Few industries pose bigger challenges surrounding corporate social responsibility (CSR) than the fossil fuel sector. The businesses that operate this lifeline of humanity must constantly walk the tightrope between extracting resources from the planet while helping to maintain balance in the local environment and communities, ideally contributing back a greater sum total than the valuable resources mined. It’s no easy task.
TSB Review got together with Mina Invierno to discover how an organisation in the mining industry genuinely could present an exemplary CSR track record and serious sustainability credentials. The business was formed in 2006 and funded by two key shareholders. Empresas Copec S.A which is a major international fuel distributor, and Inversiones Ultraterra Ltda., a subsidiary of Ultramar Group, a key player in global maritime shipping and logistics. The shareholders hold a number of years’ experience in coal mining after several decades of joint operation at the Pecket Mine in Magallanes, Chile, a venture that was subsequently sold on to local thermoelectric plants.
A new history for coal in Chile’s, Magellan began when the local government’s Production Development Corporation (CORFO – or Corporación de Fomento de la Producción de Chile, in Spanish) decided to auction off coal deposits on Riesco Island. The organisation is tasked with the economic development of Chile and it chose Mina Invierno for several of the sites. It was a challenging operation to set up. Not just logistically due to the coal being located on a small island and increasingly stringent environmental regulations, but also because the natives would naturally hold a fierce resolve to protect their beautiful local environment. Things needed to be done right.
The environmental and engineering permits were secured in 2009 and 2011 respectively. Shortly after, Mina Invierno had set up the necessary supply chain network, simultaneously contributing to the local transportation infrastructure with improved roads and port capabilities. By March 2013, the first shipment of coal had left the island.
The Invierno coal deposit is on Isla Riesco in the Rio Verde community, Magallanes region and took around $560 million of investment to set up. The site occupies a little over 1,500 hectares of the island’s 500,000 hectare total landmass. For readers interested in the technical details, the coal type is sub-bituminous with a calorific value of 4,200 Kcal/Kg and a sulfur percentage of just 0.4 %. Around 72 million tonnes already have environmental approval and there’s approximately 200 million tonnes in total reserves. Somewhere between 5 million and 6 million tonnes can be extracted annually if the site operates at full capacity.
CORFO was established at the end of 1930’s and over the decades it’s successfully developed Chile’s economy. Consequently, the country’s energy demands have grown resulting in it becoming a major importer of coal. Many experts believe that the country’s dependency on imported fuel simply isn’t sustainable and, fortunately, this is a situation incorporated into Mina Invierno’s business model.
With its current capacity, the Invierno site can supply Chile with 30% of its total demand, making a sizeable contribution for a single company. Mina Invierno doesn’t increase the coal demands of Chile, but rather helps tackle the unsustainable dependence on imported fuel. In an interview with TSB Review, company spokesperson “Patricio Alvarado] “Without a doubt our objective is to maximize the supply of coal to the domestic market, thereby contributing to increased energy independence for the country.” The fact that the country needs to find new energy sources is also established in the National Energy Agenda, so again it’s about helping to bridge that gap until such a time arrives.
Some industry leaders have warned that securing sustainable growth in mining will involve a diligent reduction in costs, improving community commitments, environmental responsibility and also improving safety. Again, Mina Invierno was aware of the challenges it faced and engineering decisions behind the extraction equipment were made from a viewpoint environmentally friendliness. The technologies are comparable with mining operations in the first world which are typically less advanced in nature, but easier on the environment.
As Mina Invierno is supply chain director, Mr Rojas Mauricio, told TSB Review, all of the partners chosen to work on the project were picked from the perspective of their good governance and track record of sustainable processes. The all-important air compressors in the mining equipment are provided by Atlas Copco, a leading provider in sustainable mining hardware that’s listed in the United Nations Global Compact 100 stock index. The minerals laboratory is organised by PCM Lab LTD and the waste management is handled by Resiter, an organisation with many CSR-related awards under its belt. The industrial gas supplier is Indura S.A, an organisation partnered with regularly by companies looking to improve their governance and sustainable processes.
Prolific port construction group, Belfi, handled that side of business and the mining fleet was provided by Ingenieria Civil Vicente, a company with the 50 years’ experience in the sector and one that’s made a name for itself by regularly showing CSR commitment Chile’s development. Algoritmos LTD handle the environmental monitoring to ensure the strict parameters and restrictions are properly and safely met and, naturally, oceanic logistics is taken care of by Ultramar Agencia Maritima.
In addition, Mina Invierno established reforestation and rehabilitation initiatives to be carried out at the mining region. Gaping sections of land left abandoned and ecologically devastated was not an option for this company. It ensured almost 700 hectares were properly cared for, around 520 hectares saw proper reforestation, in addition to the progressive replanting of landfills in parallel to progress with mining operations, all which are unique innovations in Chile.
Another technique used by the organisation is called “mobile pit”. It allows the heights and surfaces of landfills to be reduced, incorporating material back into the environment to recreate it visually using the natural contours of the surrounding terrain. This type of operation is used at similar mines in developed countries such as the United States, Australia, Germany and Spain amongst others. The technique is designed to leave areas how they were found rather than as abandoned engineering sites. When mining operations have been completed, the landfills are then replanted with pastures and a view to ensure shapes and inclinations mimic the environment and facilitate the rehabilitation process.
Mina Invierno also set up livestock farming initiatives to run alongside coal mine, using proven methods designed to avoid polluting the earth, air and water and allow for livestock farms to flourish regardless of proximity to the mine.
In addition to being a major employer, with a massive 87% of employees being locals, Mina Invierno participated in the Don Bosco Institute in Punta Arenas to develop technical and vocational training for young people so they can later seek employment at the mine. The company also helped to develop a meticulous analysis of local school curricula so opportunities for work placements could be provided.
To date, Mina Invierno has made use of over 350 external suppliers with a heavy focus on regional businesses. Between that, the school initiatives and employing so many locals, a major contribution has been made to the competitivity of the local labour market. The company contributed to the 9.8% of economic growth witnessed in Magallanes since the operation started.
A number of special initiates have been developed for the community, too. Examples include regional photographical projects that eventually resulted in published books devoted to the history of coal. The first, “Coal in Magallanes, History and Future” and the second, “The Forgotten History: After the Coal Route”, were written by the national history prize winner Mateo Martinic and by the regional journalist Cristian Morales, respectively. As a final example, the company sponsors the Invierno Cup, a 5-aside soccer tournament for local schools.
When queried on which direction Mina Invierno saw mining in Latin America going over the next decade, Patricio Alvarado stated that: “mining at every level must invest in human capital, to meet the shortage of skilled labor. In addition it must constantly search for greater process efficiency, to reduce costs and consequently find financial equilibrium”. Process efficiency in fossil fuel mining is clearly a crucial issue and few things are as important in developing countries is creating new jobs, especially skilled labour.
Patricio Alvarado went on to say how they felt it’s “also important to consider local communities as part of the mining business and keep them within the principal focuses of the company. Today, without any doubt, the social license to operate is more important than the technical design and other factors.” With such an impressive resumé of successful CSR initiatives under its belt just one year after the first shipment of coal left the shores, it seems very likely that Mina Invierno is a mining company that will back up its statements with the kind of positive action that will make a difference.
The mining industry might be the most challenging of all in terms of operating sustainably and it certainly brings a burden of responsibility to all organisations operating inside it. But, with organisations such as Mina Invierno pioneering the way, engaging local communities, providing jobs, improving local economies both in terms of output and independence, it’s certainly not impossible.
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22 May 2015