Editorial: Funds demand more tailings transparency

By Posted Trish Saywell / October 14, 2019 / www.northernminer.com / Article Link

Less than a week after the Jan. 25 tailings dam collapse at Vale's Feijao iron ore mine in Brazil that killed 251 people and left 19 missing, the Church of England Pensions Board, along with Sweden's Public Pension Funds Council, Dutch funds APG and Robeco, New Zealand Super, the U.K.'s LGPS Central and Canada's BMO Global Asset Management - together representing over US$1.3 trillion in assets - jointly called for a global independent public classification system that would monitor the safety risk of tailings dams.

The Church of England Pensions Board estimates there are 18,000 tailings storage facilities (TSFs) worldwide, 3,500 of which are active, but says there is no consolidated public register of them. "Without a global register, the precise scale of the risks are not clear, nor is it clear which company has responsibility for which facilities," it says.

"This proposal will drive a new level of accountability and transparency within the mining sector," Adam Matthews, director of Ethics and Engagement for the Church of England Pensions Board, stated on Jan. 31. "Simply put, these failures of tailings dams should not be happening. These are not black-swan events."

Within a month, the number of investors and investment funds that had joined the Investor Mining & Tailings Safety Initiative had grown to over US$6.5 trillion in assets under management. By mid-April, the number had soared to more than US$12 trillion in assets under management from over 100 investors.

The Church of England Pensions Board alone manages funds in excess of US$2.8 billion, and receives advice from the Church's Ethical Investment Advisory Group on all issues relating to the ethics of investment. It says it engages "directly with companies about aspects of their business activities that concern us."

Since April 5, the Investor Mining & Tailings Safety Initiative, which is governed by a steering committee chaired by the Church of England Pensions Board and the Council on Ethics of the Swedish AP Funds, has sent letters to the board chairs and CEOs of 726 publicly listed companies in the extractive sector, including oil and gas firms, requesting they disclose information about their TSFs. The disclosure is supposed to include all tailings facilities in which a company has any interest, through subsidiaries, partnerships or joint ventures, even if the corporation itself is not the operator. The letter also recommended that the companies should accompany their disclosures with "plans to communicate directly with communities that may be affected by the company's TSF footprint." The companies were given a June 7 deadline to respond to the letter and post the disclosure on their websites.

The Church of England Pensions Board recently published a progress report, and the results seem mixed at best. As of Oct. 1, more than half, or 418 of the 726 companies (58%), had not responded to the request. Of the 308 companies (42%) that did respond, 178 (25%) confirmed they did not have TSFs, and 92 said they did. Another 38 companies did not say whether they had TSFs or not, but requested more time to complete their disclosure.

Breaking down the numbers for the mining sector alone, 37 of the top-50 largest mining companies responded and made disclosures, which the Church of England Pensions Board stated "has resulted in information about thousands of tailings dams/facilities being made public on company websites." Overall, 69% of the mining industry by market capitalization responded, including all of the 22 publicly listed members of the London-based International Council on Mining and Metals, which brings together 26 mining and metals companies, and 35 regional and commodities associations.

While these efforts by the Investor Mining & Tailings Safety Initiative underscore the growing importance of environmental, social and governance (ESG) criteria for fund managers, particularly in Europe, it's time for the rest of the world to catch up and get on board. Increasingly, large institutional investors and even smaller funds have ESG-dedicated analysts within their firms, or hire independent third parties to analyze how the companies in which they invest meet their broader sustainability goals. Companies that ignore this trend do so at their own peril.

On Oct. 1, yet another tailings dam failure occurred in Brazil - this time at a mine in Mato Grosso. Reuters reported that the breach injured two people and left a 2 km "trail of mining waste." The news agency said the dam was "registered under the name of an individual wildcat miner rather than in the name of a mining company."

This latest failure and the tragic events at Vale's Feijao mine earlier this year follow the deadly tailings spill, also in Brazil, at Vale and BHP Billiton's Samarco iron ore mine in November 2015 that killed 19 people. In August 2014, a massive tailings spill at Imperial Metals' Mount Polley copper-gold mine in Canada sent millions of cubic metres of tailings into the Quesnel Lake watershed.

Come on people, it's 2019. We have to get this right.

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