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Perception and Reality;

The Australian Mining Industry and Environmental Performance in the 21st Century.

The 26th annual Essington Lewis Memorial Lecture
to the
Australasian Institute of Mining and Metallurgy

delivered by
The Federal Minister for Environment and Heritage
Senator the Hon Robert Hill

October 18, 2000

In politics as in mining, all too often "perception is reality."

The reality of your industry is that mining makes up around 40 per cent of Australia's merchandise exports each year, contributing around $40 billion annually to the Australian economy.

The industry is a major employer with more than 80,000 people directly employed in the mining of minerals, oil and gas with estimates of more than 300,000 further indirect jobs from manufacturing downstream products related to the mining sector.

According to the Minerals Council of Australia, the industry is responsible for payments of almost $5 billion a year to the government in taxes, royalties and transport levies. The industry has played an invaluable role in the development of regional Australia, being responsible for the establishment of new towns, ports, airfields, and rail transport.

Yet the perception is that you are part of the old economy and are all too often valued accordingly in the markets - often behind new economy players that have never turned a profit.

Furthermore, the development and uptake of new environmental technologies both in the production and mine remediation stages has increased to the stage where the dollar value of Australian exports of mining technology, equipment and services rivals the export earnings of the wine industry - yet it is the wine industry which receives the plaudits.

From an environmental perspective, the mining industry has made significant progress over the past decade particularly through initiatives such as the Minerals Industry Code for Environmental Management, the increasing interest in the use of Public Environmental Reports, and the recently announced Global Mining Initiative.

Yet a recent survey found that 52 per cent of respondents believe that the mining industry is causing major damage to the environment. In contrast, the same survey found that only 21 per cent of respondents believe the agriculture and food industry is causing major damage. These findings again raise the question of perception versus reality.

The reality is the mining industry disturbs less than 0.02 per cent of Australia's land area. The industry claims credit for the planting of more than three million trees every year as part of its mine rehabilitation efforts. In the 1998 financial year alone, the industry invested $245 million on rehabilitation of sites.

In contrast, the reality of our past mistakes in land management, particularly in relation to agricultural production, is that an estimated 12 million hectares of land is at risk from dryland salinity. In addition to this, one third of Australia's rivers are in extremely poor condition and, as you would all be aware, warnings have been sounded that within 20 years Adelaide's major source of drinking water will fail World Health Organisation standards in 2 days out of 5. Land and water degradation is estimated to cost up to $3.5 billion a year while some of the more extreme estimates have placed the total salinity repair bill at $65 billion.

Excessive landclearing goes on unchecked in Queensland, questions have been raised about the effectiveness of land clearance controls in New South Wales, and some states continue to drag their feet on implementing the water reforms they agreed to in 1994.

And yet the perception of the public is that the mining industry poses a far greater threat to the environment than the continuation of poor land management practices in the agricultural sector.

Part of the answer to this puzzle can be found in a discussion paper on environmental issues on your Institute's own web-site which states;

"The historic environmental performance of the minerals industry, although lawful at the time, is less than what is expected of the industry today. Past practices have resulted in substantial degradation - such as at former operations at Mt Lyell in Tasmania - and today's industry has been judged guilty by association. Situations such as the disposal of waste rock and tailings from the Ok Tedi mine in Papua New Guinea only reinforce the public perception that the industry is 'dirty' and environmentally irresponsible."

This view puts forward two reasons why the public still holds negative perceptions of the mining industry - substandard performance within Australia in the past as measured by today's standards and unsatisfactory outcomes by some operators overseas.

Before discussing these two, however, I would also propose a third reason - that being the changing community expectations in relation to the environment.

Since the mid-1970s, Australians have become increasingly aware of the need to protect their natural environment. Iconic issues such as the mining of Fraser Island and the proposed dam on the Franklin River helped move the environment on to the front pages of the newspapers and via television into the living rooms of homes around Australia. This in turn led to the integration of environmental issues into our education system and again into our households through the uptake of recycling. More and more companies began to embrace the concept of sustainable development while environmental protection and biodiversity conservation became mainstream political issues.

One need only look to the stunning achievements of the recent Sydney Olympics -the so-called Green Games - for proof that Australia has become one of the most environmentally progressive nations in the world.

As its awareness of environmental issues has increased, so too has the community's expectations of industry and government in regards to environmental performance. Australians now rate environmental protection as being of equal importance to economic growth. So despite the environmental advances made by the mining industry in the past two decades, the community will always expect more - the environmental high jump bar will be continually raised. The challenge for the mining industry is to communicate the environmental achievements it has already made while continuing to pursue even higher benchmarks in environmental performance.

This is consistent with the industry's approach to changing the reality of its environmental performance and dispelling the lingering perceptions of it being a dirty industry - perceptions generated by poor practices in the past.

And I've already made passing reference to some of the actions you have already taken to achieve this.

In December 1996, I launched the first Australian Minerals Industry Code for Environmental Management. It was appropriately recognised as a significant step forward for the industry's efforts to improve its environmental credentials.

The Code encourages the pursuit of environmental excellence and recognises the industry's duty of care not only to the environment, but to the communities within which it operates. The Code incorporates the principles of sustainable development, partnerships with the community, and the development of an environmentally responsible culture. Perhaps just as important is the Code's commitment to openness and transparency through the promotion of regular public environmental reporting.

The Code has since been reviewed with the revised version being released earlier this year. I understand the Code has also attracted attention from other countries and industry organisations interested in pursuing such a model. The Commonwealth will continue to take an active interest in the further development of the Code through its work on the External Advisory Group. With the Code firmly established as a benchmark within the industry, the challenge now is to increase the number of signatories, particularly among the small-to-medium size mining companies.

One of the success stories of the Code has been the increased use of public environmental reporting by the mining industry. In many ways companies such as Western Mining have been leaders in this field not only within the mining industry but across all industry sectors. Western Mining have now released five public environment reports and have expanded the process to include community and social issues. Like many mining companies, they have discovered there are both internal and external benefits from this process. Public environment reporting serves as an internal check to identify inefficiencies within the production process and opportunities to reduce waste and input costs. This would come as no surprise to the growing number of companies who figured out a long time ago that better environmental performance usually translates to a healthier bottom line profit.

But just as important is the external benefit. Public environment reports provide the mining industry with another method to communicate to the broader community all the efforts it is making to improve its environmental performance. Western Mining consults broadly with the community and other stakeholders in the compilation of its annual environment reports and has them independently verified. In doing so, the community is no longer an outsider, suspicious of what is really happening within the company's operations. The barriers are broken down and the community becomes part of the process, creating greater trust and confidence. Regular, transparent reporting of the environmental aspects of the mining industry will go a long way to changing the community's perceptions of the industry and the way it operates.

The commitment to public environment reporting also ensures that the Code cannot simply be used as a public relations exercise and I welcome your Institute's support for the increased use of such reports.

I should also note that the Commonwealth wants to see public environment reporting spread as widely as possible across all industry sectors. Earlier this year we released a national framework for voluntary public environment reports and we have helped fund extension officers in three peak industry bodies to provide advice on and promote the uptake of environmental reporting.

But it's not just the domestic performance of the mining industry which influences public opinion. Mining, like all industries, operates today in an increasingly globalised business environment. Globalisation is breaking down the barriers to Australian mining companies, which now operate in ventures around the world.

The question then becomes, is the duty of care to the environment and the community which is at the heart of your Code of Practice only applicable to domestic situations, or does that duty of care extend to the global environment and the global community?

I refer again to the environmental discussion paper from your Institute's website which says;

"Differences in the degree of environmental protection around the world affect companies operating in numerous jurisdictions. It is no longer acceptable just to adhere to the legislative requirements where a company operates, as many countries have little or no enforceable environment legislation. In addition, lack of uniformity of approach can impact on a company's reputation."

I would take that last point a step further by stating the obvious that it is not just the individual company's reputation which is at stake from questionable environmental performance in an overseas operation - it is the reputation of the entire Australian industry which suffers.

For example, I'm sure if we were to do a quick street poll of the people of Adelaide, very few, if any, would remember the name of the mining company which part owned the Baia Mare mine in Romania. But everyone would remember the television images of thousands of dead fish being taken from the Tisza River. And I'm confident they would all know that it was an Australian mining company which was involved.

So the residual perception is one of massive environmental damage caused by an Australian mining company. It doesn't matter that Australian companies operate at numerous locations around the world and at home in an environmentally sound manner. One failure costs your industry's standing a great deal.

It is clearly a problem which will continue to arise when Australian companies do business in developing nations where environmental standards and mining regulation are not up to world's best practice. While I'm not making a determination on the Romanian incident, the temptation is always there to adopt the lower domestic standard rather than that which would be expected in Australia.

The Commonwealth has taken steps to assist developing countries to adopt and implement more rigorous mining standards, and our mining industry has played a constructive role in this endeavour.

This partnership has seen the development of the Best Practice Environmental Management series covering 21 areas of environmental expertise related to the mining industry. This series is regarded internationally as a benchmark for the industry. We have also translated and promoted the series to other nations, particularly within our region. This not only assists the mining industry in other nations, it also increases the knowledge base of regulators in these countries.

In response to the Romanian cyanide spill, the United Nations Environment Program asked Australia to develop two new units under this series covering cyanide usage, acid mine drainage and tailings dam management. The request was based on the international recognition of Australia's expertise in this area and our government has committed funding toward the production of these new units. The government also supported a visit by an Australian regulator with experience in cyanide management to a special UNEP conference in Paris in the wake of the accident.

In response to a request for aid from the government of Hungary, Australia has committed funding for a mobile laboratory to monitor the health of the Tisza River which was so badly affected by the spill.

While in one sense this is a remedial action, it will also contribute to the future maintenance of the health of the river. It could be argued that the existence of such a laboratory may have alerted authorities to cyanide spill problem at an earlier stage. Many developing nations badly need this support which will help build confidence in safe mining practices.

In addition, the Commonwealth next week will host a UNEP workshop in Perth covering environmental regulation for accident prevention in mining tailings and chemicals management. Around 40 delegates from 17 countries will examine the issue of what constitutes effective regulation of mining operations, drawing on their experiences of what has or hasn't worked. Many of the delegates will be from developing nations allowing Australia to again contribute to improved environmental regulations around the globe. The Commonwealth has committed significant funding to ensure the success of the workshop. I'm pleased with the support and involvement of the Minerals Council in this workshop which again demonstrates that the Australian mining industry takes its international responsibilities and reputation seriously.

A further step for the Australian mining industry would be to ensure that all signatories to the Code for Environment Management commit to observe the Code both in their domestic and international operations. This commitment should also be monitored through references to international operations in the annual public environment report. This would further strengthen public confidence in the industry's performance.

Another recent positive step forward has been the launching of the Global Mining Initiative by the World Business Council for Sustainable Development - a signal that the global community wants to ensure that the mining industry continues to operate and grow on a sustainable basis. It is another opportunity for the Australian mining industry to display its commitment to delivering better global environmental and social outcomes. Again, a central issue for the initiative will be to address the behaviour and performance of mining companies in developing nations.

The Australian Government supports the work being done under the Global Mining Initiative and I can announce this evening that we will commit $100,000 in financial assistance to this effort. I understand our government is among the first to make such a commitment.

So it is clear that if the Australian mining industry wants to shift the public perception of it being an environmentally damaging industry, it must address not only its domestic performance but also the performance of its international operations.

I would like to touch on one final issue of global environmental significance which has not only economic ramifications for the mining industry but also significant implications for the industry's standing in the community - global warming.

I was interested to read that Essington Lewis would often travel overseas to examine the state of the steel industry in other nations. After one such trip in the mid-1930s, which included a visit to Japan, he reportedly returned to Australia convinced that the industry overseas was gearing up for a war effort. His foresight in this regard is credited with ensuring the Australian steel industry was one of the better-prepared sectors of the economy when war was eventually declared.

I wonder how an Essington Lewis would handle the international debate on global warming. His track record suggests he would read the changing mood among key international industry players - changes which have seen major fossil fuel producers such as BP Amoco and Shell International drop their hardline approach on the issue and embrace the "act now" philosophy of the Pew Centre for Global Climate Change.

I assume he would correctly read the desire for action from governments around the world as a reflection of the wishes of their local communities. I think it's also fair to assume that he would be urging his company, his industry and other Australian industries to become more energy efficient and reduce greenhouse gas emissions.

In general, the response of the mining industry to the challenge of global warming has been a positive one and our government has made it clear that we will not allow efficient producers to be disadvantaged by the implementation of the Kyoto protocol.

Both the Australian Coal Association and the Minerals Council are signatories to the Greenhouse Challenge program. Mining industry participation in this program is expected to deliver savings of 8 million tonnes of carbon per annum.

But the mining industry needs to maintain and build on this positive engagement in the issue and in doing so promote its credentials to the broader community. Once again the perception is that mining is bad for greenhouse. The reality is there are many positives. For example the production and export of LNG to the Asian region to replace poor quality coal in power generation. There will be increased demand for light metals, particularly in the transport sector because of the need for greater fuel efficiency. The mining industry is also making major contributions through developing carbon sinks and such processes as capture of waste coal mine gas for use in electricity production.

But the reality of the positive things the mining industry is continuing to contribute to the challenge of global warming can be easily undermined by the perception that some industry players simply won't accept any responsibility nor contribute to a better national outcome. This would be both regrettable and manifestly unfair to those within the mining industry who, in the spirit of an Essington Lewis, have chosen to move forward rather than look backwards.

The picture I have sought to paint this evening is of an industry that has been, is, and will remain vitally important to the Australian economy. Yet it is also an industry that generally accepts its social and environmental responsibilities and is adopting the science and technologies of the new economy to achieve these goals. I have also sought to remind you, however, that the community will continue to expect more and yet meeting these rising standards will be essential to ongoing economic prosperity. I have indicated how the government is and wants to continue working with the industry in achieving triple bottom line success and that when the industry does the right thing it will be supported by the government notwithstanding the political tide of the day.

In closing, may I say it has been an honour to be invited to deliver this address, held in memory of a great South Australian. Your Institute's notes state that this address is delivered by a leader associated with the Australian mining industry. I also note that from the list of 24 speakers over the past 25 years, I am the first Federal Minister for the Environment to deliver the address. This no doubt reflects the changing attitudes within an industry which has now embraced environmental management and responsibility as part of its core charter.

Commonwealth of Australia