World Gold Council

Unpicking the landmark Responsible Gold Mining Principles with CFO Terry Heymann

 


 

In recent years, the concept of corporations upholding a robust commitment to responsible business practices has gained greater importance in the eyes of investors and consumers, as these key stakeholders become more conscious of the impact that companies have across commonly defined environmental, social and governance (ESG) benchmarks. This increased attention paid to responsible business practices has been noticeable across the gold sector, with mining companies in particular put under the spotlight and asked to prove that their gold is produced responsibly. 

  

While a great deal of leading standards already exist and inform gold miners actions towards responsiblpractices, there has been no single, uniting responsible mining framework for the global gold sector. This was until the World Gold Council (WGC) published its Responsible Gold Mining Principles (RGMPs) in September 2019. The RGMPs attempt to set out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining. RGN’s editor delves deeper into the landmark publication in a conversation with the council’s CFO Terry Heymann. 

 

Jacob Ambrose WillsonHi Terry. How long has thcouncil’s RGMPs document been in the making and who was involved in the process? 

 

Terry Heymann: It’s taken us two years to get here. This was an initiative led by the board of the World Gold CouncilOur board generally comprises of the CEOs of our member companies. This is something that they felt was important to do, because there are a lot of different standards and codes and laws that speak to aspects of responsible gold mining, but there was nothing that brought it together in an overarching framework. That was making things confusing for investors, supply chain participants and other stakeholders. 

 

We’ve been working on it for two years and consulted very widely. We went through two separate rounds of public consultations, where we put out draft documents and collected feedback and input. We had lots of conversations with governments, civil society, communities and labour organisations. We are very thankful for organisations that convened roundtable discussions for us. The World Bank’s mining team convened a discussion for us in DC, the South African Institute of International Affairs did the same in Johannesburg, as did the European Centre for Development Policy and Management in Brussels.  

 

In the second round we held events in Lima and Toronto as well as outreach in China and Australia. We really appreciate the input we got and there’s no doubt that they have made this a better document, listening to views from a broad range of stakeholders around what constitutes responsible gold mining.  

 

It’s been an initiative led by the members of the WGC, the leading gold mining companies in the world. It’s been their backing and expertise in what it means to be a gold mining operation and what constitutes best practice that has driven the process. I think we’ve got to a very credible set of principles as a result of what has been quite a lengthy and comprehensive process. 

 

JAW: The aim of the framework is to reinforce trust in the gold mining industry. Why is it important that investors and consumers should feel confident that the sector is behaving responsibly? 

 

TH: I think we see this in all aspects of business. There is increasing attention paid to responsible business practices and the gold sector also needs to demonstrate what it is doing to gain trust and confidence for investors, consumers and customers including downstream supply chain participants of the gold mining sector. This is not new in terms of commitments to responsible business practices and commitments to responsible mining. In fact, there is a plethora of different initiatives that speak to aspects of responsible mining. The challenge with that is it can become overwhelming for those uses to simply understand what is considered as good practice 

 

We have tried to provide a single, overarching, global framework that anybody who is interested in gold mining can look at and very quickly understand what constitutes responsible gold mining. It builds on what’s already been done. It leverages existing practices and stretches them.  

 

I think it’s a demanding set of expectations for any implementing company. But it does really set out what constitutes responsible gold mining in one overarching framework. It allows investors and customers to understand the way in which their gold is being producedAs such, it’s very much intended to further build confidence and trust in gold and in the gold supply chain.

 

JAW: Looking at implementation, how widely will the principles be adopted and how will they be enforced, for want of a better word? 

 

TH: Firstly, whilst these have been developed by members of the WGC, we are keen to see adoption by all participants in professional gold mining and keen to encourage companies who are not members of the WGC to consider implementing the responsible gold mining principles. Even in the last few days, I’ve had some positive conversations with gold mining companies who are not members talking about implementation, what it would look like and how they go about that. As part of the consultation processwe also met with several non-member companies and shared positive conversations. I’m keen to see this be adopted by the sector as a whole 

 

In terms of the process for implementation, I should firstly say that many of the underlying standards and codes are already enforced by existing mechanisms in place, be that local laws or initiatives that companies are required to conform with as a requirement to access capital. The IFC performance standards are a good example of that. Companies already demonstrate conformance with a lot of the underlying components 

 

Conformance with the overall RGMPs is a voluntary initiative. It’s something that we encourage all gold producers to conform with, but ultimately it is at the discretion of individual companies.  

 

However, I firmly believe that companies will choose to implement because they will recognise the positive impact this will have in demonstrating to investors their commitment to responsible mining and I fully expected this to be adopted as a common standard, not least because the investor community will be looking at this as an expectation of any company that they consider investing in. 

 

JAW: Diving into the 10 principles, perhaps you could talk briefly on each of the three areas, starting with environmental. How will the RGMPs enable gold producers to reduce their impact on the environment? 

 

THIn the environment section, we cover environmental stewardship, biodiversity, water, energy and climate change. These are very well documented concerns of people who look at the mining sector, including the gold sector, and want to understand what companies can do and how companies operate responsibly. I am a very firm believer that companies can be net positive in what they do in terms of their contribution around the environment.  

 

In terms of climate change, it’s hugely important firstly for companies to be held accountable for what they are doing to combat climate changeas it says in the principles ‘avoid, reduce or mitigate’ carbon emissions. We released a separate report last month on climate change and I believe that the gold sector can very much be at the forefront in terms of decarbonisation and the potential opportunities around decarbonisation.  

 

If you consider the circumstances of gold mining, many of these mines are situated in very remote places that have historically relied predominantly on diesel. There is a fairly rapid transition to renewables taking place, because these areas are often well set up for renewables adoption. The cost argument is becoming ever more compelling. I think that’s really encouraging because what we need in the fight against climate change is more companies and industries decarbonising, and the gold industry really has an opportunity to be at the vanguard. 

 

We also look at tailings, which is critically important and quite rightly a lot of attention is paid to this issue, as well as gold-specific issues, such as cyanide. It’s important that all gold mining companies operate in line with the standards of practice of the International Cyanide Management Code 

 

Mercury is another issue that is more important for gold than many other commodities. In part, this is because mercury is unfortunately often used by artisanal and small-scale gold miners. Industrial mines do not use mercury. Mercury can also be a by-product from the gold production process and that needs to be responsibly managed. All of these areas are covered under the environmental principles. 

 

Turning to social, we are looking at issues around safety and health. This is very important for the mining sector, and the responsibility of mining companies to protect and promote safety and occupational health for their workforce is set out as the number one concern.   

 

We as an organisation have done a lot of work in human rights and particularly conflict, by which I’m talking about serious human rights abuses. In 2012, we set out the ConflictFree Gold Standard that is referenced in the RGMPs. Labour rightsrecognising the role of labour and working with communities living around mine sites is another crucial aspect that is included in these principles. 

 

For governance, it really is about how you set your business up so that you can operate responsibly with a commitment to ethical conduct. Understanding impacts and a commitment to engage with stakeholders to understand your impact is also important. Also recognising that gold mining companies have impacts beyond just themselves is underlined in the principles. This covers the broader supply chain, procurement as well as engagement with artisanal miners. 

 

JAW: Finally, how confident are you that the RGMPs can contribute to a more rounded understanding of responsible gold mining and ultimately a more responsible gold mining industry? 

 

TH: I think this is an important development for the industry and I’m thrilled that we released the RGMPs earlier this year. I am particularly pleased to see the response to it from the mining community, and it’s been very gratifying to see the number of mining companies commit to the RGMPs through their investor presentations and social media channels, but also the positive reception it has had from a broader set of stakeholders. I think that is testament to the consultation process we went through.  

 

Again, this is not an isolated development, it builds on a significant foundation of existing good practices and it raises the bar. I am a firm believer that the RGMPs will enable the mining industry to demonstrate how it can play a really meaningful role in social and economic development in communities and countries where they operate. Because if you can mine responsibly, the potential to do good is huge and that’s what this is about.  

 

I’m delighted with where we are but there is more work to do to ensure better understanding of what the RGMPs are and I hope that investors and mining companies become very familiar with this. Further, I hope that other stakeholders, including communities, governments and development organisations are aware of this and reference it as a tool to support social and economic development advanced through responsible gold mining.