Refining In The Precious Metals Sustainability Chain
This is a truncated version of his keynote speech from the 2019 LBMA Assaying and Refining Conference.
I would like to talk to you about sustainability and why it is important. As part of my presentation I will be covering the sustainability initiatives of the mining industry and I will specifically address the precious metal refining community and recommend actions we should be carrying out to promote and implement sustainable business practices.
Our present economic model is one based on growth and increased consumption while being heavily dependent on non-renewable resources such as minerals, metals and fossil fuels that we harvest from our ecosystem. There are three big issues with this economic model. The first is that it is heavily dependent on non-renewable resources. The second is that the world population is now almost eight billion. By 2050, it is projected to be close to 10 billion. Along with the growing population, life expectancy is rising, and standards of living are increasing. Many of us worry that future generations will not have the access to natural resources, the goods and the opportunities we presently enjoy.
The third issue is the concept of ‘the tragedy of the commons’ which refers to the overexploitation of shared resources by individuals acting in their own self-interest. The planet is our global common. We over- graze it, we over-fish our oceans, we over-mine it, we deforest it, and we waste and pollute our fresh water resources. We also pump carbon dioxide without restraint into the common we call the atmosphere. The net result is that all of us acting individually, in our own self-interest, causes this planetary common to be over-exploited and eventually it will cease to be sustainable.
A great deal of mankind’s development has occurred during the Holocene, the warm interglacial period of the last 10,000 years or so. During this period natural events dictated climate and climate change. We have now transitioned to the Anthropocene period, where human development and activities are having a profound effect on climate change and the planetary ecosystem. This period started with the Industrial Revolution and has been marked by large scale urbanisation, fossil-fuel utilisation, industrialisation, large-scale pollution, a reduction in biodiversity, and large-scale mining of metals and minerals. It is the combination of diminishing natural resources, growing global population and our collective over-exploitation of the global commons that are now profoundly impacting our planet and mankind’s long-term prospects.
All of us acting individually, in our own self-interest, causes this planetary common to be over-exploited and eventually it will cease to be sustainable.
Sustainable Business Practices
These concerns have led to the sustainability movement and a new way of doing business. The Oxford English Dictionary says that ‘sustainable’ is something that is ‘able to be maintained at a certain rate or level.’ This is the essence of sustainability. It is about balancing our present needs with those of future generations so they too can survive and prosper. It is about looking to minimize our impact on the planet. It is about our shrinking natural resources and how we extend them, via recycling and reuse, and in the business world it is about moving from a narrow shareholder focus to being attentive to a broader group of stakeholders.
In the last twenty years or so, we have now started to take a broader view of business and its impact on our ecosystem and society. We have come to the realization that business is not just about shareholders, it is also about a much broader group of stakeholders which includes vendors, employees, customers, the communities we work in as well as the local and global ecosystem within which we operate. Sustainable business practices are about businesses striking a balance between operating profitably while being concerned about the environment and society. Balancing concerns of profit, people and planet is referred to as the triple bottom line approach.
There is a very strong business case to be made for sustainability. It makes our customers happier and this can lead to improved sales. Investors often seek out companies with sustainable business practices as they are viewed as less risky and have long-term growth potential.
Reduced risk can lead to lower insurance costs and a focus on reducing energy usage and waste leads to lower operating costs. Companies with sustainable business practices are often employee focused and incur lower labor costs due to healthier workers and lower employee turnover.
Sustainability thinking become so important that the United Nations has developed 17 Sustainable Development Goals.
These goals are extensive and include objectives for water and energy usage, measured economic growth, ensuring we can all earn a livelihood, industrial innovation, as well as responsible consumption and production.
Challenges For The Mining Industry
One of our biggest global challenges is that our economic development is underpinned by the mining and consumption of non-renewable minerals, metals and fossil fuels. Despite the views of some that sustainable mining is an oxymoron, this is one industry where we see sustainable business practices deeply embedded. Even though mining companies are extracting a resource that cannot be renewed, many of them are looking to do so in a responsible fashion, concerned about the communities that they operate in and motivated to reduce their impact on the environment.
Even though mining is about extracting non- renewable resources, it should be viewed as taking those resources and converting them into human, social, financial and manufactured capital. As we mine, we create wealth, industries, jobs and communities beyond the direct mining activity, and this allows for growth and diversification of our economy. For example, we have sustainable communities, cities and industries that have grown up around mining operation that, like Johannesburg in South Africa, continue on long after the natural resources are depleted.
For a while now mining companies have been in the forefront of the sustainability movement and many of them can point to an impressive list of sustainability initiatives. However, it is important to bear in mind that the mining companies do this because it is a necessary part of doing business.
The Oxford English dictionary says that ‘sustainable’ is something that is ‘able to be maintained at a certain rate or level’.
In addition to obtaining operating permits to open mines, mining companies need a “social license” to operate. They need credibility with local governments and communities to establish mining operations. They need to plan for and demonstrate a long-term commitment to the local communities and ecosystem in which they will be operating. They need to establish post-mining remediation plans and consider what happens to the communities after mining ceases. When mining in new areas, mining companies have to build infrastructure such as road and bridges but oftentimes they also have to build medical clinics and schools and ensure drinking water and food supply.
Mining companies often operate in very remote areas and as a result are very concerned about water usage and energy consumption. As a result, we are seeing the increasing use of renewable energy in the mining sector and water utilization is a key concern for many companies. No longer is mining just about digging holes in the earth, pulling out tonnes of rock and extracting the metals. Mining is now also about long term social and environmental planning and interaction with the local communities and governments.
Sustainable business practices have become so important in the mining community that the International Council on Mining and Metals has developed a set of best practices for sustainable development. These principles are wide ranging and include guidelines for ethical business practices, environmental performance, design, use and recycling of products and societal performance. We are even seeing initiatives for improved environmental, social and governance performance in the precious metals industry. The World Gold Council has recently issued a set of Responsible Gold Mining Principles as well as a report on the impact of gold and gold-mining on climate change.
Why Refiners Need To Engage
If the mining companies are carrying out sustainable business practices, and consumers are concerned about sustainability and the impact we have on the planet, we, as refiners, need to ask ourselves what contributions we are making and how do we become more involved.
Some might ask, why should refiners participate? Quite frankly, we should because we are part of the value chain of the precious metals industry. Refineries are the conduit whereby mined metals make their way to end-users and if mining companies and consumers are concerned about sustainability, we, as refiners, need to become part of the sustainability chain.
One of the great characteristics of being a refiner is that we are an important cog in the sustainable use of metals because we are recyclers. We recycle industrial scrap and end-of-life products to recover the precious metals for reuse. In this respect we can be very proud of the key contributions we make to the sustainable use of metals but there is much more we can do.
Another reason we should give serious thought to sustainable business practices is that the LBMA has expanded its responsible sourcing program to include environmental, social and governance components as it aligns with the UN Sustainable Development Goals. In the future, as part of the audits for Good Delivery standards, the LBMA are asking its members about their social and environmental programs.
Another reason for engaging in sustainable business practices is that refiners are like banks. Our most important asset is our reputation. Participating in business sustainability initiatives enhances our reputation and reduces risk. We also work and live in impacted communities and we need to reduce the risk we present to these communities. Finally, and most importantly, in today’s world implementing sustainable business practices is simply the right thing to do for the sake of future generations.
What Should Refiners Be Focusing On?
We start by educating ourselves about sustainability and sustainable business practices. We share this knowledge with our employees, we involve them to create goals for and measures of our sustainability initiatives and then we share this information with our stakeholders. I feel strongly that we, as refiners, need to do a better job of communicating with and learning from each other especially when it comes to best practices and sustainability programs. Mining companies tend to do a very good job of benchmarking and learning from one another regarding best-in-class business practices. As a long- time participant in the refining industry, I find we are reluctant to share information openly. We tend to think that our operations are special but that is not really the case. Refineries are all using the same 100-year- old separation processes, with some small variations and tricks we believe to be proprietary. We would all be better off if we could learn from one another about our social and environmental programs and how to reduce chemical and energy consumption.
We need to be very sure that we engage in ethical business practices. We need to ask ourselves: Are we doing business with the right people? Are we doing sufficient due diligence? Are our employees correctly trained? Have we created the right incentives for our employees, so that they do not make poor decisions or deal with questionable players in the industry?
We also need to have a better understanding of the feedstock coming into our facilities. Increasingly lower-grade resources are being mined and the net result is that the doré we receive is a lot more complex in its composition. We should do a better job of analyzing our incoming feedstock for more than just the precious metals content. We need to measure radiation levels - something that not all refiners do - and carry out a basic elemental analysis to understand the nature of the incoming material. With modern and relatively inexpensive analytical tools, such as XRF, it is easy to analyze for the non-precious components of our feedstocks.
Over the years, I have become very concerned about the trace elements coming into refineries. As refiners, we do a very good job of dealing with the high concentration base metals such as copper, iron, zinc, nickel and tin. We know how to separate them from the precious metals and how to remove them from our wastewater streams. However, it is the elements that we find at lower concentrations – such as mercury, selenium, lead, cadmium, arsenic, tellurium, bismuth, beryllium and thallium – the so- called deleterious elements – that can be the cause of enormous problems in our refining operations. Even though these deleterious elements are sometimes present in very low concentrations, they can severely complicate separation processes. They can also result in the inadvertent exposure of operators to these contaminants and they can be difficult to remove from wastewater streams.
Alternative Chemicals And Renewable Energy Sources
Refiners can all do a better job of reducing chemical consumption. Refining is largely accomplished by dissolving metals into acids with the aid of oxidants and then precipitating out the precious metals out using a series of reductants. In the process, we create base metal hydroxides and large volumes of saltwater that we discharge. By looking at alternative reagents we can reduce chemical consumption and especially the use of chlorine gas. Many refiners have one-tonne chlorine cylinders on-site and even though they work safely with them every day, they do represent a hazard to the community as the cylinders need to be transported and the threat of leaks is always present. As we well know, a large-scale chlorine release could be catastrophic for a community. As an industry, we should really reconsider chlorine gas use or, at a minimum, find ways of curtailing its usage. One promising development is that the new acid-less refining process, which uses a high temperature sublimation approach, could assist in reducing chlorine use.
Refiners should also focus on energy consumption and reducing their carbon footprint. This can be done by improving energy efficiency as well as utilizing renewable energy sources. When it comes to energy efficiency, there are many things we can do in our facilities, for example by using variable speed pumps, better insulation etc. When it comes to renewable energy, we all have facilities with large roof areas that we could cover with solar panels and we could even consider the cogeneration of hot water and electricity using natural gas micro-turbines.
It is the elements that we find at lower concentrations – such as mercury, selenium, lead, cadmium, arsenic, the so-called deleterious elements - that can be the cause of enormous problems in our refining operations.
Engaging With The Artisanal And Small- Scale Mining Sector
As refiners, we also need to do a better job of engaging with the artisanal and small-scale mining sector (ASM), which is responsible for approximately 25% (don’t agree with this much more likely to be 10% max) of the world’s gold supply. We all have understandable concerns about becoming involved with this mining sector. We are concerned about illegal mining, about the use of forced and child labor, about support for armed groups and clashes of illegal miners with the formal mining sector. We are concerned about the dangerous conditions that these illegal miners work under and how little they earn. We worry about the environmental devastation that can be caused by small-scale mining and about the money-laundering operations that can associate themselves with this sector.
However, there are good business reasons to engage with this community. It is an important source of precious metals that needs to be refined and it presents a good business opportunity if we are cautious and we deal with responsible counterparties and operations.
Engaging with this sector also contributes to economic development which could lead to the formalization of the mining industry in those communities and this can reduce conflict mineral and metal supply.
Another benefit of involving ourselves with this sector is that we can promote the safer use of mercury which is an integral part of the gold recovery methods used by small miners. Mercury use will always be a factor in these small mining operations and if we become involved, we can encourage and promote improved mercury utilization and reuse methods such as retorting.
The Question Is: How Do We Better Prepare Ourselves To Serve This Supply Chain?
We educate ourselves. There are publications on responsible sourcing from the artisanal and small-mining community. We need to find the right partners to work with and we need to make site visits to see and understand what is occurring on the ground. We always need to be careful and do our due diligence, but I would encourage us to become more involved in this community because it can have wide ranging benefits.
I would like to conclude by noting that there are many good business reasons to operate more sustainably. It can result in reduced risk; lower costs and it can bolster your reputation. I would like to encourage us to become more engaged with the artisanal and small-scale mining supply chain. They have feedstock that needs to be refined and we can have a positive impact on this community. Finally, I would like to note that implementing sustainable business practices is simply the right thing to do. Part of our responsibility to future generations, our society and our planet is to start thinking long term and operating more sustainably in our industry.
Michael B. Mooiman has Master’s degrees in Chemistry and Business and a PhD in Metallurgical Engineering (University of Utah) and he has spent most of his career in the extractive metallurgy and precious metal business. He worked for Metalor Technologies for almost 20 years in different roles including Director, VP Production and General Manager. He has published over 30 papers and is also the holder of two US Patents for precious metal recovery. He is the President of Argo Advisors International and has consulted for major metallurgical research organizations and metals operations in the USA, South Africa, Europe and Canada.
When he is not consulting, he is an Associate Professor in the MBA program at Franklin Pierce University, New Hampshire where he teaches Finance and coordinates their MBA in Energy and Sustainability Studies. He is a member of the Mineral, Metals and Material Society and is co-President of the New England Chapter of the International Precious Metals Institute.