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Sustainable development of diamond mining companies as an indicator of the harmonious development of the industry

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Nowadays, every company - except the laziest one - reasons about the sustainable development (SD). The issues related to responsible business, commitment to the ESG1 criteria, the publication of non-financial statements are becoming more relevant every day, and in the near future, those “lazy” companies risk being far behind those ones that set a course for the development by taking into account high environmental, social and governance standards in due time. The issue of climate change and, in particular, the regulation of greenhouse gas emissions, is of particular importance now. Most companies give much attention to this issue despite the fact that for the diamond mining industry, the reduction of greenhouse gas emissions is not very urgent (the total greenhouse gas emissions (Scope 1 and 2)2 made by the global diamond mining companies3 in 2019 amounted to about 3.2 mn tonnes of CO2-eqv., while the emissions (Scope 1) made, for example, by gold mining company Barric Gold alone in 2019 amounted to 5.9 mn tonnes of CO2-eqv.). Without trying to compile any ratings and rankings, let us consider how the Russian and foreign4 companies disclose the information about this and other environmental and social issues, what measures they take for sustainable development, and what ambitious goals they set for the future.

De Beers Group

De Beers Group pays much attention to sustainable development and publishes reports on its corporate social responsibility (CSR) activities annually. The company has a “Building Forever” sustainable development strategy, which defines the development directions and goals to be achieved by 2030.5 The De Beers’ strategy aligns with 16 of the 17 UN Sustainable Development Goals (SDGs)6 (except SDG 2 - Zero Hunger), also set to be attained by 2030. The company focuses on 12 ambitious goals combined into four groups:

1. Environmental protection:

- adapting to climate change (the goal of achieving carbon neutrality by 2030);
- conserving water resources (the goal of reducing water consumption by 50%);
- preserving biodiversity (the goal of achieving net positive effects on biodiversity).

2. Ensuring equal opportunities:

- ensuring the diversity of talents in the jewellery sector (the goal of increasing the diversity of creative talents in the jewellery sector);
- supporting the women (the goal of supporting 10,000 women entrepreneurs and involving 10,000 girls in engineering studies);
- increasing the diversity of the workforce (the goal of achieving equal opportunities, including gender parity, for all the company’s employees).

3. Leading ethical practices in the diamond industry:

- supporting the artisanal mining (the goal of developing solutions to improve the working conditions for miners);
- providing the information on the origin of diamonds (the goal of ensuring transparency of the information on the origin of each diamond);
- responsible sourcing (the goal of extending best practice principles beyond the value chain to promote the industry standards).

4. The development of the regions of the company’s presence:

- ensuring health and well-being (the goal of achieving SDG 3 (good health and well-being) in all the areas of the company’s presence);
- developing the skills and educational activities (the goal of establishing partnerships in all regions of the company’s presence);
- improving the quality of life (the goal of creating four jobs per one job in the company in each of the partner countries).

De Beers makes its CSR reports according to the GRI (Global Reporting Initiative) standard. In addition to the above 12 areas of the sustainability strategy, De Beers provides performance reports on a number of other areas, such as mine closures and asset transfers, waste management and pollution prevention, safety, labour relations, increased transparency, and others7.

De Beers also publishes its key indicators for reducing its environmental impact, as well as for social and economic development. In particular, the company’s greenhouse gas emissions (Scope 1 and 2) in 2020 amounted to 1.5 mn tonnes of CO2-eqv., which is 12% less in 2019, and 21% less than in 2018. Over three years (2018-2020), the company managed to significantly reduce its SO2 emissions (by 2.7 times), and NO2 emissions (by a third), although this was largely explained by the reduced mining due to the COVID-19 pandemic.

As for innovative solutions, the new technologies and measures implemented by De Beers for sustainable development, the following should be noted:

- the implementation of the FutureSmart Mining8 programme developed by Anglo American and implying a changed approach to mining, including ultra-precise mining technology and big data analysis;
- the replacement of most of the fossil fuels with alternative environmentally-friendly fuels (biodiesel), as well as the transition to the use of electricity from renewable energy sources;
- the development of CarbonVault9 technology for capturing carbon from the air and retaining it in kimberlite rocks;
- the Diamond Route project, which has established a network of eight nature reserves in Botswana and South Africa;
- in addition to supporting a rich diversity of wildlife and protected species, these reserves also conduct research programmes in partnership with international universities, as well as educational programmes jointly with the local schools and tourists to support local economic development;
- the implementation of the Women-Owned Microenterprise Development Programme in partnership with UN Women to train women entrepreneurs in Botswana, Namibia, and South Africa in business skills and increase their income on average by 25%;
- the development and implementation of a set of rigorous standards - Best Practice Principles – that imply observing the human rights and labour standards, and other ethical, social and environmental requirements by all the De Beers sightholders and contractors;
- the development of the innovative technological platform Tracr10 using blockchain technology, which provides a guarantee of origin and authenticity of natural diamonds along the entire diamond pipeline;
- the GemFair11 pilot project is to provide miners with access to the global diamond market and training opportunities; at first, the project is planned to be implemented in Sierra Leone.

ALROSA

Russian diamond miner ALROSA keeps up with De Beers in the area of ​​the sustainable development. The company has its Sustainable Development and Corporate Social Responsibility Policy.12 The company annually publishes its sustainable development reports according to the GRI standard. ALROSA contributes to the achievement of 11 of the 17 UN SDGs (3-9, 12-13, 15, 17). The ALROSA’s sustainable development activities are carried out in five key areas:

1. responsible business practices;
2. labour protection and industrial safety;
3. development of human capital;
4. environmental protection;
5. development of the regions of its presence.

The company’s key performance indicators are published in its reports, including greenhouse gas emissions, energy consumption, waste volumes, etc.

Among ALROSA’s initiatives in sustainable development, the following ones should be highlighted:

- testing a unique mine electric locomotive running on batteries - together with Rusnano’s Liotech;
- launching a pilot project for the purification of used engine oils and their recycling to partly replace diesel fuel used in the production of explosives;
- implementing a project to transfer motor vehicles to gas as a vehicle fuel and elaboration of a project to transfer the heating system in the Udachny settlement to gas (expected to be completed by 2023);
- using solar panels in the summer to provide water supply to the heating system of one of the rotational villages (at the Nyurba Mining and Processing Plant);
- creating a specially protected natural area “Living Diamonds of Yakutia” - an area of ​​more than 32,000 hectares - where deer, bison, yaks and other animals are kept;
- introducing an internal corporate system of the rough and polished diamond supply chain management;
- setting up a corporate university, the programme of which includes over 70 educational programmes, as well as setting up a training centre;
- implementing its internal social programmes, including providing employees with housing, medical care, vouchers to health resorts and holiday centres, etc.;
- introducing the Dunobil insomnia technology to control drivers’ fatigue.

Sociedade Mineira de Catoca LDA

Angolan company Catoca does not publish its sustainable development strategy, but it mentions on its official website13 that it goes down that road. The main aspects of environmental and social development are discussed in the company’s annual reports. Its environmental protection measures include lectures on environmental education, implementation of the best practices in waste and wastewater management, water quality monitoring, use of GPS navigators, etc.

As for  ​​corporate social responsibility, Catoca implements a housing programme (construction of residential houses for workers), provides health and life insurance, and offers consumer and car loans.

As for non-corporate social responsibility activities, Catoca supports a programme to encourage fish farming and gardening, provides more than 30,000 children with school meals, conducts educational programmes for children, and provides medical care to the local communities.

AGD DIAMONDS

Another Russian company, AGD DIAMONDS, began publishing its annual sustainable development reports according to the GRI standard in 201814 and it discloses its key performance indicators. The key goals of the company in the sustainable development are as follows:

1. achieving the economic goals of the business;
2. ensuring environmental safety and environmental protection;
3. contributing to the socio-economic development of the regions of its presence;
4. guaranteeing decent wages, protecting the rights, providing social support and staff development;
5. observing the ethics and integrity principles, preventing corruption.

AGD DIAMONDS contributes to the achievement of 10 of the 17 UN SDGs (1, 3-4, 6, 8-9, 11-13, 15). Among the measures taken by the company to ensure sustainable development, the following can be mentioned:

- using the TOMRA XRT separator at the beneficiation factory, which allows to increase diamond recovery and reduce capital costs;
- using (for the first time in Russia) smart compact crushers ThyssenKrupp, which improves the safety of diamonds during the beneficiation;
- ensuring transparency of production and distribution chains;
- using the fuel oil (the main fuel for diesel generator units of the company’s power complex) with a lower sulfur content to reduce the environmental impact, and introducing energy-saving engines for the dewatering system pumps;
- carrying out biotechnical activities, in particular, salt licks for hoofed animals;
- using the hydro-seeding technology to strengthen hydraulic engineering structures;
- corporate training system and various social programmes for employees (voluntary medical insurance, organization of recreation and medical care, etc.);

Active anti-corruption activities, including the opening of the ”We Care” line so that the employees could consult with the head and the security service on corruption issues.

Petra diamonds

Petra Diamonds is currently working out its sustainable development strategy and is going to submit it in 2021.15 It will include the approval of the sustainable development goals with indication of specific indicators for monitoring. Petra Diamonds has been publishing CSR reports according to GRI standards since 2009 with its key environmental, social and economic indicators. The company focuses on its commitment to the ESG criteria.

Some of the Petra Diamonds’ sustainable development measures include:

- introducing the measures to reduce energy consumption, including the introduction of virtual servers, standardization of printing protocols, changed the principle of operation of fans, upgrading the pumping stations, etc.; 
- carrying out works on partial land rehabilitation and reclamation near the ​​mines while simultaneously developing the deposits (in the unused areas), which allows reducing obligations for land reclamation after placing its mines on care and maintenance; 
- launching an initiative to develop small-scale diamond production from the Koffiefontein mine dumps to support artisanal and prevent illegal diamond mining;
- conducting campaigns to support women and promote the development opportunities for women in the mining industry;
- carrying out the “HSE16 Starts With Me” campaign among the company’s employees to prevent incidents and accidents at work;
- annual voluntary HIV testing, which all employees of the company undergo (in South Africa);
- holding an annual “Ethics Roadshow” when Petra top managers meet with employees in all the divisions and develop online training programmes, including on the protection of human rights, anti-bribery and anti-corruption.

Mountain province diamonds

Mountain Province is a Canadian company operating in accordance with the principles of reducing environmental impact, protecting the interests of its employees and local communities’ representatives. In 2014, the company entered into a Ni Hadi Xa agreement with six local communities, the agreement includes an innovative environmental monitoring strategy. The innovation lies in the use of traditional knowledge accumulated by local people who conduct regular field observations and work in cooperation with the Mountain Province environmental team. The company annually publishes its CSR reports17 where some key indicators of its social development are given, and the measures and initiatives are indicated aimed at the company’s sustainable development.

In addition to the original approach to the environmental monitoring that ensures effective mitigation of the mining impact on wildlife, Mountain Province strives to increase the share of the local communities’ representatives (especially women) in the company’s staff, conducts educational programmes for children and adults, it holds sports events, etc.

Lucara diamond

Lucara Diamonds, a Canadian company based in Botswana, publishes its annual sustainable development reports in accordance with the GRI18 standards. In 2019, the company undertook obligation towards 10 of the 17 UN SDGs (1-6, 8-9, 16-17), and in the near future, it plans to set specific targets. Lucara reports on its key indicators of environmental (including greenhouse gas emissions (Scope 1 and 2) and carbon intensity), social and economic development.

The Lucara’s most interesting sustainability solution was the implementation of Clara19, a secure digital sales platform. Clara uses proprietary analytics alongside the cloud and blockchain technologies to modernize the existing diamond supply chain from a mine to an end-user.

Gem Diamonds

Gem Diamonds, a British company operating in South Africa, also regularly publishes its sustainable development reports in accordance with the GRI20 standards. The company considers 6 out of the 17 SDGs (1, 3, 6, 8, 10, 12) as priority ones. Gem Diamonds lists some of its key ESG performance indicators in its sustainable development reports as well as in its annual reports21 (including data on greenhouse gas emissions, water, and electricity consumption).

In 2019, Gem Diamonds undertook an assessment of risks due to climate change, which resulted in its adaptation plan based on two areas of development:

- business continuity by adapting to the effects of climate change and minimizing the greenhouse gas emissions;
- providing opportunities for sustainable land utilization after placing its mines on care and maintenance, and land reclamation.

Gem Diamonds also invests 1% of its annual revenues and 1% of each sold diamond weighing more than 300 carats in non-corporate social responsibility projects, conducts educational programmes, and works on improving security measures, etc.

Let’s sum things up. Table 1 summarizes the information on the presence/absence of certain data on the sustainable development of the diamond mining companies we discussed. In general, a fairly high level of information disclosure on sustainable development can be noted, and almost all these companies publish their CSR reports with key indicators within the framework of sustainable development. Five out of eight companies, including both Russian ones, commit themselves to the implementation of the UN SDGs. At the same time, only two “giants” have a sustainable development (SD) strategy as a separate document - De Beers Group and ALROSA, and only De Beers Group sets targets for the development in the long term. Particularly noteworthy is the fact that the Russian diamond mining companies, on the whole, are not inferior, and in some respects, even outstrip foreign ones in the sustainable development, because in Russia, this issue took on relevance much later than in Europe and the USA. This is largely due to the fact that most of the Russian diamonds are exported, and the companies need to “keep up with the times” and follow the latest global trends both in the rough and polished diamond industry and business in general. However, I would like to believe that all these efforts are aimed not only at ensuring a good reputation and revenue growth, but really help in harmonious development taking into account the interests of employees, local communities in the regions of presence, and all the rests aspects.

Table 1. Qualitative characteristics of disclosing the information on the diamond miners’ sustainable development

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           Sources: open company data
           Notes: * There are reports in paper form (not in the public domain), ** Materials are expected in 2021.

Anastasia Smolnikova, analyst, the Institute of Natural Monopolies Problems, for Rough&Polished

1 ESG - Environmental, Social, and Corporate Governance; a set of characteristics of managing a company, ensuring the involvement of the given company in solving the environmental, social and governance problems
2 Scope 1 emissions are direct emissions caused by the use of fossil fuels, Scope 2 emissions are indirect emissions when purchased electricity is used
3 The assessment includes diamond mining companies providing data on their GHG emissions - De Beers Group, ALROSA, AGD DIAMONDS, Petra Diamonds, Lucara Diamond, Gem Diamonds; ALROSA provides data only for Scope 1
4 This article does not cover Rio Tinto as the company is diversified and does not provide its separate SD information for the diamond industry; the Arctic Canadian Diamond Company is not covered (since it does not provide data in the public domain); and Stornoway Diamonds is not covered either (because access to its SD reports at the time of writing was closed)
5 https://www.debeersgroup.com/~/media/Files/D/De-Beers-Group-V2/documents/sustainability-and-ethics/building-forever-goals-summary-2030.pdf
6 https://sdgs.un.org/goals
7https://www.debeersgroup.com/~/media/Files/D/De-Beers-Group-V2/documents/building-forever/our-material-topics-progress-2019-report.pdf
8 https://www.angloamerican.com/futuresmart/futuresmart-mining
9 https://www.debeersgroup.com/sustainability-and-ethics/protecting-the-natural-world/carbon-vault
10 https://www.tracr.com/
11 https://gemfair.com/
12 http://www.alrosa.ru/
[1]3 http://www.catoca.com/ru/visao-geral/
14 https://www.agddiamond.ru/prom_secure/ecoinform/
15 https://www.petradiamonds.com/wp-content/uploads/Petra-Diamonds-Limited-Sustainability-Report-2020.pdf
16 HSE - health, safety, and environment
17 https://filecache.investorroom.com/mr5ircnw_mntprovincetest/2530/MPD%20CSR-Proof-V2-edit-02.07.20RM.pdf
18 https://lucaradiamond.com/site/assets/files/62670/2019_sustainabilityreport-1.pdf
19 https://claradiamonds.ca/
20 https://www.gemdiamonds-reports.co.za/reports/sd-2021/pdf/gem-diamonds-sus-report-2020.pdf
21 https://www.gemdiamonds.com/downloads/2021/reports/gem-diamonds-annual-report-and-accounts-2020-final-1.pdf