The way mining companies do business is undergoing a fundamental transition that is part of a larger global shift toward greater accountability and common industry standards, says an official with Canada's second-largest gold producer.
"The operating environment for all international industrial enterprises is being transformed in response to issues that were of concern principally, in some instances uniquely, to mining," said Jim Cooney, general manager for strategic issues with Placer Dome Inc. of Vancouver.
Cooney was in Alberta last week to speak to audiences in both Calgary and Edmonton as part of a series hosted by Alliance for Capitalizing on Change.
He noted a new, little-noticed global regulatory system - more comprehensive than today's patchwork system followed by many multinational companies - is taking root in the international business community, and that its effects are gradually changing the rules of the game.
The system, said Cooney, comes with a new set of global standards - ranging from dictating to corporations the environmental and approval systems they must employ, their relationships with indigenous peoples, their impacts on forests to the resettlement of populations, the protection of biodiversity, the management of health and safety issues, and the need to respect the rights of labour.
"When it arrives, the world of international business will change dramatically, and I would suggest much for the better for all concerned," said Cooney.
Placer Dome Inc. operates 17 mines in seven countries. The company has a sustainability policy that emphasizes minimizing environmental impacts and planning for reclamation, as well as aboriginal consultation. It is a supporter of the United Nations Global Compact with Business, which asks the private sector to respect a set of core values within its sphere of influence in areas of human rights, labour standards and environmental practices.
Cooney said such "soft regulation" can be applied without a global enforcement body through financial incentives, public perception and peer pressure, "with the approval and support of national government but not, at least initially, with direct governmental implementation." Bodies such as the World Bank and its affiliate, the International Finance Corp. (IFC), together with the world's major commercial banks will impose these regulations, said Cooney, emphasizing that the process has already started.
During the past year, 28 international financial institutions have adopted what they call the Equator Principles, under which all industrial projects with a capital cost of $50 million or more will be subject to World Bank-IFC Safeguard Policies (performance standards), said Cooney.
Those 28 institutions represent more than 75 per cent of all commercial bank financing for industrial projects around the world.
In Canada, both the Canadian Imperial Bank of Commerce and the Royal Bank have already signed, and it will only be a matter of time before the other Canadian banks join in, added Cooney.
"It appears probable that within a year, any major industrial project that involves World Bank or IFC participation or that requires commercial bank financing will be subject to these global standards," he said.
The mining industry has been on the forefront of many of these changes, Cooney said. In the mid-1990s, the industry was faced by rising environmental standards as governments became more sensitive to public concerns. Sustainable development, using current resources while respecting the need for future generations, soon came to be an industry watchword.
In 1995, Cooney said, Placer was a lone industry voice calling for the integration of mining with sustainable development.
Later, non-governmental organizations (NGOs) - initially seen as opposition advocacy groups - would soon become part of the process.
But not all international companies embrace voluntary self-regulation, noted Cooney.
"The exploratory steps of a few companies and institutions six years ago have profoundly transformed the global mining industry - both the companies themselves and the context in which they do business. The revolution in mining is still unfolding," said Cooney.
(Laura Severs can be reached at laura@businessedge.ca)
