The Rise of Sustainability: Changing Public Concerns and Governance Approaches toward Exploration
Alistair MacDonald, Ginger Gibson, 2005. "The Rise of Sustainability: Changing Public Concerns and Governance Approaches toward Exploration", Wealth Creation in the Minerals Industry: Integrating Science, Business, and Education, Michael D. Doggett, John R. Parry
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The risks associated with, geographic locations of, and engagement strategies required by exploration companies have shifted in the last 25 years, largely in response to changing public attitudes and governance approaches. A mixture of growing global environmental consciousness, the rise of international civil society networks, and economic liberalization and government deregulation in the developing world have all played key roles in altering the environment for mineral exploration. Three fundamental tenets of a positive climate for exploration have been altered: access to land, ease and speed of permitting, and the right to mine deposits after discovery. This paper identifies the importance of new stakeholders, including nongovernmental organizations, international financial institutions, and community activist networks; new governance approaches, such as self-regulation, the use of international standards and co-management, and new monitoring and engagement techniques, such as environmental and social impact assessment, thirdparty monitoring, and prior informed consent. The traditional relationship focus between states and corporations has been replaced by constantly evolving relationships among corporations, governments, civil society, and affected communities. Exploration companies, particularly junior companies, must use available tools—early community engagement strategies and available guidance documents from industry associations among them—to adapt themselves to this new focus.
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Global political and economic developments shape both the demand for minerals and primary metals and their supply. Overall, demand has moved broadly in step with economic activity over the past 30 years. Notwithstanding the collapse of the Soviet Union and Eastern Bloc countries, demand grew more rapidly in the second half of the period than the first. The performance of individual products within this general trend largely reflects the specific nature of their main end uses. The geographic center of demand has shifted away from the mature industrial economies of North America, Western Europe, and Japan toward the newly industrializing countries of the Pacific Rim, China, and India. Mine production rose with demand, but not always in precise step. New capacity was required not just to meet demand, even where that was static, but also to offset the continuing effects of ore depletion. There were also changes in the location of production in response to geopolitical forces, the depletion of ore reserves, and the changing economics of extraction and processing. The number of mines contracted, especially during the 1990s, and the scale of mining operations was increased in order to achieve the requisite cost savings. Prices fluctuated in response to changing balances between supply and demand, trending downward from the early 1970s until the early 2000s. Most products witnessed at least one sharp price spike during the period, usually with continuing repercussions. Prices picked up from 2003, but generally not back to their earlier peak in real terms. Profitability varied according to the products concerned. In many years the average rates of return on capital employed have been insufficient to cover the risks involved.