New strategies are being formed for the gold mining industry. The field is going through a transformation as growth has been hampered by rising costs, falling ore grades, increased stakeholder intervention, and manpower scarcity.
These changing variables are causing miners to refocus their efforts on sustaining low-cost production strategies in order to stay profitable.
Sustainability will be a prominent concern on gold miners’ agendas as they strive to maintain corporate competitiveness. This is to comply with ever-increasing environmental, social, and governance (ESG) metrics and new regulations as well as to attract available capital that is increasingly linked to ESG compliance.
It is gaining traction as funds and other corporate investors demand gold as a strategic investment.
The challenge here is how gold mining companies deal with the present in order to ensure long-term competitiveness in the future. When reshaping company strategies, miners should keep the following things in mind.
Understanding the Mining Principles of the World Gold Council
The World Gold Council and major miners partnered to develop ESG principles to guide responsible gold mining, which encompass the following important areas: governance, social, and environmental concerns.
Governance includes ethical behavior, knowledge of the impact of gold mining, and supply chain management. Social issues are safety and health, human rights and conflict, labor rights, and working with communities.
Lastly, environmental concerns involve water, energy, climate change, environmental stewardship, biodiversity, land use, and mine closure.
The 2019 principles, developed in consultation with the majority, are complemented by guidelines that allow gold mining companies to provide assurance in each of these critical areas.
Striking a Balance between Cost, Risk, and Compliance
Rising costs, diminishing ore grades, labor constraints, and rising resource nationalism in some nations are all posing hurdles for gold miners in bringing supplies to market. However, replacing reserves in order to maintain long-term productivity has been one of the most important challenges.
Higher gold prices allow the funds to be dedicated to new exploration, so the continuous problem of preserving capital or pursuing aggressive exploration is likely to be less acute right now.
Gold mining companies must also ensure that sufficient capital is set aside to comply with local legislation and secure permission to operate with diverse stakeholders, including local communities, workers, governments, and even the general public.
Continuous capital allocation for ESG and incremental participation of stakeholders across the value chain are increasingly essential for gold miners to maintain operational continuity.
Making Use of Green Financing Options
These steps are anticipated to provide opportunities for miners to replicate finance activities in order to raise funding for environmentally friendly initiatives. For instance, Polymetal received a US$125 million green loan from Societe Generale to fund projects targeted at transitioning to more sustainable operations.
Miners must restructure their capital strategies in order to move to sustainable mining by employing available green capital.
Investors are becoming increasingly worried about the future sustainability of their investments, and gold miners are being pushed to improve ESG compliance and increase the impression of gold as a differentiating investment from other resource materials such as iron ore or coal.
It would benefit gold mining companies to receive insightful advice and direction from notable experts in the mining and exploration field.
If you need guidance in mining and gold exploration, Janet Sheriff is the name to trust. Janet Sheriff is an innovative entrepreneur with extensive experience in all aspects of communications to startups, new ventures, and the mining and exploration sectors. Contact us today to learn more.