Mining for corporate social responsibility – Canadian Government Executive

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June 26, 2012

Mining for corporate social responsibility

The Canadian mining industry is responsible for over 4.5 percent of the nation’s GDP. It has contributed to opening up and sustaining northern communities in Canada and countries around the world. But as with any human activity, social, economic and environmental “harms” can arise. How does an important industry like mining mitigate harms and maximize social benefit abroad?  
 
Tye W. Burt is the president and CEO of Kinross Gold Corporation. He joined the company in 2005 after serving as head of mergers and acquisitions and strategic transactions for Barrick Gold Corp. He spoke with CGE advisory board member Vic Pakalnis.

What do you see as the essential elements of good corporate social responsibility, both in Canada and abroad?

We have to start with the premise that the world needs raw materials, hard rock minerals, and precious metals on an ongoing basis. Once you accept that premise, the question is: how do you minimize the environmental impact of extracting these materials, maximize the positive economic and social benefits for the local communities, operate in a safe and healthy way for your employees, and make a profit for your shareholders? Once you triangulate all of those premises, it becomes very clear what you have to do. Simply put, you have to be a responsible miner not only because it is the right thing to do but also because it is good business.

To successfully do business in the communities where we operate, we need to earn the support of the people who live there. There are many examples of mining companies failing to gain local support and paying the price with project delays and production interruptions. It is a clear business advantage to not only have a good corporate responsibility (CR) reputation, but to also deliver on your CR promises – that is how you gain your social license to operate.
   
For Kinross, our approach to CR starts with our four company values: putting people first; outstanding corporate citizenship; a high performance culture; and rigorous financial discipline. These are the foundations of how we do business. The very first value, putting people first, means having the best people running our operations and directing our business. It also means delivering them, and their employees, home safely every night. That is the fundamental premise that we start with: zero tolerance for accidents, health and safety problems and notices of environmental violation. No company is perfect, but our statistics are very good and I am extremely proud of them.

A key aspect for a global company operating in six different countries is setting consistent standards across all our operations in all countries. Our policy is that a miner in Ecuador, or the U.S. or Russia should have the same safety standards, the same workplace protection, the same attitude toward environmental stewardship, and the same attitude toward engaging stakeholders and the local community in a meaningful way. We expect all our employees to live our four values, and put them to work every day. We recognize this internally and give out a set of awards every year, the Living Our Values Awards, to celebrate employees who best exemplify and embody each of our four values. By making our values part of the company’s DNA, we feel we have a business proposition and a stewardship proposition that is quite attractive for the governments that are hosting us. As a result we have a very good reputation globally for corporate citizenship. For example, Kinross was named one of Canada’s Top 50 Most Responsible Corporations by Maclean’s magazine last year, one of only two mining companies who made the list.

What advice would you have concerning public policy in this area of corporate social responsibility? In particular, would regulatory action create a more level playing field for the mining companies?

It depends on what kind of regulatory action. When you look around this office, or look at the Canadian mining industry in general, I think you’ll find people who are fundamentally responsible, law abiding, hard working, and committed to safety, health and the environment. I don’t see anything endemically wrong with a corporate model for developing assets, and I don’t think it necessarily needs more layers of government oversight. To me, the government sets the basic playing field rules, but it’s up to corporate citizens and their employees to live up to those standards.

I believe Kinross offers world-class environmental stewardship and health and safety practices. Our practices are in compliance with the law in the countries where we operate, and on many occasions, our efforts go beyond just complying. We reach a high level that is uniform across the company.

Mining has led the recovery in the stock markets. What are the sector’s economic prospects, nationally and internationally, and are they sustainable?

Countries like China, India, Brazil and Russia are growing rapidly in terms of economic strength. Major consuming areas like the United States, Europe, and the Far East are going to underpin continued growth in the consumption of materials, and I believe the pressure to find and use materials is going to continue. Whether it is minerals, precious metals, or oil and gas, the world is going to consume more and more. With that pressure on the demand side, the supply side has to keep up. In a world of scarce resources, it puts tremendous pressure on finding new resources and developing them responsibly. I think it’s a world that it is going to continue to accelerate in consumption and the big question will be how we manage our stewardship of that growing supply responsibly.

Commodity prices and the equity values of the companies that own the commodities have recovered quite significantly, and I think that trend is going to continue. However, to get at these commodities in the future, it is going to require more capital, and venturing into more remote regions. At Kinross, we’re mining in arctic conditions at the Kupol mine in Russia and the Fort Knox mine in Alaska. We’re also mining in the Andes in Chile, at almost 4000 meters above sea level. We’re mining in some very difficult conditions and our peers are doing the same.

Turning to another aspect of corporate citizenship, what are your views regarding corporate support for higher education like universities?

We have a strong commitment to three fundamental charitable areas: the environment; the health of the communities where we work; and to young people and their education. We have strong commitments to Queen’s University and to the University of Guelph. At Guelph, I sit on the Board of Governors and chair a research and fundraising campaign in life sciences because I believe we have to keep investing in young people and research capacity and the educational benefits that it brings.

I am a great believer in research, and I think that as government funding slows it’s going to be the responsibility of not only individual citizens but of corporate citizens to pick up that slack. The relationship between the public sector and the private sector, between the educational sector and corporations, is going to have to grow stronger, and it’s a duty on both sides to figure out how that is going to work. 

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