By any measure, 2007 has been an extraordinary year for the mining industry in this country. At the same time as the major mining states have been translating unprecedented demand for our resources into economic and employment benefits for Australians, our industry's licence to operate is under threat like never before, and no more so than for the coal sector.
Take New South Wales. The year has been marked by the bookends of a March state and November federal election, providing a rare season of two major political stages for opponents of the industry to make their case for the end of mining.
When pressured on the economic absurdity of such demands, opponents have instead called for its brisk phasing-out.
The reaction from industry has been to reinforce the mantra of jobs, jobs, jobs and to talk about the importance of mining to the economy. However, while this is beyond dispute, we can't allow it to be the crutch on which our licence to operate is propped.
Rather, economics is just one of the pillars, sharing the load with a commitment to workplace safety, partnerships with our neighbours and communities, a reputation for innovation and demonstrated environmental sustainability.
The industry shows each of these elements in spades, but it does not always effectively communicate them to the wider community. The coal industry's position on climate change is not only topical and heavily politicised, but largely misunderstood.
We must take some of the responsibility for this state of affairs. Climate change is, above all, a risk management issue. Whether the science is in, or the jury still out, is a debate which misses the point.
Acknowledgement of the risks inherent in climate change (to the global environment, to energy security and for our industry's licence to operate), is critical if the industry is to position itself appropriately to manage potential impacts.
Happily, the picture painted by opponents of the coal industry as a cumbersome, outdated relic in denial of climate change is well off the mark. The industry identified the risk early and has been developing a meaningful response for over a decade, initially through the Australian Coal Association Research Program (ACARP).
The COAL21 National Action Plan formed in March 2003 to reduce our eliminate greenhouse emissions from coal-based electricity generation is the hard evidence of the industry's climate change bona fides.
Three years later the COAL21 Fund was established, initially with a $300 million commitment raised through a voluntary levy on coal producers, to demonstrate and deploy low emission coal technologies. It was subsequently augmented with a further $700 million. As former ACA executive director Mark O'Neill observed, "If that's a PR exercise, it has to be one of the most expensive in history".
What has been missing has been a broad-based commitment to tell our story to the public with the same vigour and passion as the industry's opponents do.
Public perception, like politics, is a battle of ideas. But ideas are not enough. They must be supported with clear communication based on facts, supported by sound science and economics, and driven by passion and a genuine commitment. In each of these areas, the coal industry is well equipped.
Saving water is the key to survival
Water management is another clear example of a major challenge the industry must come to grips with. First some facts. Sometimes overlooked is the fact the mining industry is a frugal consumer of water compared to other sectors in NSW.
According to the ABS Water Account Report, out of the 5922 gigalitres of total water accounted for in NSW in 2004-05, mining operations consumed about 63GL, or just over 1% of the total. This is compared to agriculture at 70%, the water supply industry at 11% and households at 10%.
According to the CSIRO, the mining industry generates the greatest value of any sector from the water it uses. The economic value of water used by the minerals industry, at $80 per cubic metre, is double that of the industrial sector and 16 times that of agriculture.
While these facts contradict claims of industry profligacy with water resources, the reality is that in some areas of NSW and elsewhere, mining is a major water user in the context of local or regional consumption.
Companies in these areas must recognise the importance of forward thinking and contingency planning to prepare for water scarcity, as well as the benefits of early and frequent communication with key government agencies and the community about emerging issues.
The positive experience of Newcrest Mining's Cadia Valley Operations in Orange earlier this year demonstrated the importance of strong relationships with local communities as a key contributing factor for the mine to be supplied additional water to continue its operations.
The harsh reality we must also acknowledge and address is these examples of industry leadership are not the ones on which our licence to operate will be decided. We will always be judged by our worst performer, making it our collective responsibility to identify best practice, work collegially and support our colleagues to ensure the industry's licence to operate is beyond debate.
Published in the December 2007 Australia's Mining Monthly - Licence to Operate supplement.
