Comparing Mining Industry in UK and Canada

Sustainability Practices in the UK Mining Industry

Abstract

It is becoming increasingly difficult to ignore the fact that the mining industry makes one of the strongest environmental effects. In addition, mining companies affect the social and economic situation in the region, in which they operate; therefore, their corporate responsibility is based on three main pillars of sustainability: environmental, social, and economic factors. The United Kingdom is a worldwide leader in mining; thus, sustainability practices of the local mining industry are of particular concern. The matter is that the government does not offer any specific alternatives to sustainability regulations; consequently, the companies choose the most relevant frameworks on their own.

The following study proves the existence of that tendency based on the systematic literature review and analysis of statistics for the last ten years. Sustainability practices do not seem to thwart mining companies from gaining greater revenues in the future. However, the current state of affairs suggests that companies need to engage in cooperation with local communities and governments to maintain profitable production. A similar tendency is observed in Canada, the mining industry of which has been compared to the UK one. According to the global trend, the closer cooperation of stakeholders and sustainable management of production is crucial; otherwise, mining corporations are likely to face growing capital expenditures.

Introduction

Every government strives to provide its citizens with better living conditions. In such a manner, the government nurtures a motivated workforce that will invest more resources and time into production. In their turn, better fruit yielded by economic activities assures the population of sustained growth and development of both the social and economic sectors. To ensure coordinated trade in sensitive trades like mining, and policies. Through environmental laws and policies, the protection of natural resources takes effect, and the regulation of subsequent actions aimed at the preservation of natural sources is made possible. In the United Kingdom, such laws and policies define business behaviors. The mining industry is one of the key players in the economy of the UK, and its environmental effects are among the highest ones. Many companies introduce sustainability solutions voluntarily, but it is unclear whether the governments offer any alternatives or not, and how these legislative regulations influence the profitability of mining companies in the United Kingdom.

Research Objectives and Research Questions

• Research Objectives

The research objective is to ascertain the influence of environmental policies and laws on the mining practice in the United Kingdom in the past decade.

• Research Questions

1. What alternative sustainability regulations are practiced by the UK mining companies except for voluntary internal policies and solutions?
2. Do the environmental laws curtail the mining processes in the UK without giving alternative options for the trade to operate profitably?
3. Is the voluntary self-regulation culture of business people in the UK mining more developed and effective in ensuring profitability and compliance with regulations as compared to Canada, another developed nation?

Literature Review

There is a large volume of literature published on the subject of environmental and sustainability practices in mining. In such a manner, the most prominent subjects must be highlighted in more detail. Fernando Carvalho suggests that the mining industry in the United Kingdom still plays a vital role but its influence on sustainability is also critical as social inequalities and economic implications are becoming extreme (2017). Consequently, the author emphasizes the need to implement sustainability practices in the UK mining companies with a close attachment to the communities, in which they operate (Carvalho 2017). The findings suggest that such practices are popular, and large corporations tend to demonstrate their profound involvement in the support of their communities, for example, by investing in the public infrastructure and leading various social incentives (Carvalho 2017). Nevertheless, these acts are voluntary since the current law of the UK does not provide any specific alternative requirements for mining companies to support the social, economic, and environmental sustainability in the area.

On the contrary, Sinan and Yaman Erzurumlu argue that the sustainable performance of mining companies is a prerogative of communities rather than firms alone (2015). This idea seems to hold, and the authors recommend communities demonstrate their interest in such collaboration, thus demonstrating to firms the specific expectations and wishes of the society (Erzurumlu & Erzurumlu 2015). Sustainability development is a strong trend nowadays; however, maximal efficacy can be attained in the case of collaboration and sharing the vision of current problems. Consequently, Erzurumlu and Erzurumlu indicate that mining corporations use sustainability practices on their own because they do not have any distinct legislation to follow concerning these initiatives (2015). The authors agree on that matter that companies engage in sustainable practices because of various reasons, but their motives are not shaped by any distinct framework that can deliver a systematic contribution to the social, economic, and environmental sustainability of the region, in which they operate (Erzurumlu & Erzurumlu 2015). Hence, this vision is popular among researchers.

Sustainability is not just an obligation for mining companies but an objective that requires common efforts. Dobele, Weisberg, Steel, and Flowers use a similar approach in their study; they claim that sustainability practices are not the concerns of mining companies only (2014). Other stakeholders have a non-centric relationship with the company; thus, even governments do not guide companies in terms of sustainability management. Again, the authors emphasize the fact that voluntary sustainability practices in mining companies are the outcome of the fact that they are the only players particularly engaged in sustainable projects. Meanwhile, communities and other stakeholders are passive in such sort of collaborations (Dobele et al. 2014). Therefore, sustainability practices of mining companies and all relevant stakeholders are based on their awareness rather than any official attempts to regulate the process to produce global outcomes and share their own experience in this domain.

Sustainability practices should not only take into account the basic needs of their local communities but also consider larger contexts. Such an approach was proposed by Fonseca, McAllister, and Fitzpatrick; they argue that mining companies should not be limited to basic and personal initiatives in sustainability management (2014). This approach implies a lack of alternative regulations for them, so they do not pay attention to global reporting and other activities that can make a significant contribution to the maintenance of global sustainability. It is a different perspective of sustainable practices in mining corporations, but the authors share the view that mining companies lack specific guidance concerning sustainable practices as such (Fonseca, McAllister, & Fitzpatrick 2014). Some laws and taxes oblige mining corporations to adhere to a range of rules, but they do not raise corporate awareness about making a positive effect on their communities. As a result, these companies usually act according to their agenda, as they feel responsible because of their openness and appropriate organizational culture.

Concerning the profitability of mining companies in terms of sustainability and the need to implement relevant practices, production does not change to a significant extent. John Sykes and Allan Trench argue that mining companies would be still in demand because of their production, while miners and related technology vendors might be required to offer new and more sustainable solutions (2016). This course of action is attainable in the future as stakeholders admit the possibility of these outcomes. Sykes and Trench also assert that a limited range of the industry's flexibility in terms of sustainability will require long-term outlooks in strategic planning (2016). As a result, companies will have to utilize both divergent and convergent approaches in the management of their strategic tools and sustainability practices. Consequently, large and financially mature companies will be the first ones to contribute to the industry change significantly; this scenario is inevitable under these circumstances.

These changes are likely to have a huge effect on the mining industry because many corporations have already launched such forward-thinking solutions in technological, organizational, and public senses. Shen, Mudili, and Barve admit that many companies have managed to implement international frameworks for sustainability regarding the socio-economic and environmental influence, so they generate wealth for a greater number of people within the community (2015). This finding implies that sustainability practices can be useful for mining industries; consequently, harmonious co-existence of communities and mining companies is achievable. The authors also mention that this state of affairs is still insufficient because firms do not see any long-term prospects in evolving sustainable approaches in their practice (Shen, Mudili, & Barve 2015). However, the article does not provide any rationale for this statement (Shen, Mudili, & Barve 2015). It is difficult to understand whether these observations are based on the research evidence or are just predictions of future outcomes.

The tendency in sustainability practices in Canadian mining companies does not differ much from trends in the United Kingdom. Hilson reports that both companies and the government seek some specific approaches, but they still lack mutual consultation regarding the improvement of all three pillars of sustainability (2000). The author also indicates the fact that the government does not offer any incentives that may motivate mining companies to engage in sustainability activities. In such a way, the current state of sustainability practices in the most prominent mining companies in the world does not differ much (Hilson 2000). However, Hilson offers several recommendations regarding the improvement of the situation: regulation of procedures related to the limitation of specific mining practices, distinct instructions concerning the involvement of the environmental organizations, role allocation among stakeholders, prescriptions of environmental monitoring, and recommendations for the minimization of harmful effects of mining on the environment (2000). Therefore, the Canadian mining industry experiences the same challenges and prospects as the United Kingdom does.

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The issue related to profitability in terms of sustainability trends is viewed in Canada from a different perspective. Komljenovic, Abdelnour, and Popovic note that companies have to produce more at a lower cost (2015). This phenomenon does not relate to the issue of sustainability directly but the deployment of sustainable approaches will mean that mining businesses are jeopardized in multiple aspects. The authors claim that the industry uses outdated approaches to financial management; therefore, finance must be updated as soon as possible in this era of sustainable development (Komljenovic, Abdulnour, & Popovic 2015). In such a manner, the shared decision-making and design of the unique framework for the generation of profits will be needed in the future, and the research should focus on this type of study. In addition, the authors admit that this approach will be economically viable and financially competitive as firms will be able to perform at their maximum in terms of productivity (Komljenovic, Abdulnour, & Popovic 2015). In other words, the future success of the Canadian mining industry depends on the provision of a unique decision-making framework that will combine sustainable practices and optimal productivity.

Methodology

Since the study sought to provide specific industry insights and particular trends for the future, a mixed methodology research design was chosen. Qualitative and quantitative data were used to answer research questions to provide the most relevant and credible research outcomes. The methodology was based on qualitative data from the systematic literature review and quantitative figures derived from economic statistics. A historical explanation, observation, and archival research on environmental policies, laws, and their influence on the behaviors in the mining industry in the United Kingdom were utilized. The sample of the analyzed literature comprised 54 items, including peer-reviewed articles, policy statements, and white papers concerning sustainability regulations in the mining industry of the United Kingdom. Since the research focused on the investigation of the phenomenon of sustainability practices in the UK mining industry, the collection of reliable insights via the systematic review of the most popular trends was selected as the most effective research instrument in this regard (Lyon, M? llering, & Saunders 2015). These data were compared to similar archival information concerning the Canadian mining sector. Quantitative data have been in use when analyzing statistics of the last ten years and making comparisons in terms of profits and losses, as well as the growth trends in the mining industry of the United Kingdom. The same was underpinned by the research aim to trace a distinct tendency for the future (Lyon, M? llering, & Saunders 2015). In such a manner, the accumulation and comparison of historical data were utilized as the most appropriate research tools. These research tools were selected because of their maximal efficacy in the context of the study and relative feasibility which has been an important consideration for such complicated research. The data have been processed without any significant deviations, and thus the results can be presented and discussed.

Analysis 

• Results

The quantitative analysis of the productivity and capital expenditures of the industry in the United Kingdom and Canada demonstrated a relative parity. Without a doubt, the UK mining industry has managed to achieve higher productivity because of its profound experience and long history of mining practices (Appendix 1). At the same time, Canadian mining companies have significantly boosted their productivity over the last decade (Appendix 2). Therefore, sustainability trends have not influenced these countries since there has always been a high demand for mining, even though alternative sources of energy have been introduced in the meanwhile. At the same time, the growth of capital expenditures is a peculiar process observed both in Canada and in the United Kingdom. On the one hand, Canada was struggling with high expenses for the long period from 2008 to 2018. Consequently, its current CapEx is one of the lowest of the decade (Appendix 3). On the other hand, a prolonged downfall of CapEx in the UK mining industry is followed by a rapid increase. Therefore, one may conclude that sustainability practices have not made any positive contribution to the optimization of production to the desired extent (Appendix 4). The provided results correspond to the theoretical framework; therefore, these findings are credible enough to integrate into the major field of study. In addition, there is a consensus among theoreticians and practitioners concerning the research subject; thus, the outcomes of this study are valid.

The qualitative analysis has uncovered that sustainability practices in mining companies do not have many alternatives in the United Kingdom and Canada. The latter experiences a greater involvement of the government, but these solutions are ineffective in the context of the passive participation of other stakeholders. Nevertheless, the Canadian mining industry has not managed to become more advanced in this domain; its general profitability does not differ much from the capacity of the sector in the United Kingdom. In such a manner, the UK and Canadian mining companies develop according to similar patterns but in different economic environments. The difference in taxation, technology reliance, and effects of Brexit play a crucial role. At any rate, the statistical data have been retrieved from official reliable sources, and the same processes have been described in the literature review. Henceforward, quantitative findings are also reliable and valid. There is a wide range of implications that explain the current state of mining industries in the United Kingdom and Canada, and they require a detailed discussion.

• Discussion

According to the results of the study, it is critical to discuss the following aspects. First, the UK mining corporations demonstrate sustainable performance, but these initiatives are limited to the organizational decision-making and relevant culture that promotes such attitudes. These practices are usually observed in large corporations that strive for a global presence in the market. Consequently, sharing experience with small and localized mining companies is necessary (Hojem 2014). Two trends can justify this trend. Big companies engage in sustainability practices because of the scale of operations and effects they produce. Meanwhile, small organizations have limited resources and expertise in this respect, even though they still play a vital role in global sustainability (Hojem 2014). However, many practices are narrowed to specific performance indicators; therefore, even small companies can use them (de Villiers, Low, & Samkin 2014). At the same time, such measures do not influence decision-making toward more conscious and sustainable performance design as a whole since setting specific performance standards is insufficient for long-term sustainable performance.

In such a manner, the situation with sustainable practices and alternatives should be addressed with strong corporate responsibility, localization of sustainability policies, and governmental incentives. These components are necessary for a smooth progression of the entire mining industry in the United Kingdom. At the current stage of development, sustainable practices just have to become an essential part of operations in mining companies, regardless of their size, capital, and experience (Giurco & Cooper 2012). Consequently, the policy-making should vary depending on the specifics of mining companies. Incentives must come together with regulations in the same way since the mining industry needs profound support for the attainment of sufficient capitalization and cost savings for long-run performance (Mudd 2010). This course of action does not offer any specific and long-term outcomes because the establishment of common sustainability norms is a preexisting requirement.

The absence of adequate environmental regulations is extremely apparent in the mining industry in the United Kingdom; therefore, there are no specific barriers to gaining profits in this regard. A global trend of sustainability may suggest that there is a little decrease in profits because of the limited production activities (Kirsch 2010). This tendency is not persistent on a large scale; meanwhile, numerous other barriers may prevent the industry from capitalizing further (Himley 2010). The oversupply and restrictions on the related markets may play a key role and define the profitability of mining companies (Moran et al. 2014). It is important to note that environmental policies do not undermine the revenue mechanisms of mining companies. Therefore, an associated decrease is extremely improbable even though sustainability practices come at play as an essential part of production (Dechezlepr? tre & Sato 2017). The mining industry faces other problems at the moment, and businesses are jeopardized in this situation (Fonseca, McAllister, & Fitzpatrick 2013). Oversupply affects the prices; however, markets will need more raw materials, and thus corporations cannot simply cut production loads (Franks 2015). Hence, sustainability trends might turn out to be strong game changers in this regard; if heavy reliance on the mining industry decreases, fair value for mining, refinery, storage, and other services will be set (Dechezlepr? tre & Sato 2017). The global mining market has reached its momentum at the arousal of sustainability; therefore, prices demand, and sustainability adjustments are likely to create a harmonious economic model for companies.

Ultimately, sustainability practices in Canada are developed to the same extent, but several advancements can be observed. There is a profound corporate responsibility, and the governments strive to engage in the creation of incentives for communities and mining corporations, even though several gaps are still unaddressed. The culture of sustainability is shared with other industries; consequently, stakeholders have a better awareness of cooperation in this respect (Humphreys 2015). On the contrary, the United Kingdom mining companies generate effective profits while Canadian companies encounter a greater amount of capital expenditures (Hall 2013). This difference can be generally explained by the fact that these companies spend much on technology; meanwhile, their production is subject to taxation. This tendency undermines the aforementioned governmental incentives as they do not extend the tax deductions (Humphreys 2015). In general, the Canadian mining industry needs to take the same course of action as the UK has recommended above.

The Canadian mining industry follows almost the same pattern of development that the United Kingdom companies have been practicing for the last ten years. Therefore, differences in sustainability practices or revenues for the last decade have not been extremely opposite. It is crucial to note that Canada and the UK are the top countries in the sustainable mining industry (Goodland 2012). Developing countries have to deal with significant problems with all pillars of sustainability; therefore, Canada and the United Kingdom are expected to take responsibility for developing worldwide standards and practices for sustainable mining (Haque et al. 2014). Some companies outsource overseas to developing countries; as a result, their sustainable development leaves much to be desired, as well (Boiral & Henry 2017). It is necessary to admit that the current state of sustainability practices and leveraged profitability of the mining industry should develop in the future. There are all conditions for developing attractive incentives and a common environment for building sustainable mining on a global scale.

Conclusion

It is appropriate to make conclusions that sustainability practices are still an emerging trend in the mining industry in both the United Kingdom and Canada. It does not make any extreme effects on the markets and economies as a whole, but some promising trends are likely to take effect in the shortcoming future. At the current stage of development, sustainability practices in mining industries are still subject to the voluntary participation of organizations rather than the result of strong incentives offered by the governments. As a result, the future of sustainable mining depends on the way companies and other stakeholders cooperate. There is a lack of communal involvement; therefore, mining companies do not observe a clear picture of the specific needs of the communities, in which they operate. Meanwhile, the governments do not have any specific strategy for the implementation of incentives in a stable legislative mechanism.

This idea may explain why sustainability practices do not hamper the productivity of mining industries in both countries. First, they do not produce any significant impact on production processes, even though the majority of sustainability solutions target that domain. Second, sustainability practices in other industries do not affect productivity to a dramatic extent, and the same outcomes are likely for mining companies. Third, the mining industry in both the United Kingdom and Canada experience an extreme oversupply even though demand has not saturated and has been projected to grow in the next decade. Taken together, the profitability of mining companies can be hardly harmed by sustainable practices. Instead, there is a high probability that these solutions will advance the revenue mechanisms of mining companies, thus making their smooth transformation to a new form of economic relations, while energy resources play a different role.

Limitations and Recommendations for the Future Research

Nevertheless, the current study has several gaps. Despite profound findings and generalizations, research does not offer specific strategies for fostering sustainability practices in terms of cooperation with other stakeholders. In addition, governments are not offered any effective ideas for developing incentives for sustainability legislation. Research simply describes the current state of economics in the United Kingdom in this regard. Meanwhile, the comparison with the Canadian mining industry does not provide any suggestions that can be applied to the British context. Therefore, future research should focus on the investigation of existing policy-making practices and their transition to the UK's mining industry, especially concerning the changing economic model caused by Brexit. Besides, expertise from other industries should be also studied to understand whether the mining industry could be integrated into the global system of sustainability practices or not.