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Annual Report, 2007

3 March 2008

Over the last few decades the spread of a global marketeconomy has helped lift millions of people out of poverty. At the same time, it has generated a tremendous increase inconsumption and capital development, both in developednations, but particularly in emerging economies.

As a result the mining and metals industry has undergone an unprecedented period of transformation; of rapid growth, geographic diversification and an increase in the complexity of the companies involved. For many companies it has been a time of impressive financial performance. The raw materials from these enterprises are used in a huge range of products that make up the fabric of 21st-century society, from MRI machines to suspension bridges, from tin cans to motor cars, from semiconductors to the space shuttle.

But, with such remarkable success comes considerable responsibility.

For example, the mining industry is often the first to make significant inward investment in poor countries and this places the industry in a prime position to ensure a positive contribution at a critical stage in the host nation’s economic development.

The range of countries that mining companies operate in has increased, with many companies making substantial investments in some of the most challenging environments in the world, from the Gobi desert in Mongolia to the Andes in Chile and Argentina, and the Papuan highlands of Indonesia.

For this inward investment to be secure there must be mutual benefit; companies must benefit, as must the host community and country. Indeed, the concept of mutual benefit is the underlying basis for responsible behaviour in the sector. In the past, the economic outcome from inward investment by the mining sector has been variable. The economies of countries such as the Philippines and Sierra Leone, for example, have not benefited sufficiently from the substantial mining activity that has taken place there. This must change. Most communities and countries rightly expect to receive tangible benefits from the use of their mineral resources – part of a nation’s non-renewable natural capital.

Embracing the challenge

Yet in countries such as Botswana and Chile we see what is possible when companies, governments, local communities and development agencies demonstrate their willingness to collaborate, to work in partnership and to embrace the challenge of creating socio-economic benefits from mining investment, collectively. This positive outcome – both socio-economic and environmental – is what ICMM is working to ensure becomes the norm, rather than the exception.

Our work, which began in 2001, is ongoing, and it is clear from a number of events in 2007 that we have made considerable progress during this time.

At the G8 conference held at Heiligendamm, Germany, in June2007, for example, as well as dealing with energy resources, there was a focus on minerals and, to a lesser degree, metals. The work of ICMM was acknowledged in the conference’s communiqué – a sign of the growing recognition of the importance of our activities.

At the African Big Table at Addis Ababa, Ethiopia, in February2007, convened by the president of the African Development Bank and the head of the UN commission for East Africa, and involving 24 mining and energy ministers from various African countries, we were the only business group represented. The information that we put forward was well received and there was recognition of the initiatives we are taking to assist with improvements in national governance, which are fundamentally important to positive socio-economic outcomes.

Establishing higher performance standards

Finally, our stakeholder survey, completed early in 2007, confirms that the most serious issues our stakeholders say the mining and metals industry will face in the next three years are environmental concerns, followed by social and community acceptance. Encouragingly, over three-quarters of those same stakeholders believe that ICMM is proving successful as a leadership group in establishing higher performance standards for its member companies.

Nevertheless, there remains a significant challenge as the pace of change within the mining and metals industry continues at an unprecedented rate. We must continue to encourage the sector to develop its institutional capacity so that it can respond effectively to current events.

Success relies on the collective endeavours of national government, provincial government, multilateral institutions, donor agencies and local communities, as well as companies in the sector. Bringing all of these parties together to achieve positive outcomes is a significant undertaking.

We have gone a long way down this road, but we are still far from the end of the journey. During 2008 we must maintain the momentum as we continue to encourage a responsible approach to the mining and use of metals. It is nothing less than modern society in the 21st century expects and deserves.

Paul Mitchell
President, ICMM