Creating Shared Value in the Mining Industry - AusIMM · •Customer – we have to ... value...
Transcript of Creating Shared Value in the Mining Industry - AusIMM · •Customer – we have to ... value...
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Economics - simplified
Current premise
The planet
provides infinite
natural capital –
economist and
financiers
determine where
financial capital is
invested to delivery
financial growth
and prosperity.
Future premise
How can we use
the financial capital
available in the
economic system
to create prosperity
for people and
planet?
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Strategic Investment Decision Evaluation Models (Joubert,
2014)
Causes of project delays from a survey of 190 delayed
projects (Goldman Sachs, Xtrata, 2012)
Investment - measures
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Causes of conflict (Rachel Davis & Daniel Franks © 2014 by the CSR Initiative at the Harvard Kennedy School)
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Creating Shared VALUE (Porter and Kramer, HBR 2011)
CSR CSV
Value: Doing good Value: Economic and societal benefits relative to cost
Citizenship, philanthropy, sustainability Joint company and community value creation
Discretionary or in response to external pressure
Integral to competing
Separate from profit maximisation Integral to profit maximisation
Agenda is determined by external reporting and personal preferences
Agenda is company specific and internally generated
Impact limited by corporate footprint and CSR budget
Realigns the entire company budget
Example: Fair trade purchasing Example: Transforming procurement to increase quality and yield
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The Capitals – beyond the single and triple bottom
lines
Industry example
Sasol Video:
https://www.youtube.com
/watch?v=-zELkQ6BO4E
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Mining and Metals – EY Risk Radar
RISK
10. Access to water and energy
9. Balancing talent requirements
8. Sharing the benefits
7. Infrastructure access
6. Price and currency volatility
5. Capital projects
4. Resource nationalism
3. Social license to operate
2. Capital dilemmas
1. Productivity improvement
CAPITAL
10. Natural
9. Human/ Social
8. Social
7. Manufactured
6. Financial
5. Manufactured
4. Social
3. Social
2. Financial
1. Financial
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Financial Capital Improvements:
Improved NPV, IRR, payback period
Many scenarios reviewed & tweaked
Theory of Constraints applied
Social and Human Capital improvements:
• Identified further initiatives to strengthen workforce performance,
• Assisting in developing local enterprises,
• Improving health facilities and road safety.
Natural Capital improvements:
Identified initiatives with potential to reduce electricity and water usage
Case Study – Platinum mine – Creating shared value
Base Case
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Cost of Sustainability Initiatives
• Estimated to be approx. 3-4%
of total NPV – worst case
• The NPV would be reduced by
up to 20% with 1 year delay and
more than 40% with 3 years
delay
Risk Reduction
Reducing the risk that licence to
operate issues will lead to conflict
Reducing the premium added by
project financiers to account for
project risk
Case Study – Platinum mine – Creating shared value
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Miners in Queensland operate in an
unpredictable environment affected
by global demand for commodities.
While in the short-term it’s easy to
make productivity gains through
supply chain cost reduction
sustainable long-term growth
requires a different approach.
The sector needs to collaborate to
create sustainable and bankable
gains through investing in
intellectual capital, innovative
policy and shared value throughout
the entire supply chain linked to
consumers needs.
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Designing the future together mining in Queensland (Workshop held 2 August 2016)
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• The future is uncertain – there is a need to be agile
• Collaboration amongst all stakeholders in the value chain is
critical to create a prosperous future
• Social licence is imperative to combating risks to the sector
• Communication and education must promote shared value
and tangible economic benefits
• We need to harness and direct intellectual capital and
productivity to the right problems
• Collaboration – between all participants including miners,
mineral processors, manufacturers, shareholders, investors
(e.g. pension funds), communities and the customer
• Shared value – there needs to be tangible benefits
demonstrated to all stakeholders
• Communication – there is a need to educate but also to listen
• Community – communities need to be at the heart, not
disenfranchised spectators
• Customer – we have to understand our customers
Themes
Common threads
Themes, common threads and starting points on
explorations
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Conclusions
To achieve success, mining companies must look beyond traditional tools of engagement, dialogue and discourse to build integrated teams and identify innovative ways in which their business can benefit society. (Fraser and Scoble, 2015)
CSV provides a business based concept for this transformational change
Case Study - enterprise wide optimisation with a SUSOP Five Capitals approach to community and environmental sustainability issues at the Pre-feasibility stage with benefits across the Five Capitals.
Opportunities:
Enhanced community collaboration – incorporation of community representatives into the Capitals balancing discussion Better understanding of Financial Capital Enhanced ownership of outcomes
Intellectual Capital - upgrading in the mine supply chain for creation of additional value through enhanced expertise, technology and innovation
Capital Optimisation – can the Capitals be objectively optimised in parallel?
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