Archive

Posts Tagged ‘CSR’

Miners’ rescue turns into celebration

October 18, 2010 Comments off

“…The century-old mine, located off a dirt track in the bare hills of the Atacama Desert in northern Chile, was worked the old-fashioned way. Miners blasted chunks of gold-laden rock with explosives, collected the rubble in trucks and sent it up to the surface to be processed at a plant in nearby Copiapó. …

“The mine was in precarious conditions and they always told the bosses, but the only thing they cared about was production,” said Ms Ramírez. The mine owners have apologised for the accident, but said the decision to reopen the mine in May 2008 after a worker died in an accident in 2007 was taken after safety checks by the authorities.”

Source: Financial Times, October 11 2010

Observations:

  • The San José mine, which has been the center point of the mining world’s attention for the last 2 months, faced several significant accidents over the past decade.
  • Chilean mining regulators have been fined after the latest accident because of lack of control. The cost of the mining operation will likely cause the mine to cease operations.

Implications:

  • Many mines in the region are improving safety precautions to ensure regulatory compliance. Still very few mines around the world use advanced cost-benefit analysis that includes the potential cost of accidents. Typically the safety design uses rock mechanical software that calculates a safety margin without taking the cost of reinforcements and potential cost of accidents in account.
  • Some probabilistic techniques attach a value to the risk of fatal accidents, based on the age and salary of the workers and the likelihood of miners hit by falling rock or being trapped. Although this technique is certainly not advisable for deciding whether or not to rescue trapped miners, it would help to include the type of use of drifts in performing cost-benefit analysis for mine design.

©2010 | Wilfred Visser | thebusinessofmining.com

Doubts on Coal India’s coal reserves

September 13, 2010 Comments off

“Coal India is set to begin a roadshow to promote what is expected to be India’s biggest stock listing, even as tightened environmental regulations and a Maoist insurgency threaten to render much of the state-owned miner’s reserves inaccessible. …

Coal India hopes to raise up to Rs150bn ($3.2bn) from the sale of a 10 per cent stake. That would make its initial public offering bigger than India’s largest completed listing, the $3bn offering of domestic electricity producer Reliance Power in early 2008. Coal India claims to be the world’s largest coal producer and accounts for 85 per cent of production in India, which has the fourth-largest reserves on the globe. But it recently revised down its annual production target from 520m tonnes to 486m tonnes, citing delays in environmental clearance for mine expansion. Meanwhile, Indian coal imports are surging, with KPMG estimating a domestic shortfall of 189m tonnes a year by 2015.”

Source: Financial Times, September 13, 2010

Observations:

  • The capital aimed to raise with the proposed IPO is $0.4bln higher than initially targeted. However, the uncertainty caused by changes in legislation have delayed the process by months since the rumours in June.
  • Coal India has 471 mines (March 2010) of which 273 are underground, 163 opencast and 35 mixed mines. CIL further operates 18 coal washeries, (12 coking coal and 6 non-coking coal). The many small operations are organized into 8 core geographical business units.

Implications:

  • A recent ruling on mining in areas populated by tribal people affected the plans of Vedanta to develop an iron ore mine in the state of Orissa. The Indian government is stepping up its efforts to protect the environment and human rights, changing the way many local mining companies have to operate. The amount of capital Coal India will be able to raise depends on the availability of its reserves in areas protected by these rulings.
  • Once a larger part of Coal India is made available to the public, large corporates in the Indian power industry and heavy industry (especially steel: ArcelorMittal, Reliance and Tata) are likely to acquire strategic stakes in the company to secure supplies.

©2010 | Wilfred Visser | thebusinessofmining.com

Chile miners alive but long rescue ahead

August 24, 2010 2 comments

“Specialist drilling equipment arrived on Monday at a small gold and copper mine in Chile to begin digging out 33 miners trapped nearly half a mile underground for 18 days – a Herculean task that could last until Christmas.

Thirty-three miners trapped deep underground for 17 days after a cave-in at a small private gold and copper mine in northern Chile are alive and well, but still face months underground until they can be hauled out.

The men tied a note reading ‘the 33 of us in the shelter are well’ to a drill that finally reached them on Sunday just as hopes of finding them alive were fading following the August 5 accident in the mine in Chile, the world’s top copper producing nation.”

Source: Financial Times, August 23, 2010

Observations:

  • Compañía Minera San Esteban Primera, the owner of the mine, is likely to go bankrupt due to the lost production and the cost of the rescue operation. Other parties in Chile have ensured the funding of the rescue operation.
  • Drilling 700 meter at a 66cm diameter would normally not take more than a couple of weeks. However, no conventional methods can be used because of the risk of collapse or flooding of the shelter.

Implications:

  • The safety regulations for underground mining in Chile will become stronger. Chile is an important mining country, but regulation has mainly focussed on the large mining corporations. Smaller companies will have to increase safety to similar levels, which will reduce the competitiveness of some of the mines.
  • The major mining houses, working together in the ICMM, might consider setting up a global mine rescue team for situations like these. Having a team standby with the best equipment possible to assist in any mine disaster would shorten the time required to rescue miners and increase the likelihood of survival.

©2010 | Wilfred Visser | thebusinessofmining.com

Delhi to target mining groups with ethics law

May 15, 2010 2 comments

“India plans to make corporate social responsibility obligatory for mining companies in reaction to concern over pollution and rebel violence. Santha Sheela Nair, the secretary at the mines ministry, said yesterday the draft Mines and Minerals (Development & Regulation) Act sought to address the breakdown in trust between mining companies and communities. The law, said Ms Nair, would enforce corporate responsibility programmes to provide employment and development. …

Mining companies operating in India should make their local stakeholders also their shareholders to overcome hostility towards the industry, she said, but cautioned that negative perceptions of mining would have to be overcome. The draft legislation contains proposals to offer equity to communities whose land is acquired for mining projects.

India is the fourth-largest iron ore producer in the world and has significant deposits of coal, bauxite and chromite. Local mining companies include listed companies such as Sesa Goa, Sterlite, Tata and the Steel Authority of India. They also number less internationally known iron ore miners such as Obulapuram Mining and Anantapur Mining, owned by the powerful Reddy political dynasty in Karnataka.”

Source: Financial Times, May 3 2010

Observations:

  • Conflicts about the distribution of benefits from mining have fueled unrest caused by Maoist rebels and other minority groups in India.
  • A large proportion of the mines in India are run by relatively small mining companies. Many of these companies do not have a strong corporate social responsibility (CSR) program.

Implications:

  • The Indian government will slowly enforce social responsibility standards that are in line with the standards used by the established multinational companies. However, in some areas with strong minority groups, this will not be enough to satisfy the local population.
  • Similar problems can be observed in any mining area where groups of disadvantaged minorities claim ownership over the land and resources (e.g. Australian aboriginals, Latin American indigenous people, African tribal regions). Mining companies should put effort into specifically meeting the development needs of these groups.