Profit versus Purpose – a Mining Industry in a State of Flux

Shareholders and stakeholders need to come to the party to identify solutions to ensure the survival of the mining industry.

Cape Town, 5 February 2014: The balance between sustainability and profitability has always been a difficult one to strike, particularly within the mining industry. All too often, the pursuit of generating revenue is put above the importance of social engagement in the communities that the sector impacts. Although corporate social investment has always been a critical factor in the mining industry, more often than not proper measures are not taken to ensure their tangible impact.

According to DuPont Global Consulting Solutions, as uncertainty and complexity continue to define the context in which mining companies operate, executives are facing pressures to become more competitive and agile, while also delivering tangible value for all stakeholders.

Speaking at the 2014 African Mining Indaba, Simon Herriot, Managing Director, DuPont Global Consulting Solutions had this to say, “The need for, and desire of, mining companies to maximise benefits for local communities is quite clear.  And yet, while many mining companies have bolstered their commitment and understanding of sustainable development, successful implementation remains a challenge.”

He further said, “Sustainable implementation can only happen when executives start to balance shareholder accountability with stakeholder concerns, and company success with social progress. In doing so, executives can provide products that not only address the communities’ need, but the expectations of consumers and society – while accessing new markets, creating demand and spurring growth.

Herriot added that key to this is a belief that the mining sector can truly become a vehicle for positive societal change. Historical impressions of an industry only interested in profit at any cost must be reversed in favour of a more inclusive approach that intends to share benefits of the company being in operation with community stakeholders and company shareholders alike.

The greatest obstacle towards achieving this ideal is twofold – an efficient and productive workforce and finding alternative energy solutions to help fight souring energy costs.

Finding a balance between employment and mechanisation has always been challenging for the mining industry. The best approach, Herriott believes, is one that aligns skills development and educational programmes to future business needs.

“Championing sustainable labour solutions within the mining industry relies on educating and uplifting communities. In many ways, large global entities can benefit from a dedication to promoting skills development. If executed correctly, this can directly serve the business requirements while engaging the communities.”

“Promoting critical skills development in science and mathematics with a view towards training rural youth to become mechanical or industrial engineers, for example, is an approach that can have a long-lasting impact. This allows the mine to focus on implementing mechanization where required to protect profitability, while benefitting from a well-trained and skilled work force.”

The necessity to reduce energy consumption and unnecessary wastage of valuable resources is also critical to the process. This approach demands a long-term dedication from all stakeholders and will not be something that is rectified over-night. “As such it is essential that the mining industry work together to achieve a sustainable solution ” , concludes Herriott. 

DuPont says that Sustainability can be the defining feature of Africa’s growth

Continent well positioned to address the sustainable growth challenge

16 July 2013, Johannesburg:  African companies now recognise the importance of sustainability as a strategic imperative, although many still battle with implementing a comprehensive solution. This is the view of Antoinette Du Randt, Regional Director, DuPont Sustainable Solutions, the operations management consulting firm of the science company.
Du Randt says “after grappling with sustainability for many years, starting with how to define sustainability, there is now raised awareness about the need to continually think about keeping a business sustainable for the long term”. Du Randt ranks sustainability as a key challenge for corporations in the 21^st century and she equates it to the modern assessment of business performance.
 “A key element of sustainability is the creation of social value,” says Du Randt, who points out that companies are under pressure to not only deliver profits for shareholders, particularly evident in mining companies, but also to deliver higher value to government through increased taxes and royalties, as well as communities where they operate, who are looking for employment opportunities and improved facilities.
Sustainability can also become the defining feature of Africa’s growth in the decades ahead, helping the continent overcome the “growth at all costs” trap that has afflicted other countries in the past, whose economic growth has sometimes been accompanied by high social and environmental costs.  
Africa has changed for the better, moving from economic stagnation to being home to seven of the ten fastest growing economies, according to The Economist. This growth has helped build a burgeoning middle class, which has spurred demand for goods and services.   
But for Africa to truly realise its potential it will need to diversify its economy, encourage movement to high value manufacturing and facilitate beneficiation of its vast minerals. Putting in place robust sustainable development strategies will help the continent achieve inclusive growth without damaging the environment or harming the long term use of fresh water resources and agricultural output.
Du Randt points out that DuPont sees sustainability as part of the evolution of the business model and is a goal that companies have to pursue in collaboration with government, labour and communities. Du Randt believes that sustainability is no longer a function of corporate responsibility or compliance, but rather a key growth opportunity that differentiates a company from its competition. “For companies to thrive, the communities they operate in must thrive,”  
Du Randt says as with any other business objective, sustainability needs to be driven from the top of the organisation with a clearly defined set of goals, a buy in from all employees and leadership from board and executive level.
Du Randt points out that companies need a change in mind set and view sustainability as “going beyond corporate social responsibility” to create sustainable shared value for all stakeholders as a strategic imperative.
Sustainability can deliver commercial benefits. Between 1990 and 2004, DuPont estimates that it reduced its greenhouse gas emissions by 72% and has generated $ 10 billion in revenue from products based on non depletable resources.
She also argues that stakeholders need to have realistic expectations from sustainability and that stakeholder education and inclusion is important.
Du Randt argues that the best way for companies to achieve sustainability is to invest in innovation that improves all aspects of business performance, whether its improvement in production while reducing water and energy consumption or by defining market facing goals which deliver product innovation that reduces the environmental footprint throughout the value chain while providing tangible consumer benefits
There is also emerging debate whether companies should be provided with incentives, including financial incentives, to pursue sustainable practices. Du Randt points out those financial incentives are likely to have a limited impact and the companies should pursue sustainability for their own long term interests.
Du Randt also argued that there are already incentives such as tax breaks in place and the ultimate incentive for any company is increased and sustained profitability, gained through an integrated strategy informed by shared value creation and capture.
Du Randt concludes by noting that as external pressures continue to mount, improved sustainability performance is no longer optional, shareholders and stakeholders expect companies to reduce their environmental foot print.

As companies search for opportunities on the African continent and exploit its resources, they should use innovation and a robust sustainable culture to drive improvement.