2022 will be a year of recovery for the mining industry, as it rebounds from Covid-19 and begins to increase production to pre-pandemic projections. However, the continual threat of further Covid-19 variants and the increasing pressure to adhere to strict environmental, social, and governance (ESG) guidelines will mean that miners have to remain diligent, flexible, and alert to changing political, social, and environmental conditions to maintain a steady recovery.
We speak to Boris Ivanov, founder of international natural resources operator Emiral Resources, about the state of the recovery, the importance of ESG in retaining the confidence of local and international stakeholders, and supporting continual growth in the sector.
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Zachary Skidmore (ZS): What commodities do you see rising in value the most over the coming year and why?
Boris Ivanov (BI): The world is continuing its recovery from the pandemic apace and so is the minerals industry. Since the second half of 2020, the sector has rebounded swiftly and we have seen rising demand for most mining commodities. These conditions will remain in 2022 and beyond. While gold did not have the best year in 2021, its popularity is expected to steadily rise this year, owing to growing inflation across the world and its standing as an age-old, inflation-proof commodity.
Copper will be another metal to watch out for after a strong 2021. The copper market is forecast to support AISC (all-in sustaining cost – a modern cost of production metric mostly used in gold and non-ferrous metal extraction) margins over 100% in 2022. Nickel will be another metal to watch as its trends are similar to copper, and growing interest in energy transition metals will buoy cooper and nickel prices above average.
ZS: How will Omicron and the potential discovery of further variants impact mining operations globally?
BI: The pandemic had a rather severe effect on the mining industry, but the sector has demonstrated resilience with a strong rebound that began in the latter half of 2020. Omicron’s emergence has again delayed recovery though, with latest reports from mining giants like BHP and Rio Tinto warning of further disruptions, chiefly labour shortages, as the variant courses through the world.
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Omicron’s effect has also been keenly felt in Latin America, with top mining nations like Peru, Chile, Mexico, Brazil, Argentina, and Colombia all seeing rapid increases in Covid-19 case numbers, which has in turn hurt productivity. However, with growing vaccination coverage and the prospect of nationwide lockdowns unlikely, the industry will be relatively insulated, and the supply chain will be able to recover quicker as compared to when the pandemic first hit.
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By GlobalDataZS: How important are ESG concerns in the delivery and development of Emiral Resources’ mine operations in 2022?
BI: I believe we should start by not labelling ESG as a “concern” – it is an integral part of modern mining operations. ESG issues are taken extremely seriously at Emiral Resources.
There is no denying that mining is an activity that can be disruptive to both the natural and social environments. It is also one of the oldest and most fundamental of human business activities, as it provides all the materials for the rest of our economy. Every single object that we produce, buy, and use starts with sourcing its basic components through some form of natural resource extraction.
Therefore, it is the governance element of ESG that must drive action that mitigates or re-balances the disruptive nature of mining. It is crucial to understand that mining companies address these issues head-on, take proactive action, and build an operating culture where ESG is an integral part of work.
A positive ESG record has a direct impact on gaining access to customers, securing, and maintaining funding and, most importantly, guaranteeing good neighbour relations with local communities. Producing tangible change in the living standards of the people, who call mining areas home, is the only sustainable way to operate a project whose lifespan is measured in years and decades.
It may be surprising, but it starts with listening to the local people, not bringing one’s preconceived ideas of what is “good, responsible, and sustainable”.
[This means] not even taking leads from the central government of a country but talking and establishing connection at the village and town level, and then using superior logistical and management expertise (coupled with access to funding, of course) to address the often very acute local challenges. That is what builds mutual trust, and that is what brings sustainability to the environment and to the mining project itself.Maintaining a strong ESG record can also translate into meaningful savings from reduced energy costs, environmentally friendly use of water resources, and an overall improvement in resource utilisation. ESG issues will continue to grow in prominence in 2022 and beyond. Emiral will continue to to not only identify key ESG challenges across all our projects, but also maintain its commitment to implementing comprehensive solutions on the ground that provide tangible benefits to all stakeholders.
ZS: How critical is working with local communities throughout the planning, operation and decommission of mines?
BI: Local communities need to be at the front and centre of the entire mining process and provided exhaustive information right from the first stage. Prioritising the development and maintenance of strong partnerships with local communities either with an interest in or impacted by a mining project is crucial.
However, it is important to understand that working towards the benefit of local communities entails a long-term approach to effect systemic change that mainstreams the creation and sustenance of local community partnerships.
One thing that mining companies can do to promote inclusivity in the local community is to ensure that they do a better job of supporting ancillary industries and jobs around the mining project. Local procurement of goods and services goes a long way in job-creation in the immediate vicinity of the project, utilises the local economy, and in turn develops more options that have the potential to thrive even after the mining project has been decommissioned.
In coordination with local community leaders, investments in local infrastructure – such as water, irrigation, roads, educational, and health facilities – also produce a lasting effect on the local standards of living.
Mining companies also need to push governments, both local and central, to put in place policies that strengthen educational skills of the labour force, ease access to financing, and make infrastructural improvements in areas around the mining project.
ZS: How can the environmental impacts of open pit mining be alleviated?
BI: With just under half of the world mining occurring at the surface, open pit mining is here to stay. While open pit mining increases efficiency and enhances safety, however, its environmental impact is indeed serious. Reclamation of the mining pit is one of the most popular methods to lessen environmental damage through the dragline and back haul method.
Biological reclamation approaches through the use of microbial fertilisers, improvement of barren land, restoring soil fertility, and techniques to balance the proportion of sand and mud can also be implemented to alleviate damage inflicted by open pit mining. Preventing acid rock drainage through the flooding of old mine pits, sealing of exposed surfaces, and isolating contaminated water through stratification are also effective means of guarding against sustained environmental damage.
ZS: How has the improvement of extraction methods on gold mine sites improved over the past five years?
BI: While extraction techniques for gold are constantly evolving, one key advance has been on developing awareness and solutions to eliminate cyanide, a highly toxic chemical compound, in the leaching process. It is extremely expensive to detoxify cyanide and even after this economically intensive process, the risks of using this compound are not eliminated.
However, the use of a potassium permanganate to glycine system, used in leaching gold from ore deposits, and the use of a benign reagent has brought forward a safer and much more environmentally friendly extraction method. While this process is still not widely used and is currently under development, it is a crucial step towards eliminating the use of cyanide and can be counted as one of the biggest improvements in extraction process in this highly competitive industry.
ZS: How has Emiral Resources worked to address the challenge of mercury use among traditional small-scale miners?
BI: Estimates say that there are just over 44 million artisanal miners around the world, with millions more dependent on them according to Delve, a global platform for [artisanal and small-scale mining] (ASM) data. The vast majority of artisanal miners use mercury to extract gold from ore – this technique has been known to humans since at least Ancient Egypt, seven thousand years ago.
While there are cleaner and safer alternative practices and technologies, artisanal miners often ignore the threats that mercury poses to human health and lack the capacity, education, funds, and incentives to adopt good mining practice. Many artisanal miners are stuck in a poverty trap; they must mine to live. This has resulted in [artisanal and small-scale gold mining] (ASGM) being the single biggest source of mercury pollution in the world, by one estimate contributing almost one-third of global mercury air emissions.
While the Minamata Convention on Mercury encourages countries to consider legalising or formalising ASGM and drawing up national action plans to reduce and eliminate sources of mercury within their borders, challenges remain, especially as the cost and value of gold keeps rising.
Since the pandemic, gold prices have reached historic heights. Consequently, ASGM, including deadly illegal gold mining, has flourished from African states like Ghana or the Democratic Republic of Congo, to Indonesia in Asia and Brazil and Bolivia in South America.
Access to financing is a major barrier to transitioning miners off mercury to cleaner technologies. Being a commercial operator, our approaches are clearly limited by existing national government regulations and the scale of operations in a given area. At Emiral, we provide solutions on a local scale, that try to cover as wide a surrounding area around the project site as possible. One of the obvious advantages of modern extractive technology is much higher gold yields.
Thus, one of the win-win solutions that we, with the consent and support of the authorities, have pioneered in Sudan is offering to buy gold-bearing rock from the artisanal miners, eliminating the need for them to use polluting and dangerous mercury extraction. A gold-testing lab that we maintain at our production site is also made available to local artisanal miners, who bring us their finds and immediately learn the gold content.
They then get their payment for the weight of gold that can be extracted using a modern plant, which is easily 30%-60% more than what they would receive using mercury.
Employing local personnel and providing training is another way to disseminate knowledge about more efficient ways of gold production. By word of mouth, such knowledge travels around and in time brings more traditional miners to the program, since they work less and get more money, while our plant produces additional gold (from which, it should be added, the national and local government gets more tax income).
It is a rare case of positive outcomes for all stakeholders. Creating opportunities for local employment, not only at our project but also through ESG programs establishing schools, hospitals, and more arable land through irrigation, to some degree reduces the pressure to engage in subsistence artisanal mining, as other jobs or additional family income become available.
Witnessing the magnitude of this extremely serious problem on the ground, we, at Emiral, obviously understand that we make only a small contribution to addressing it. Doing it successfully on a national or continental scale will require more than just making it easier for small-scale miners to get permits or buy equipment.
The effectiveness of formalisation depends on a government’s ability to simultaneously address related development issues, such as youth unemployment, poverty, political conflicts, and support for agriculture. Some developing countries may lack the financial and human resources – or the political will – to tackle this complex issue wjich is rife with environmental, regional security, and societal implications.
