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Miners need to defend their industry: former Fortescue CEO

Former Fortescue Metals Group Ltd. CEO Neville Power issued a "call to arms" to Australia's mining executives to stand up to their opponents who would sever the critical ties between industry and communities amid rising distrust in corporate Australia.

Tim Langmead, Fortescue's director of community, environment and government, delivered the Association of Mining and Exploration Companies convention's keynote address June 13 in Perth on behalf of Power, who was in the hospital after emergency knee surgery but still scripted the speech.

Langmead helped to develop a blueprint for Fortescue's corporate social responsibility strategy. Power wrote that in the process of developing that strategy, the company learned that "only through a close alignment of business and community, and a shared understanding of each others' expectations... we can build trust and deliver against mutual objectives and outcomes."

Power made what he described as a "call to arms" for Australia's mining executives to "ensure mining helps to build the communities and [the] economy of the future."

He mentioned the results of the 2018 Edelman Trust Barometer, which revealed Australians' trust in business sits at 45%, down from 48% in 2017 and below the global average of 52%.

"The campaign against the [federal government's] corporate tax initiative, the perception that small business suffers at the hands of big companies, and community dissatisfaction generally with executive remuneration, more recently the banking royal commission, has highlighted some disturbing practices in that sector, with the inevitable tarnishing of the corporate sector as a whole," he said.

"We've even been blamed for the appreciation in the value of the Aussie dollar during the recent super cycle, when, in fact, that has always been driven by the differential between U.S. and Australian interest rates."

He pointed out the West Australian government's recent budget revelation that about 17% of the state's revenue depends on mining royalties, which reflects industry's importance, yet many corporations "feel their best protection in this type of atmosphere is to be distant and manage the community and government at arm's length, but this approach feeds into the cycle of a loss of trust and exacerbates it."

Power believes that miners should "not be defensive" about their industry and "be prepared to call people out when they attempt to create division between the community and business."

"It's easy to play negative, 'small-p politics' to exploit fears and prejudices and a lack of understanding, but this is both short-sighted and short-term and does nothing to build strong, sustainable communities for the future."

Mount Isa is an ideal example

Power, who started in the industry as a 15-year-old at Mount Isa Mines Ltd. as an apprentice fitter from the local community, said that operation was a model for coexistence with the local community as the town of Mount Isa would not have existed had the mine not been founded there in the 1920s, and even today, the operation provides about 20% of local jobs.

"When I started at [Mount Isa], it was seen as a very integral part of the community," he said. "It was not spoken about as separate to the town. There was strong unity, which led to close cooperation between what was happening in the town and on the mine site.

"The company worked alongside the local council and government to genuinely prioritize what people wanted because it recognized that a strong and vibrant community was essential to the stability and loyalty of their workforce."

Power said towns are now typically much further away from mines with increased reliance on a fly-in, fly-out workforce, and management teams can be similarly remote from the community as opposed to Mount Isa Mines' leadership being based at Mount Isa in the early days.

While Power said this was not a criticism of more recent trends, they are additional challenges for companies in building engagement with communities.

He later worked in Queensland's Bowen Basin coal fields, when government legislated that miners build their own domiciled towns complete with police stations, schools, hospitals and shops in an attempt to artificially create communities around mine sites rather than allow fly-in, fly-out or drive-in, drive-out operations.

However, Power said this ultimately failed as it created "very dysfunctional communities because there were not enough outlets for kids and resistance to the employment of partners, which led to the creation of a class of people who were excluded from the community's economic life without alternative healthy outlets for their enterprise or expression."

"We need to shape community expectation," he said, adding that miners should "play to their strengths."