The global battery market is forecast to grow 40-fold by 2050, a rapid demand increase that is placing extreme pressure on mineral mining. But while the mining sector has long been associated with Environmental, Social and Governance (ESG) considerations, its role to mitigate risks, enhance sustainability and promote long-term financial performance has never been as important.
ESG is increasingly being seen as a growth opportunity for mining companies and those that take a proactive approach to ESG will reap financial rewards from sustained value growth. This article highlights how mineral mining companies can future-proof themselves by including four key elements in their ESG strategy.
A glimpse into today’s mineral mining landscape
With the global transition to net-zero comes a rapid shift to clean technologies such as electric vehicles, solar and wind power, all of which are dependent on high-performance lithium-ion batteries. These batteries however utllise a significant amount of critical minerals and the rapid growth in demand has placed astronomical pressure on mining for critical minerals such as nickel, cobalt and lithium.
How to future-proof your ESG strategy
Sustainable critical mineral mining is going to play a key role in us reaching net-zero by 2050. As the ESG revolution grows in momentum, it is clear that in order to achieve long-term sustainability mining firms will need to offer future value growth over and above delivering the necessary capital returns.
To future-proof themselves, mineral miners should adapt their ESG to include four elements (PwC).
1. Expand the ESG strategy to include stakeholders beyond shareholders and government
The operating environment has changed for today’s mining companies where they are required to engage with stakeholders beyond their shareholders and government. Now they are also expected to satisfy the demands of investors, local communities and NGOs amongst others which requires a greater level of preparation, planning and ESG strategy alignment in response to their needs and concerns.
2. Manage change with a people-centric approach
With the transition to a green economy, mines too will need to adapt their operations to ensure they reduce their carbon footprint. Such changes have a knock on effect on employees and the various stakeholders and managing them with a people-centric approach will be crucial.
3. Improve regulatory efficiency
Maintain high levels of regulatory compliance whilst simultaneously streamlining the project approval process. This can be done by pre-empting regulatory hurdles and collaborating with government to improve the process for reviewing and approving new mining projects.
4. Bolster supply chain resilience
Starting with the COVID-19 pandemic, followed by geopolitical tensions triggered by the war in Ukraine, the world is facing an unprecedented era of uncertainty which has placed major pressure on global supply chains. To improve its supply chain resilience as well as adequately address ESG concerns, mining companies need to improve visibility.
The rapid rise in demand for critical minerals has put mineral mining on an unparalleled growth trajectory. To reap the rewards of sustained value growth, mineral mining companies can future-proof their ESG strategy by adequately addressing all stakeholders, taking a people-centric approach, improving regulatory efficiency and bolstering supply chain resilience.
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