Monday, March 20, 2006

Strategic options for Newmont Mining

This recent Global Guerillas (a blog by John Robb) post Indonesia's "Systempunkt" in the form of an attack on Newmont Mining prompted the following thought process: this is a classic example of a company ‘hitting the walls of the funnel,’ due to its violations of the 4 sustainability principles – particularly the 1st (a root cause of substances from the Earth’s crust systematically increasing in concentration in the biosphere) and the 4th (systematically undermining peoples’ capacity to meet their needs, by draining a country of its natural resources, with no benefit for the majority of the people in that country).

It highlights a few basic options for the company:

1) Pull out, move elsewhere: probably unattractive due to invested overhead in the country and the growing lack of accessible resources (another version of the funnel walls)

2) React in kind, further oppression: the expected response from Global Guerillas, and probably a safe bet – but one sure to end in further suffering for the Indonesians and the company

3) Start working strategically towards sustainability: an evaluation of the company’s contributions to violating the 4th sustainability principle and envisioning a future where they do not contribute to such violations would undoubtedly reveal some “low hanging fruit,” and they could use this event as an opportunity to invite locals into the process, and work to form mutually beneficial partnerships.

These partnerships could be seen as the first step in revising and improving practices so that they do not harm and exploit local populations and the ecosystems that they depend on for survival. Such a move could help the company better understand the problems, provide more jobs, and empower the local people by allowing for participation, understanding, creativity, and a sense of identity (synergistically satisfying fundamental needs).

They could continue to work with the governments, only in a more productive way – to support initiatives (regulations, enforcement, etc) that restrict their competitors from profiting from exploitative behavior – which would in turn enhance the short-term competitive advantage of their strategic sustainable approach.

If done properly, I have no doubt it could be done for less than the cost of private military expenses or walking away from invested capital. It would also need to be done of a longer-term strategic plan for moving towards sustainability and what role a mining company would play in a sustainable society – I would guess eventually something in the realm of cycling metals and raw materials, possibly with some limited sustainable mining and final deposition of waste.

At first glance it might seem idealistic, unrealistic, and inefficient – but from a long-term, whole-system strategic perspective, I think the best choice for the company is obvious. If the true-costs of the alternatives were considered – as they relate to things like ecosystems services, human life, corruption, bribery and international debt-service – the choice would be obvious to everyone. Stay going…