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The project I've been working as the Environment and Social Manager for the past six years is the Segilola gold mine, which is owned and operated by Thor Explorations, and is located in Osun State in southwest Nigeria.
Nigeria is a new jurisdiction for miners, and Segilola is the first legal commercial gold mine in the country, so we've had to do a lot of capacity building with government, communities and workers to help them understand what a mining project entails.
We've just completed our first year of production, with an output of around 100,000 oz of gold, making us a medium-sized gold mining operation in global terms.
We produce the gold at site, from an open pit mine and a mill processing around 650,000 tonnes of ore per year. We've also completed construction of our tailings dam, our water storage dam and we have a camp at site, housing around 750 of our 1,700 employees.
There are three host communities around our site, and about 20% of our workforce is from those communities, which is something we are very proud of.
The footprint of the mine is about 540 hectares, which given we had approval to take up to 800 hectares is also an achievement in terms of reducing our impact on the landscape.
As of this year, we have just moved from diesel to full use of compressed natural gas (CNG) for our 6MW-powered onsite generators. This has helped us reduce our overall greenhouse gas (GHG) emissions from the project by about 26% compared to last year, which is something I am personally very proud of.
Segilola is certainly making people look at Nigeria as a mineral resources base. Nigeria is very wealthy with regard to natural resources, but it went down the oil and gas route first, and nobody has ever really considered it for commercial mining projects before now.
It still has quite a way to go before it becomes a truly mining-friendly jurisdiction, but we are in discussion with the Nigerian Ministry of Mines and Steel Development and Ministry of Finance about updating the country's 15 year-old mining legislation.
Since Nigeria drafted its mining laws, the world had changed and the way companies organise themselves has changed. Most companies now use lots of contractors and subcontractors, with the mining company's direct workforce only making up maybe 15-20% of the people working on a project.
This has governance and tax implications that need to be recognised by the legislation.
I'm not surprised that a lot of mining companies regard ESG as one of the biggest risks they face. ESG is going to be with us for a long time, so it's a long-term issue with moving goalposts.
It is forcing us, in a good way, to think about the environmental and social side of projects, as well as how you manage projects from a governance perspective – taking into account your community risks, financial risks and environmental risks – and what you do early on to mitigate these risks.
It's also about how well you handle shocks to the market, such as the recent hike in global energy costs.
Our decision to use CNG instead of diesel for our generators came from a GHG position, but it also turned out to be a cheaper option when fuel costs began to shoot up.
So having ESG as an umbrella over all these risks has really helped us think more clearly about what we are going to do to mitigate them.
Embedding ESG from the outset
One of the things that was really valuable to my work on Segilola, as an environmental and social specialist, was being able to sit at the decision-making table at the feasibility stage – two years before the start of construction.
That was vital, because it takes a long time to build up trust with communities. This is not unique to Nigeria – wherever your project is, you need to work with local communities and obtain a social licence to operate.
When we were putting together the budget for the project, we included benefits for the community in the bottom line. We set out clearly what we were going to do, and how we were going to do that transparently.
I really have to pat Nigeria on the back for writing into law that you have to sign a Community Development Agreement (CDA) with host communities before you put a single spade in the ground.
I think the Nigerian government has learned from its experience with the oil and gas sector and put that provision into the mining sector.
For us, it took about 18 months to negotiate CDAs with the three host communities around Segilola.
We had to establish CDA committees, which consisted of the community chief, the village elders, women's representatives and youth representatives, who could negotiate on behalf of the communities.
We had some pretty tough battles, but in the end you need to work together.
The CDAs we ended up with included employment for local people, scholarships for vulnerable children to stay in school, some physical aspects such as roads and some financial arrangements, such as a development fund for the communities to deploy themselves.
Those CDAs meant we were able to build up working, transparent relationships with the communities and that they were part of the journey of constructing Segilola and bringing it into production.
A particularly important aspect of our CDAs is what we did for the women in our local communities, as generally women don't receive as many direct benefits from mining projects as men do.
Our Women's Initiative Programme allows female members of the communities to decide what will benefit them the most. In the end, most wanted us to provide a way for them to have an income independent of the mine, such as providing refrigerators to sell cold drinks, sewing machines, or threshing machines so they could produce flour.
We also have some women employed on the mine site – they only make up around 8.5% of the workforce at present, so it's one of our ESG targets is to increase the number of female staff.
We've just taken on four female truck drivers, which is great because we are pushing the boundaries of what women can be seen to do. We also have female geologists and women who work in our laboratory, which sets them on a career path that has a future beyond the shelf life of the mine.
Because we intend to stay in Nigeria, where we have 15 exploration licences for further potential projects, it's in our interest to build up a base of skilled people.
As well as the mining activities, the ESG activities we do are attracting a lot of talent to our project.
Nigeria hasn't had the brain drain suffered by some African countries and it has a fairly strong financial and legal sector, meaning there is a wide, deep pool of talent to draw from.
I think companies in places like the UK and Europe who are struggling to get people into mining should think about Africa as a source of new industry talent.
'Do no harm'
ESG is closely bound up with the idea of doing no harm, but in the mining industry it's very aspirational to say that.
Mining does do some harm, at least temporarily. It significantly changes landforms, with the mine pit, waste dumps, dams etc.
But now there is a lot more emphasis on mine closure plans, to try to minimise or ideally neutralise the long-term harm.
In most African jurisdictions, mining companies are made to think about their mine closure plan before they are allowed to proceed with a project.
Surety bonds, which are contractual relationships whereby a third-party surety (typically a bank or surety bond company) guarantees the mining company's performance of closure obligations and provides additional funds in the event of default, are now quite common.
It's more cost-effective to think about it from the outset. This is what we did, so for example, we've stored our topsoil so we can use it in the mine closure.
Some people might argue that onerous mine closure obligations deter new entrants from some jurisdictions. But, when you look at the damage caused by illegal mining, which is widespread in Nigeria and Africa in general, this reinforces the need to plan how you are going to mitigate your long-term impact and not leave communities and governments to clear up your mess.
I grew up in a coal mining community in Australia and I saw first-hand the scarring of the land and the pollution that occurred back when there was no emphasis put on the clean-up. It's a huge legacy issue.
It's also not just about the physical landform and rehabilitation of the site, it's about what you do with the communities. They get used to having a big industry in the area, so there needs to be a plan for them for after you've left.
At our project, we've compensated people for the land within the footprint of the mine and we also run livelihood programmes, including a fish farm which uses some of the water from our water storage dam. This is a new industry in that community and has been very popular because of food security issues.
We've set up cooperatives for the fish farmers and also put in a higher yield vegetable garden and higher yield cocoa trees, so even those in traditional sectors get a benefit and this helps cultivate different skills that don't depend on us being there.
Ideally, you want to leave your communities in a better position than they were in before you arrived.
ESG can be seen as both a risk and an opportunity.
I think the more explicit obligations to report on ESG are good, because these make you set targets and decide what metrics you are going to use, and give you an opportunity to think differently and think ahead.
The main risk in my view is the ratings you might receive from financial institutions. I think there are too many ESG standards out there.
Ratings make everybody nervous, because you might get a great score from one ratings agency and a terrible score from another.
I think if ESG is just run by financial institutions, it will be very quantitative and can be misinterpreted because the focus is just on a number, rather than the qualitative aspects of having a social licence to operate.
In our case, we feel we're on a good ESG journey. We're walking the talk and doing it in a jurisdiction that nobody had ever looked at before.
Louise Porteus was in conversation with Cecily Davis, Fieldfisher's Co-Head of Africa, as part of Fieldfisher Africa Week 2023.
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