Posted: 25 Jan. 2021 4 min. read

Closing the trust deficit in mining

COVID-19 cut through most companies’ best laid plans, forcing leaders across the mining sector to refine their strategic objectives, recommit to their stakeholders, and reset their priorities. It is fair to say, COVID-19 has preoccupied the headspace of executives and boards in the mining industry during the past year and no doubt will continue to dominate into 2021.

On 1 February 2021, Deloitte will launch the 13th edition of the annual global mining trends report, Tracking the Trends. As we set out to identify this year’s top mining trends, we purposely avoided focusing in on the immediate response to COVID-19. Instead, we tried to look beyond the pandemic and see how longer-term trends in the industry were being impacted and what new trends might be emerging. In doing so, a central narrative emerged, namely the issue of trust between the mining industry and its wider set of stakeholders. But what does this really mean, and how can mining companies actively build trust across their stakeholder ecosystem?

In July 2020, the World Economic Forum[1] released a report identifying the “trust deficit” as the key risk facing the mining industry today. Trust, however, is abroad term and can mean many things to many people. Over the last few months, Deloitte conducted research amongst executives across different industries to define “trust.”  From this research, we define trust as the input to and the outcome of human relationships, founded and established within relationships, and built upon through shared confidence, experiences, and continued interactions.  

Trust by a companies stakeholders is important to the success of any their business, for mining companies this is particularly relevant as it pertains to communities and host governments. However, as the macro environment is fundamentally reshaping how business is conducted, now is the time for mining executives to address the issue of trust with a wider group of stakeholders and understand what builds and sustains trust amongst these groups—be it investors, talent, or society at large.

The industry is in many ways at a critical juncture. Mining holds the key to a lower carbon future through many of the minerals it mines, yet the industry is capital starved. It has the potential to create widespread meaningful employment in urban and rural areas, yet it’s often not the first choice for talent. Mining companies have played a significant role throughout the COVID crisis by flying in personal protective equipment (PPE), leveraging their healthcare infrastructure, and keeping workers safe. Yet many governments continue to look towards the industry for additional taxes and royalty payments. These dichotomies may still exist partly because of a deficit in trust.

Investors are an important stakeholder group and while a negative trust-related event can erode a significant portion of a company’s market cap, redeploying capital back into the sector is important for the long-term supply of minerals. To this end, winning back investor confidence is key and can be cultivated by: delivering consistent shareholder returns; closing the supply chain gaps that the pandemic brought to the fore; and shifting towards more integrated operations to create operational predictability.

Mining companies are also revisiting their commitments to local communities, and society at large, by enhancing their environmental, social, and governance (ESG) performance. The transparency that comes with ESG commitments are central not just to investors but also to building trust with society. In this year’s trends, we revisit the importance of ESG as a central narrative for mining companies, including commitments to decarbonization, driving shared value with communities, and enhancing corporate governance frameworks to create competitive advantage.

In a talent starved industry, attracting the best and the brightest of a diverse workforce should be top of mind for business leaders. To rebuild trust across their talent network, companies should redefine leadership in this new virtually enhanced environment and adapt the workplace culture to allow for more flexibility. A mining company’s workforce complement varies widely – from miners and processing engineers working on site to the finance manager and executive working in the office. Recommitting to the goal of zero harm and driving towards this through the use of collaborative big data analytics might be one way to ensure that management teams have their employees’ physical safety and mental health at the heart of the solution.

Amid prevailing uncertainty, it’s impossible to predict the results these efforts will yield. It is certain, however, that success in the future will be judged on factors far beyond financial performance. With stakeholder expectations continuing to evolve, clear and transparent communication is important to build and maintain a foundation of trust. COVID-19 has taught us a lesson about the things people value most—safety, community, social impact, the environment. Mining companies working to overcome a deficit in trust must take these lessons to heart.

This year the report takes a hard look at what the mining sector is doing right and what needs to improve as we lay a foundation for tomorrow. As in previous years, this edition features insights from Deloitte’s global mining professionals who share real-world case study examples mining companies can leverage in building a path forward.

[1] World Economic Forum, 20 July 2020, “How data can help mining companies tackle their trust deficit” by Hélène De Villiers-Piaget, accessed https://www.weforum.org/agenda/2020/07/data-help-mining-companies-tackle-trust-deficit/ on 20 November 2020.

Download the latest edition of Tracking the trend on 1 February 2021 from www.deloitte.com/trackingthetrends.

Authors:

Andrew Swart is the Global Mining & Metals Leader as well as Deloitte Canada’s Mining & Metals Leader.

Ikram Al Mouaswas is a Partner in Financial Advisory at Deloitte Canada.