As energy becomes scarcer innovative forms of extraction have emerged. Most prominent among these due to their controversy are fracking and oil sands.
Obama in his State of the Union address backed fracking alongside additional regulation requiring companies disclose the chemicals used in the process.
Keystone XL did not receive the Presidents backing amid claims the Congress imposed deadline did not give sufficient time to weigh the social and environmental impact. The more cynical might suggest it was simply too controversial a decision to take in an election year.
Regardless of the motives behind each decision the question must be posed, has the extractives industry ability to operate in increasing complex and difficult environments been matched by implementation of a sufficiently robust social and environmental policy? Deepwater water horizon is a poignant reminder of failed risk mitigation as BP struggled to contain a leak occurring hundreds of feet below the ocean floor.
Fracking in the USA is seen as a potential holy grail on the road to diversifying energy supply and reducing foreign energy dependence. Environmentalists remind us of the potentially devastating harm fracking can cause to drinking water
The risk versus opportunity conundrum extends well beyond energy extraction. In the mining sector operations now take place in extreme environments ranging from the Canadian Arctic right through to conflict affected zones such as DR Congo and Liberia. Here risk mitigation isn't just environmental but also social.
Infrastructure and regulatory capacity is often minimal whilst mining operations have a major impact on national GDP. De Beers through its diamond mining activities generates 30% of GDP and 50% of government revenue in Botswana.
Resource rich countries are become increasingly protective of their natural assets as energy and precious materials become scarcer. South Africa, Zambia, Australia, Zimbabwe and Columbia have all put forward plans to secure a greater slice of the pie.
The challenge is for extractives companies to engage with local and national stakeholders and develop positive long term relationships in order to retain all important community consent for operations and overcome resource nationalism .
Resources are finite and the onus is on mining companies to develop sustainable social investment initiatives which will survive long after mine closure.
For a more in depth rundown of key social and environmental risk challenges including the keystone xl debate and resource nationalism download a free Ethical Corporation 15-page briefing pack here
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For more information:
Steven Wilding
Conference Director
Ethical Corporation
00 44 207 375 7226
E: steven.wilding@ethicalcorp.com