September 2010, CDP initiative backed by 534 institutional investors with more than $64trn in AUM Source: PwC (2009). On behalf of The Carbon Disclosure Project www.icmm.com
  • 17. ICMM activity on Climate Change  Climate change is of significant interest to ICMM member companies  Mining industry estimated to contribute approx. 1.8% to global GHG emissions  Many metals produced are essential to pollution prevention ‘green technologies’  ICMM members working to establish themselves as part of the solution to the climate change challenge  Current efforts involve sharing information to improve understanding of issues and drive implementation of best practice technology www.icmm.com
  • 18. Water availability & quality Water disclosure scores by sector (out of 100): Source: CERES (2010). Murky Waters? Corporate Reporting on Water Risks www.icmm.com
  • 19. Increasing importance of Indigenous Peoples  Indigenous Peoples are increasingly important in terms of resource access  EIRIS, CAER and The Ethical Funds Company all promoting FPIC (ideally large ‘C’)  Not just NGO’s advocating: Co- Operative Bank’s support for Beaver Lake Cree Nations vs. Tar Sands in Alberta  EIRIS analysed 250 companies from FTSE All World Developed Index: Oil & Gas (47%), Mining (36%); Forestry (10%) and Agribusiness (7%) www.icmm.com
  • 20. Indigenous Peoples – selected indicators Agribusiness Forestry & Paper % % Oil & Gas Mining Indigenous Policy FPIC (consent/consultation) % % Indigenous employment Resettlement Source: EIRIS (2009). Indigenous rights: risks and opportunities for investors www.icmm.com
  • 21. ICMM member ‘policy’ commitments 10 Principles for Sustainable Development 1. Implement ethical business practices and apply good corporate governance 2. Integrate SD in corporate decision-making 3. Uphold fundamental human rights 4. Manage risks based on sound science 5/6. Improve EHS performance 7. Conserve biodiversity & participate in integrated land use planning 8. Encourage life cycle approach to materials management 9. Contribute to community development 10. Publicly report, independently assure and engage openly and transparently 6 Position Statements Mining and Protected Areas Mining: Partnerships for Development Climate Change Mining and Indigenous Peoples Mercury Risk Management Transparency of Mineral Revenues www.icmm.com
  • 22. Reporting & Assurance by ICMM members  Adopting systematic approaches to reporting material risks, which reflects enhanced ESG performance  Undertaking robust assurance of sustainability reports to enhance credibility and trust  Understanding how/which ESG efforts contribute to value creation/protection  Enabling investors & analysts to better differentiate between companies www.icmm.com
  • 23. Do mining investors respond to ESG factors? Vedanta resources share price (2010) www.icmm.com
  • 24. Concluding remarks  ESG factors are increasingly a mainstream concern for investors  Not just buy-side analysts, but increasingly sell-side analysts who have an interest and influence  ESG factors will continue to grow in importance in terms of project finance and M&A activity  ICMM members demonstrate leadership in terms of ESG commitments and performance “ESG analysis will benefit from improved reporting and corporate governance structures. But attention should also be paid to the need for improvements in the coherence and consistency of ESG analysis itself.” UNCTAD (2010). Investment and Enterprise Responsibility Review www.icmm.com
  • 25. For further information please contact: Aidan Davy, Senior Program Director aidan.davy@icmm.com www.icmm.com
  • 26. GLOBAL MINING INVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:
  • 27. Transforming artisanal and small scale mining
  • 28.  Intro video  Background to Oakridge involvement  Overview of conflict situation in East Congo  Current situation  The fairmining solution  Project Kivu – first fairmining implementation  The future of fair mining
  • 29.  By invitation - we got involved based on request from local stakeholders groups  Background in corporate business transformation, troubleshooting and root cause analysis  Our approach was region development focused, not mining specific  We spend 12 months detailed on the ground analysis and investigation before putting a proposal together.  We are developing the solution in conjunction with all local stakeholders  We are developing solutions with repeatability in mind
  • 30.  It is not as complex as it seems  It is there by design  Blood minerals – not all minerals are fueling war (Blood Gold)  Resolving the conflict situation will result in many people losing a lot of money  Our initial root cause analysis showed many anomalies when compared with what gets reported in main stream media  Aid is a big cause of corruption  NGO’s creating a false economy  Economic development and job creation is the only solution
  • 31.  Strong and cohesive voice for artisanal mining starting to emerging out of North Kivu  Joint meetings between Local Communities, SAEESCAM, COMIMPA, ANR, Comptoirs, Mining Police, Government and UN Expert Group  This voice does not effectively reach international advocacy and media.  We are launching platforms to address this  www.walikali.com and www.habarizakweto.net  Mineral ban in North Kivu, South Kivu and Maniema (Coltan, Wolframite and Cassiterite)  Developing the artisanal mining sector in these regions now high on DRC government agenda.
  • 32.  It is a holistic, generic, business approach to community based mining that is contextual in it’s implementation  Product Scope – All metals and minerals  Key elements  Social and economical development  Environmental development  Transparent and traceable (compliance)  Ethical trading
  • 33.  Proprietary communication platform  www.fairmining.com  Best in class information and process management systems and infrastructure  Fully integrated management information systems  Real time KPI monitoring and management facilities  Balanced scorecard methodology implemented  HF Radio based email facilities in rural areas  RFID tracking  Detailed financial and revenue distribution model
  • 34.  Secure chain of custody module (mining certificates of origin)  Trading platform  Ethical metals and stones trading platform  Baseline traceable and transparent  Level 1 – fully independent certified FT/FM products  Gold and associated metals  South America – premium 10-15%  Level 2 – internally verified sourced minerals from fairmining partners/products  No premium  All metals  Incl 2nd party ethical products  Level 3 – recycled metals  Communities and projects (social networking)
  • 35.  Kalminco, the first majority locally owned Congo minerals company in North Kivu  80% of profits stays in the Congo  Very attractive ROI to investors (eg. Phase 2 gives 100% ROI in 12 months)  Will become operational as part of the DRC government’s initiatives to clean up the mineral trade in North Kivu
  • 36.  Project Kivu  Three more Fairmining implementations are under negotiation and will become available soon  600 km2 concessions to be developed in DRC – business plan available in November 2010  Ghana – early 2011  Sierra Leone – early 2011  Investors that are seriously looking for both high social and financial dividends are welcome to talk to us
  • 37. GLOBAL MINING INVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:
  • 38. 29 September Global Mining Investment Conference Mike Davis Team Leader, Conflict Resources Global Witness mdavis@globalwitness.org
  • 39. What’s being done to tackle the trade in conflict minerals? • US legislation – provisions on conflict minerals in financial reform act • UN Security Council due diligence guidelines for companies sourcing from Eastern DRC • OECD standards on due diligence for companies sourcing minerals from conflict-affected areas • Certification schemes: German government and ICGLR • Industry initiatives • UN Sanctions
  • 40. Key elements of supply chain due diligence 1. Conflict minerals policy 2. Supply chain risk assessments 3. Remedial action 4. Audit 5. Public reporting
  • 41. Companies involved in / investing in the minerals sector should: • Ensure due diligence on supply chains • Back legislation on conflict minerals in Europe to match what’s just been introduced in US Companies involved in / investing in the diamonds sector should: • Ensure due diligence on supply chains • Ensure a stronger commitment to human rights by the Kimberley Process
  • 42. 29 September Global Mining Investment Conference Mike Davis Team Leader, Conflict Resources Global Witness mdavis@globalwitness.org
  • 43. GLOBAL MINING INVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations: