Can software and data improve ESG in mining?

The mining industry remains one of the world’s largest polluters, yet it is a cornerstone of the global economy, and production is not likely to stop soon.

Improving operational efficiency has become the industry’s preferred method for reducing emissions, looking to balance the need to minimize environmental damage with the desire to maintain productivity and profitability. Data analytics companies are seeking to monetize environmental governance and digital ESG best practices in the mining sector.

Number crunchers want to help miners make more informed production and supply chain decisions, while reducing emissions and promoting ESG integration, but will their efforts be enough to offset the environmental damage inherent in mining and its impact?

numbers game

CRU, a business intelligence and advisory service for the mineral, mining and fertilizer industries, is one example of many companies using analytics to change how the sector manages carbon.

The company relies on blending and analyzing data from thousands of different sources and creating insights that clients use to make short- and long-term investment decisions. Then, the data analysis approach that complies with ESG standards also makes a difference in the mining sector.

It has already released a carbon emissions data tool, which helps clients calculate and visualize carbon emissions for more than 4,000 commodity-producing assets globally, and its leaders understand the importance of data to a range of companies across the mining industry. Will Blake, CRU’s chief technology officer, says customers want data-driven insights that help them understand key trends in the market and make informed decisions.

“Decision intelligence and prescriptive analytics help us achieve this goal, supporting clients to better understand the commodity landscape and model the key variables, from production costs to carbon emissions, that drive investment decisions every day,” says Blake.

“Our customers, more than anyone else, rely on decisions made five, 10, and even 20 years ago. Prescriptive analytics allows us to provide them with both projections that look this far into the future and, given that information, insights into the optimal course of action.”

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There is more than just the environment at stake; Data and ESG are a key factor in company performance, and investors and industry leaders are likely to look favorably on companies with strong ESG credentials. Oxford University research found that 80% of companies saw positive share price performance with good sustainability practices. There’s a reason why data companies like the CRU see the money in ESG-compliant data metrics. S&P Global Commodities reports that the Natural Resources Forum, which will be held in London in October 2022, has heard that miners are preparing for new ESG standards and reporting, as demand for the minerals grows.

There may also be a need to standardize guidance from a range of organizations focused on ESG, such as the Responsible Minerals Initiative and the International Council on Mining and Metals, to promote environmental and social acceptance of the sector, according to miners, traders, analysts and financiers at the event.

In addition, the European Union has just adopted a new directive on corporate sustainability reporting. Gillian Davidson, chair of the Sustainability Committee for Copper and Zinc and a major Central Asian producer of the metal, told the forum that the mining sector was “waiting for regulation”.

As a result, an interesting interaction is at stake. On the other hand, global investors and mining companies see regulation coming, adding to their concerns and requirements for ESG harmonization in the extractive industries. However, data analysts see an opportunity to capitalize on this trend, while the green lobby hopes that the extractive industries sector will be more sustainable in the coming years, providing sources of optimism for the future of the sector.

ESG in mining: the broader picture than the data

The role of data providers can only grow. The International Energy Agency (IEA) says there are significant risks associated with ESG impacts for mining projects.

These include geopolitical tensions, armed conflicts, human rights violations, bribery and corruption, emissions, water stress and biodiversity loss. These kinds of impacts could erode public support for mining projects, and they would face increased scrutiny from manufacturing industries, investors and civil society.

catch? The IEA says such screening could limit the supply of important minerals and metalloids, which could hinder clean energy transitions. Mineral wealth, if properly managed, can contribute to public revenues and provide decent economic livelihoods.

However, failure to properly manage these risks may also expose governments and companies to ESG and reputational criticism. The theory goes that the right data can at best prevent or at least reduce these risks.

The Ernst & Young (EY) Top Ten Risks and Employment Opportunities in 2022 for Mining and Metals in 2023 contains some stark facts about the data. It says compliance with the new standards and expectations will require miners to improve data availability, accuracy, reliability, and reliability. One might argue that this will be done through the appropriate analytics providers.

EY also reveals that mining and metals executives are focusing digital investment on advancing data-driven innovation to inform evidence-based decision-making. The top priorities in the EY paper are process intelligence and mining automation, followed closely by the need for new ESG platforms for metric tracking and reporting.

In more detail, EY argues that digital data will play a major role in supporting miners
Implement sustainability roadmaps, including by providing greater visibility across asset and process performance, and better control of energy and water consumption.

EY cites how Garrick Gold Corporation has integrated environmental compliance rules within its real-time operational data platform, helping miners reduce environmental anomalies by 45%.

In addition, EY argues that the right digital tools can support miners in meeting the challenge of reducing Scope 3 emissions; Data analytics, smart sensors, and blockchain can help companies better track, monitor, and manage tertiary domains.

How data can help the real world

“Our reliance on the mining industry has increased dramatically in recent years, following rapid growth in demand for transition metals to support our journey to zero, as they are essential in the production of renewable energy technology,” commented Elena Espinosa, Senior Leader, Social Issues and Acting Head of Administration, Principles United Nations for Responsible Investment (PRI).

It should be noted that the Public Research Corporation is the foremost advocate of responsible investing in the world. The Public Research Corporation acts for the benefit of its signatories and the financial markets and economies in which it operates.

Launched in 2006, the institute has more than 5,000 websites managing more than $121 trillion. Much of this controls the cash that flows to and through global extraction.

“For a long time, the environmental and social impacts of mining have been treated as externalities, and the consequences of this have been manifested in the collapse of tailings dams all over the world,” Espinosa continues.

“These tragedies have caused loss of life, long-term disruption to surrounding communities and environmental damage, the scale of which is not yet fully realized.”

As such, Espinosa argues, it has become critical to address and mitigate environmental and social risks, as well as to remedy when damage occurs in production processes across the global supply chain to ensure the transition is “fair”.

To support this journey, the Investor and Tailings Mining Safety Initiative is working to establish a global repository, an independent monitoring system and the creation of a Global Tailings Heritage Rehabilitation Fund to increase accountability in the mining sector for waste management.

“In addition, the advanced PRI initiative that seeks to drive progress in human rights through more ambitious investor oversight will focus its first phase of activities on human rights risks in the minerals and mining sector.”

Editor’s note: This article first appeared on our sister site Mining technology.

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