Issues Magazine

The Social Implications of Mining in Australia



By Kieren Moffat and Justine Lacey

What is the future of mining in Australia, and can it be more sustainable?

The mining industry in Australia features in much of the public discussion about our current and future prosperity. As advocates for the mining industry point out, the materials that mining produces are central to almost everything that our society uses and values:

• coal is essential to our current electricity generation models;

• metals are used to make the smart phones, computers and televisions we use every day; and

• the use of diamonds in jewellery remains a near-universal symbol of wealth and prestige.

More and more, however, society is asking: “But at what cost?” Those with reservations about mining point to the environmental impacts of extracting and using non-renewable resources like coal, the economic distortion that results from one part of the economy booming while other parts languish (i.e. a “two-speed economy”), and the risks to communities that live near large or multiple mining projects as strong reasons why mining should be curtailed or even stopped.

As a nation, it is important that we think about the benefits of mining balanced against the costs – those resources under the ground belong to all Australians and we should be active in shaping how they are exploited and how the benefits that flow from mining are used and distributed.

The mining industry in Australia is significant in both scope and size, and it’s still growing. Australia is a major supplier of mineral resources globally and, as a major export industry, mining brings significant financial benefits to the nation. The Australian Bureau of Statistics (ABS) states that in the year to March 2011 the value of mining exports was $155 billion and represented 52.8% of the value of total exports from this country, with the bulk of that being contributed by iron ore and coal. The proportion of Australia’s Gross Domestic Product (GDP: the value of all final goods and services produced by Australia during a specific period) made up by mining has grown significantly from around 4% in 2004 to around 9% today.

While the amount of material exported has increased during this period, so has the value of the commodities being extracted. Iron ore, which is used primarily to make steel for construction, has increased from around A$25 per metric tonne in 2004 to over A$140 per metric tonne today.

This increase in the amount of mining conducted in Australia, and the value it has for mining companies and the government, has been driven by enormous global demand for commodities like iron ore and coal to fuel industrialisation and urbanisation, and to support population growth around the world. This is particularly the case in China, which has seen incredible development since the 1990s and is Australia’s second largest export destination behind Japan.

At the same time, the mining industry is facing decreasing productivity as a result of declining ore grades and ore bodies that are increasingly remote and difficult to access. What this means is that extraction and processing of minerals is becoming more challenging and creating more waste (Fig. 1). Although we are in no danger of physically running out of minerals any time soon, we do need to address the fact that continued production and declining resource quality create technological, environmental and social challenges.
Figure 1. Waste rock generated by mining has increased for most commodities over time in Australia. Adapted from Mudd, G.M., 2010, The Environmental sustainability of mining in Australia: Key mega-trends and looming constraints. Resources Policy, 35(2), 98–115.

Smarter Approaches to Mining
In an effort to maximise the positive benefits and minimise the negative impacts of mining, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) has been exploring the future sustainability of the Australian mining industry through the Mineral Futures Collaboration Cluster. This research cluster represents an investment of around $3 million dollars over three years, with work due to conclude in June 2012.

The cluster brings together researchers from five Australian universities and CSIRO to collaboratively explore large and complex future sustainability issues in the minerals industry across regional, national and global scales. In particular, the cluster has focused on examining what the future of mining in Australia might hold, how Australian regions are impacted by mining, and how technology influences the way mining is conducted and experienced by those around it.

One of the key outputs of the cluster’s research is the strategy “Vision 2040: Mining, Minerals and Innovation”, which outlines a vision for Australia’s mineral future. Led by researchers at the Institute for Sustainable Futures, University of Technology, Sydney, Vision 2040 aims to provide a clear view of what governments, communities and the industry would need to do to have mining and mineral production contribute positively to a sustainable Australia in 2040.

One of the clear messages that has emerged thus far is the idea that Australia needs to develop a national minerals policy supported by a comprehensive set of mineral accounts that provides some transparency about resource stocks (both above and below the ground), along with some detailed analysis of the impacts of mining activities. We don’t currently take a national approach to managing this issue so we don’t really have a complete picture of exactly who is benefiting and who is bearing the costs of mining, or to what extent this is occurring.

At the same time, there is increasing community interest and pressure on government and industry to ensure that these resources are being managed for the benefit of all Australians. By incorporating community views on how long-term benefit can be best derived from Australia’s mineral endowment, there is real opportunity here to make the Australian public central to the decisions that are being made about this issue and the future they wish to see for their country.

We need to get smarter and more creative in how we approach the business of mining, and what we export to the world. As Dr Damien Gircuo of the Institute of Sustainable Futures points out in a recent article in Dialogue, Australia is already a leader in services to mining, such as the development of software and automation technology. In fact, in 2008–09 more revenue was generated from mining software sales by Australian companies than from combined sales of uranium and zinc ores.

There may also be alternative sources for the commodities that we value and opportunities for new and creative mining business models. For example, with declining ore grades (Fig. 2) it may be more economical in the future to recycle and recover materials from products at the end of their life cycle than dig them out of the ground. Just consider this: it takes two grams of gold to make a wedding ring. That can either be produced from 10,000 kg of gold ore or 10 kg of mobile telephones.
Figure 2. Ore grade has decreased over time across most commodities in Australia. Adapted from Mudd, G.M., 2009, The Sustainability of Mining in Australia: Key Production Trends and Their Environmental Implications for the Future. Research Report No. RR5, Department of Civil Engineering, Monash University and Mineral Policy Institute.

What Happens When Mining Comes to Town?
One focus of the cluster’s work has been the direct impacts of the extractive industries on local communities in mining regions around Australia, and how those regions transition through various stages of mining activity. So, what happens when mining comes to town, and what happens when it leaves? Led by colleagues at Curtin University, Central Queensland University (CQU) and the Australian National University (ANU), the cluster has focused on developing an understanding of the resource development cycle and how this impacts on communities.

When resources are located where other industries (or populations) are already well established, there is real potential for land use conflicts to emerge. Currently we are seeing this played out across Australia where land uses such as mining, agriculture and tourism among others are attempting to coexist in the landscape. The presence of mining in a landscape can completely transform not only land use but also the infrastructure and labour force of a region – in some cases to the detriment of the more traditional or well established sources of economic production. Communities that are singularly reliant on resource development can find themselves at risk when that industry faces a downturn or needs to move on. There is also the reality that mineral resources will be exhausted or their extraction will cease to be economically viable, and when this happens communities need to have the capacity to reinvent themselves if they are to maintain their viability into the future.

While the economic value of mining often outweighs other land use options, this masks the much more complex socio-economic impacts of restructuring communities in this way. Some of the key challenges that have emerged for mining regions are the increasingly high cost and shortage of housing, the impact of “fly in and fly out” (FIFO) or “drive in and drive out” (DIDO) workforces, and a significant gap in the wages paid to mining staff and those who work locally in service industries. This in particular creates inequities in communities and is often described as the “two-speed economy”.

It also raises the question of where some of that wealth being generated by the mining boom ends up being invested. More often than not, when a transient workforce is involved they are unlikely to be spending their income in the regions where the minerals are being extracted. In many cases, that money travels back to capital cities rather than being spent locally.

Communities in mining regions have been vocal about the need to see some of the benefits of living in Australia’s mining towns. In an article in Resources Policy, Dr Galina Ivanova and Professor John Rolfe from CQU explored what mining communities want, using the town of Moranbah in Queensland as a case study. By asking residents what would make their town more or less “liveable” if coal mining expanded in the region, they found that residents thought increasing the number of workcamps separate to the community would make Moranbah a much less attractive place to live.

But is the expectation that mining wages will be spent locally a legitimate one? After all, every Australian presumably has the right to spend their earnings wherever they please. But how do we compensate those communities that bear most of the costs of living alongside mining activities?

One way this has been addressed is through the Western Australian Government’s Royalties for Regions agreement. Under this scheme the state government promised to distribute 25% of Western Australia’s mining and onshore petroleum royalties to the state’s regional areas each year as an additional investment in projects, infrastructure and community services. Estimated expenditure through the Royalties for Regions fund from 2008–09 to 2014–15 is $6.1 billion, with $1.2 billion allocated to 2011–12.

Technology: Problem or Solution?
The demand for mineral resources is likely to stay high for the foreseeable future so finding more sustainable ways for the industry to operate in Australia is important. Technology will play a central role in achieving greater levels of sustainability but its development, adoption and deployment in the mining industry need to demonstrate both environmental sustainability and broad societal acceptance. In this area, the cluster has focused on understanding how mining technologies impact on those who work and live around them.

Led by colleagues at the University of Queensland (UQ), the cluster’s research in this area has found that the success of technologies is no longer only about their technical efficiency but also their acceptability to the Australian public. In some ways, this is about managing the risks associated with technologies – a poorly chosen or unsuitable technology can lead to considerable damage to the public, individual industries, specific mining processes and companies, mine employees and the environment. Social or environmental harm may lead to tangible and intangible costs to industry including reputational loss, costly retro-fitting and even the closure of an operation due to a loss of social licence.

For example, one particularly controversial technical mining process in Australia relates to hydraulic fracturing, or “fracking”, which is a process used in the mining of coal seam gas resources and metalliferous ore. This process has created controversy in Australia and other places where it is used for coal seam gas resources, much of which is based on little or incomplete information about the process, its impacts and the risks to people and the environment.

Due to the close relationship between the industry’s social licence to operate and technology, the cluster’s research has identified an opportunity to address future social challenges within the design stage of technology development using a method known as Social Licence in Design, as described by UQ researcher Dr Daniel Franks. This design process attempts to reduce social hazards or minimise potential social risk by involving designers and decision-makers in considering the likely impacts (anticipated and unanticipated) of technologies once deployed, and how these may be communicated to the public more effectively.

Further, Franks suggests that technological change may also induce social and economic change such as shifts in employment and skills requirements, or economic returns to communities that may not necessarily lead to social conflict but nonetheless have serious impacts on those communities. For example, autonomous and remote operation technologies are set to transform the Australian mining industry. These technologies will instigate a change in the nature of employment in the mining sector and, as a result, the way in which mines interact with the communities in which they operate.

Recently one of the world’s biggest mining companies, Rio Tinto, announced that it would be investing half a billion dollars in its automation program, which includes driverless trains in the Pilbara region of Western Australia to transport iron ore, new technologies in underground tunnelling, a remote operations centre in Perth, and a new fleet of driverless trucks. Other mining companies have indicated that they too have plans to roll out autonomous haul truck fleets and underground loaders.

Automation sounds like a good way of addressing current labour shortages in the mining industry, especially as mining operations continue to expand across Australia. Also, automation may push down the costs of mining because there are (potentially) fewer wages to be paid and it improves workplace health and safety by taking people out of dangerous situations. However, automation implies that some jobs currently based in mining regions will be lost to higher skilled positions located in capital cities and regional centres.

The role of technology is central in defining and realising a sustainable future for the minerals and mining industry in Australia. It has the ability to drive environmental efficiencies (e.g. reduce water and energy use), improve the cost-efficiency of mining, and improve the safety of industry workers. Yet technology that is poorly designed or inadequately thought through has the potential to create unintended consequences for the environment, reduce the number of jobs available to local community members, and change the way mining and society relate to each other. Mining technology development in the future will benefit strongly from the inclusion of a broader set of voices in considering how technologies are designed and deployed. Successful technologies will be those that not only solve technical problems but also meet the needs of decision-makers, local communities and the broader Australian public.

As our Prime Minister, the Honourable Julia Gillard, has said: “The future is in our hands, and it will be defined by the way we handle the current minerals boom. Get it wrong, and we falter. Get it right, and we set the nation up for decades to come.”

Ensuring that we “get it right” means thinking about mining in new ways to deliver benefit for more Australians and reduce the negative impacts of the industry.