Mining sector commits 9 percent of revenue to ESG initiatives by 2025

MINING companies have indicated plans to spend approximately nine percent of their revenues on Environmental, Social and Government (ESG) initiatives in 2025, with an additional two percent of revenue to be channelled towards community development.

ESG represents a set of criteria utilised to evaluate an organisation’s business practices and performance concerning sustainability and ethical matters.

Companies face increasing demands to substantiate the presence of a coherent sustainability strategy seamlessly integrated into their business model and effectively executed.

Moreover, they are progressively obligated to demonstrate and be accountable for the impact of their operations on communities and the environment.

According to the latest Mining Industry Prospects for 2025 report findings released on the side-lines of the 27th Mining, Engineering, and Transport Expo (Mine Entra) last week, 98 percent of mining executives highlighted that in pursuit of creating a sustainable future for all, they are mitigating mining operations’ negative impacts through investing in several areas.

ESG matters identified by mining firms include cleaner production technology, investment in renewable energy and reforestation and rehabilitation programmes.

“Survey findings show that mining companies plan to spend an average of nine percent of their revenue on Environmental, Social and Government (ESG) in 2025,” reads the report.

“Survey findings also show that approximately 67 percent of respondent mining executives have an ESG policy that guides their investments and operation while 33 percent reported that they were working on compiling ESG policies in 2025.”

On reforestation and rehabilitation, firms plan to partner with conservation organisations to protect critical habitats such as endangered species.

Meanwhile, the state of the mining report notes that all respondent mining executives indicated that they were engaged in local content development and local empowerment initiatives.

Ninety percent of respondents indicated that they have in-house procurement policies that deliberately promote local content participation based on the cost of sales.

To that end, local procurement now accounts for around 70 percent of the total procurement budget and locally manufactured products account for 17 percent of total procurement.

About 70 percent of respondent executives indicated that they were undertaking Supplier Development Programmes that included upgrading manufacturing infrastructure and supporting them in the procurement of machinery to enhance their production efficiencies.

Added to that, the executives said they assist in improving the quality of products, provide off-take arrangements for SMEs to mobilise funding and offer start-up capital and training.

They are also implementing technological transfer through sharing technology and knowledge with local suppliers and partners to enhance their participation in the value chain and collaborating with local manufacturers on quality improvement initiatives to ensure they meet mine specifications.

However, mining executives said poor quality products, long delivery timelines, lack of credit facilities and lack of after-sales backup were undermining local content in the mining industry.

The State of the Mining Industry Survey was conceived in 2015 to provide a detailed account of the state of affairs in the mining industry vis-à-vis key performance opportunities, prospects and challenges in the mining sector.

Since its inception, the report has become the main reliable source of information regarding the state of affairs of the performance and prospects of the mining industry.

The survey reports have assisted in bridging the information gap and providing leverage for Government policy as well as strategic planning for other key stakeholders, which include mining houses, investors, financiers, suppliers, labour and communities.