IGF SUSTAINABILITY FORUM MINING 4.0: HOW TECHNOLOGY AND INNOVATION ARE TRANSFORMING THE MINING SECTOR - Intergovernmental ...
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INDABA 2020
IGF SUSTAINABILITY FORUM
MINING 4.0: HOW TECHNOLOGY AND INNOVATION
ARE TRANSFORMING THE MINING SECTOR
February 3, 2020 | 14:00–16:00 | Roof Terrace Room
Cape Town International Convention Centre | Cape Town, South Africa
MEETING SUMMARY SESSION 1: BUILDING SKILLS
The Intergovernmental Forum on Mining, Minerals, FOR A SUSTAINABLE FUTURE
Metals and Sustainable Development (IGF)
This first session was devoted to exploring a
hosted a Sustainability Forum on February 3,
number of key questions facing the industry:
2020, with participants of the African Mining
What do new mining technologies mean for
Indaba in Cape Town at the Roof Terrace Room
the future of work? What types of skills will
of the Cape Town International Convention
be needed, and how can mining companies,
Centre. The theme of the forum was Mining
governments and others ensure that local
4.0: How technology and innovation are
stakeholders have the necessary skills to allow
transforming the mining sector. The IGF
mining to make its proper contribution to
partnered with the International Council on
sustainable development?
Mining and Metals (ICMM), the World Economic
Forum (WEF), the Organisation for Economic An expert panel lead by Aaron Cosbey, Senior
Co-operation and Development (OECD), and the Associate from IGF, and comprised of Aidan
Tax Justice Network Africa for this year’s annual Davy, Chief Operating Officer of ICMM; Jörgen
forum. Sandström, Head of Mining and Minerals
Industry Group of WEF; Kemal Öskan, Assistant
More than 100 participants attended the
General Secretary of IndustriALL Global Union;
interactive discussions on the challenges
and Froydis Cameron-Johansson, Head of
and opportunities of innovation and new
International and Governmental Relations of
technologies in mining through the lenses
Anglo American, shared their experience on
of skills development and the future of work,
these complex issues with the audience. The
as well as the implications for government
summary of the discussions follows.
revenues. Participants came from diverse
sectors, including government, the private sector, Aaron Cosbey set the context by noting
civil society, international organizations, and that the session would focus on what new
academia. technologies mean for the relationship
1
between mining companies and their host mobility. That means the right education and the
communities as well as their host countries. right skills aligned with the right jobs—better
He noted that mining is in the midst of a jobs.
wave of profound transformation: disruptive,
creative destruction, similar to that which has He argued that we are not looking at an
already revolutionized manufacturing, retail, entirely negative future on the job front but
communications, entertainment, and other highlighted that technologies are developing
sectors. The technologies involved are in fact at an accelerating pace and that, as a result,
syntheses and adaptations of innovations a number of tasks and abilities are likely to
that have developed outside the mining sector: be performed by machines. He stressed that
artificial intelligence and machine learning, these would open new opportunities for the
blockchain, drones, geographic information mining sector, but that the sector would have to
systems, electric vehicles, renewable energy manage this transition to ensure that gains are
generation and storage, cheap radio-frequency maximized, negative impacts are contained, and
identification sensors, 5G, the Internet of Things, opportunities are shared equally, regardless of
and the processing capacity to handle big data. gender, age, and origin.
Brought to bear on the mining sector, all of Sandström focused in particular on the need to
this comes together to mean the mines of the facilitate the implementation of a positive and
future will be data-rich optimized environments. proactive approach to better tackle the future
They will look quite different from the mines employment and the related skills needed for
of today, with more efficient operations using the jobs of the future. Key programs would have
less energy, emitting fewer greenhouse gas to include reskilling and upskilling of existing
emissions, logging fewer accidents, exploiting labour, targeted programs to attract new
previously unviable resources, and opening up talents, strategies to facilitate inter- and intra-
new opportunities for women and youth in the industry employees’ redeployment, and new
sector. ways of thinking about corporate responsibility
Cosbey observed that these are all very good to support those who would be displaced by
things but that any technology has both positive automation.
and negative impacts, and anticipating and He stressed that we need good data and aligned
addressing the negative is crucial if we hope policy, with policy lighthouses or beacons to
to benefit from the positive impacts that new help better coordinate between business and
tech can provide. He prompted the panellists their associations and with a reskilling delivery
to reflect on these issues from their distinct mechanism that works for all stakeholders.
perspectives. Focusing on closing the skills gap with
accelerators such as good policy is critical. The
OPPORTUNITIES AND CHALLENGES WEF Mining and Metals Community Task Force,
REGARDING TECHNOLOGICAL AND established as part of the Shaping the Future
INNOVATIVE ADVANCEMENTS IN THE of the New Economy and Society Platform, can
MINING SECTOR help to increase awareness and identify and
promote leadership. He acknowledged that
In line with Aaron Cosbey’s initial remarks, tensions are high because of fears of job loss
Jörgen Sandström from the WEF opened by and agreed that some jobs—such as accounting,
simply stating the future is here: 5G has rolled payroll desks, assembly, stock keeping, financial
out in all industries and 6G is being tested in analysis, and driving—are being replaced. But he
mining. At Davos, the discussions focused on reiterated that there will be new and better jobs
social cohesion, with some predicting twice as and ended with a few examples of current jobs
many jobs being created by the Fourth Industrial and future jobs to show the difference.
Revolution. He noted that, as a sector, it will be
incumbent on mining to reskill 1 in 10 people Aidan Davy from ICMM began by outlining the
over the next 10 years and to consider how opportunities and challenges with the advent
to support employees on pathways to social of technological changes such as increased
2
digitization, automation, and the other high Davy further contended that mining has been
technologies in the mining sector. Based on his a significant driver of development in the past
experience with ICMM membership and in recent 20 years in many resource-dependent countries,
publications, he detailed the positive dimensions including in Africa.2 However, he explained
and potential that technology and innovation that the challenge remains whether the social
bring to the sector. From an industry perspective, progress and economic gains over the past two
technology and innovation have great potential decades are going to be sustained over the
to: next two decades as technology and innovation
• Optimize operations and improve mineral accelerate.
processing and recovery rates. Davy recognized that, realistically, local
• Increase productivity, as exemplified by a communities are the most vulnerable to changes
recent decision by one American company due to advances in technology and innovation. In
to roll out machine learning technology terms of employment, jobs that are traditionally
across mines in the Americas with the goal staffed locally or nationally (drilling, blasting,
to raise its copper production across their truck driving, etc.) are expected to decline,
portfolio of assets in the Americas by about given the trend toward automation. However,
5%.1 higher-skilled jobs, such as those linked to
• Enable safer mining activity overall with data analysis and remote central operations,
a lower carbon footprint and therefore will be more in demand. Unfortunately, the
reduced greenhouse gas emissions. communities to be likely adversely impacted are
those that are perhaps least well positioned to
• Salvage or reverse a declining trend in
take advantage of the economic opportunities
productivity. In an era of declining ore
that will come with advances in innovation
grades, the application of technology and
and technology. These will stay out of reach by
innovation sustains productivity gains as
virtue of shortcomings in social and economic
opposed to losses. A reference was made
infrastructure and related factors, such as the
to the McKinsey Mine Lands Productivity
often limited levels of educational attainment
Index, which demonstrated a decline in
and skills base in remote communities.
productivity in the mining sector between
2004 and 2014 that, in some cases, was In addition, alternative economic opportunities
running at about 10% per year. The data available to mining communities will probably
showed that a reversal was only made with be compromised as sectors such as agriculture,
a sustained focus on reducing headcount tourism, and manufacturing are subject to the
and boosting labour productivity. Fourth Industrial Revolution. In remote mining
2
ICCM. (2018). Role of mining in national economies: Mining
1
See: Freeport turns to artificial intelligence to raise copper output Contribution Index 2018 (4th ed.). https://www.icmm.com/website/
by 90,000 tonnes. (2019, November 3). Financial Times. https://www. publications/pdfs/social-and-economic-development/181002_
ft.com/content/88628dc0-fe32-11e9-be59-e49b2a136b8d mci_4th-edition.pdf
3
communities, there is a direct correlation partnerships to deliver support and to
between communities’ expectations of benefits acquire skills at scale. Collaboration
from mining operations and their proximity to between institutions such as ICMM, WEF,
those operations. IISD, the World Bank, the International
Finance Corporation, Mining Share
There is also a gender dimension to technological Value, and many others is a good path to
advances: mining has traditionally been a understanding the nature and scope of the
male-dominated sector. Because technological evolving skills landscape and to identifying
changes impact jobs that are predominately opportunities for partnerships in supporting
physical and manual, the types of jobs often the delivery of critical skills for a common
carried out by men will likely be more affected future.
than those of women. However, women will
not necessarily benefit from this reversal and
the technological advancements in the sector,
A “SOCIAL LICENCE TO INNOVATE’’ AND
as fewer women are involved in science and COLLABORATIVE REGIONAL DEVELOPMENT
technology, engineering, and mathematics and Froydis Cameron-Johansson from Anglo
will not have a competitive advantage in the American shared concrete and pragmatic
mining sector. examples of initiatives undertaken by Anglo
American in the area of innovation. Anglo
ROLE OF INDUSTRY IN ENSURING THAT American has rolled out a robust innovation
LOCAL STAKEHOLDERS HAVE THE program called “FutureSmart.” It aims to identify
the technologies that will affect the mine
NECESSARY SKILLS TO ALLOW MINING
of tomorrow in terms of finding safer, more
TO MAKE ITS PROPER CONTRIBUTION TO efficient, and environmentally friendly ways of
SUSTAINABLE DEVELOPMENT unlocking mineral value such as reducing the
When asked about the role of industry in the physical footprint, the potential for mines that
effort to reskill workers, Davy further stressed are waterless, have no tailings dams, or have
that there must be a shared understanding of a very low carbon footprint, etc. Furthermore,
the skills required for mining communities to Anglo American is committed to its purpose as
thrive in an uncertain future characterized by a company, which is to re-imagine mining to
technological advances and the inevitability improve people’s lives.
of mine closures. He noted that the definition
However, she highlighted the challenges faced
of reskilling needed to be expanded beyond
by companies in developing countries in trying
job training to include entrepreneurial training
to achieve a just transition and delivering on
and leadership skills. In addition, partnerships
companies’ core values. Examples from existing
between mining companies, governments, and
literature and strategies are conceived for
local communities will be necessary to effectively
countries that have a really structured welfare
plan for sustainable, diversified local economies.
state and very high-functioning education
Davy emphasized the following elements:
systems, such as OECD countries. For a company
• There is a need to understand the changing investing in a country such as South Africa,
nature of the skills that are going to be where there are structural challenges with
required for participation in the economy employment (unemployment rates that are at
of the future. This will require mining least over 25%), the challenges are very different.
companies and the industry working
together with governments and educational Cameron-Johansson noted that reskilling
institutions in civil society. might be too easily proposed as a solution to
the changes wrought by automation. In some
• There is a need to develop pathways for
cases, there will simply be an irreconcilable gap
communities and others to obtain the
between the skills needed in the mine of the
necessary skills for economic participation,
future and the skills that existing workers can
leadership, and economic diversification.
acquire. Moreover, she cautioned, we need to
• There is a need to collaborate on catalytic be careful with our assumptions if we claim
4to be doing workers a favour by eliminating JUST TRANSITION
meaningless repetitive jobs. Have we tested
Kemal Öskan, Assistant General Secretary of
that assumption in dialogue with those that are
IndustriALL, a global union federation, pointed
doing those jobs?
to the lack of inclusion of workers in the debate
Anglo American has developed five principles on automation and skills for a sustainable future,
around a concept called “a social licence to the very same debate that will determine the
innovate,’’ which is still at an early stage. The future of their careers. Neither companies nor
principles address how companies should workers know with certainty the degree to which
conduct themselves in considering the impacts technology in mines will affect employment, but
of new technology: listening, engagement, there are examples from Australia, the United
collaboration with those affected, transparency, States, and Canada that indicate significant
and being true to purpose in viewing new job losses. Some estimates place the loss at 20
technology as improving peoples’ lives. million jobs in the mining industry throughout
the world. For Öskan, this gap in dialogue must
Anglo American has also adopted a be filled to ensure workers’ acceptance of the
collaborative regional development approach measures to be taken by mining companies. The
that fundamentally rethinks a mine as an search for the social licence to innovate must
economic catalyst to create independent necessarily include dialogue and collaboration
economic opportunities for the community. with, and acceptance by, local communities as
This starts by identifying socioeconomic well as workers.
development opportunities that offer the
greatest potential in a region, using spatial He pointed to the auto industry as an example
planning and analysis and working with of where that kind of collaborative process had
development agencies, non-governmental worked. They started with an analysis of what
organizations, and the community. Projects kinds of skills would be needed in the future, and
are designed to become part of the regional then unions and employers sat down together
development plan—not Anglo American’s to discuss the best ways forward toward, taking
regional development plan but the local into account the perspectives of all sides.
government's regional development plan.
He argued that information sharing and
Capacity building for municipalities is another
consultation should be held at the project,
key for success to ensure strong leadership
national, and global levels to generate a
and capability in project management and
common vision and understanding of a just
governance.
transition. Broader reforms and discussions
about sustainable industrial policy and
education policy in partnership with
governments will be critical in supporting the
transformational changes to technology and
automation.
5SESSION 2: TECHNOLOGY AND as was the commitment of the international
community to reach a political consensus for a
THE FUTURE OF GOVERNMENT long-term solution to the tax challenges arising
REVENUES from the digitalization of the economy by the
end of 2020. Corrick expressed the view that
The second half of the forum focused on the the consensus will resolve the different policy
roles and impacts of new technologies in mining approaches among G20 countries, including, in
on tax revenues from the sector, and what types particular, the issues between the United States
of partnerships and strategies will ensure that and France on digital sector taxes. However,
mining revenues for developing countries do not a number of technical challenges and policy
erode. differences remained among the participants
that would need to be resolved in order to reach
The panel discussion was moderated by Howard an agreement. These include:
Mann, Special Advisor, Tax Base Erosion and
Profit Shifting (BEPS), IGF, and participating 1. The safe harbour approach proposed by the
panellists included Kingsley Chanda, United States for the implementation of
Commissioner General of the Zambia Revenue Pillar One.4
Authority; Alvin Mosioma, Executive Director 2. The so-called digital differentiation that will
of Tax Justice Network Africa; and Lee Corrick, apply slightly different rules for very large
Senior Advisor, Transfer Pricing, OECD. businesses versus other businesses.
3. The regional segmentation, as suggested by
OECD/G20 INCLUSIVE FRAMEWORK ON some members, of the inclusive framework
BEPS to take into account regional factors.
The panel began with a brief update on the 4. The proposed binding nature of dispute
OECD/G20 Inclusive Framework on BEPS on prevention and resolution mechanisms, as
the Two-Pillar Approach to Address the Tax well as the scope of the dispute resolution
Challenges Arising from the Digitalization of mechanism. The importance of this issue
the Economy.3 Lee Corrick, OECD, recalled the for the African region, where a majority
recent progress made during the Paris meeting of members are strongly opposed to any
in January 2020 but also noted that there form of mandatory binding arbitration tax
are challenges to be met in order to reach a sovereignty, was noted.
consensus. The agreement on the ‘‘Unified
Approach” was an important step forward, 4
The “safe harbour” approach was proposed in a letter from the
U.S. Treasury Secretary to the OECD Secretary General in December
3
See the OECD and G20’s January 2020 statement here: https:// 2019. For more details, see: https://www.oecd.org/tax/international-
www.oecd.org/tax/beps/statement-by-the-oecd-g20-inclusive- community-renews-commitment-to-multilateral-efforts-to-address-
framework-on-beps-january-2020.pdf tax-challenges-from-digitalisation-of-the-economy.htm
6NEW TECHNOLOGY, INTELLECTUAL • The potential losses of tax revenue, such as
PROPERTY RIGHTS AND THE POTENTIAL personal income taxes due to employment
loss as a result of technology.
TO SHIFT TAX REVENUE
Panellists were invited to reflect on how However, Kinsley acknowledged that new
government revenue might become more technology could bring more opportunities
vulnerable to profit shifting with the expansion to increase government revenue as costs are
of new technologies and related intellectual reduced and efficiency and profitability in
property rights. Howard Mann set the context mining operations improved. Conscious of
that new technology that is rich in intellectual their lack of capacity, more and more African
property rights is causing a significant shift countries are moving toward simpler fiscal
in weight to the part of the value chain that schemes on production or taking a stake in
comes before construction or operation and is mining companies.
located primarily in the intangibles in developed
Alvin Mosioma from the Tax Justice Network
countries.
concurred with other panellists that investing
Corrick recognized that the problem is complex, in new technologies, building capacities,
global, and prevalent in many industries, not only and enhancing human resources within tax
in the extractive sector. He further stressed that administrations will be unavoidable if African
the problem is not new but is being amplified countries are to tackle the challenge of
by the BEPS debates globally. Drawing from the transition of the mining sector to new
OECD experience in collaborating with a large technologies. He also identified double tax
number of African countries’ tax administrations agreements with countries where intellectual
over the past 10 years, it was noted that the properties are located as a risk to forgoing
valuation of intellectual property has long been revenues, especially when the intellectual
recognized as one of the most difficult issues in property is located in a jurisdiction considered
transfer pricing. It requires important resources a “tax haven.” African nations should therefore
and capacity in the tax administrations and be more involved in the global reforms in order
highly specialized skills. In this context, the to streamline and modernize the existing double
African continent is unfortunately not well tax agreements landscape.
equipped yet with the expertise to appropriately
Overall, the panel agreed that technology could
consider complex intellectual property rights
be both an opportunity and a challenge with
and transfer pricing issues and related disputes.
regard to national efforts to increase revenues,
However, a few African nations have started
depending on how prepared and capacitated the
to follow some OECD countries in adopting
tax administrations are.
advanced pricing agreements as the preferred
approach to preventing disputes.
STRATEGIES TO SIMPLIFY TAX SYSTEMS
Kingsley Chanda, Commissioner General of
Panellists further discussed the rationales and
the Zambia Revenue Authority, shared his
strategies to simplify the tax systems. Leading
experience from a government perspective on
the discussions, Kinsley reiterated that the
how the shift to a higher presence of intellectual
complexification of mining operations and
property rights and intangibles in the mining
accounting systems and the limited capacities
process is impacting the capacities of African
of African tax administrations to audit those
administration to collect revenue. He highlighted
systems is a reason to resort to simpler strong
some challenges arising in the African context in
tax regimes and monitoring mechanisms. Kinsley
dealing with the issues of intellectual property
gave an example of the Mineral Value Chain
rights and transfer pricing practices, including:
Project, where the tax administration monitors
• The lack of tax administration capacity the production of minerals from the entire value
and the lack of adequate information and chain from production to export. This project
communications technology infrastructure. provides data that can later be reconciled with
the reporting data from mining companies.
• The lack of expertise or resources for
One element here was the need to learn from
undertaking complex audits of mining
experience how a mining company can be
companies.
7producing at a loss for many decades without (i.e., information on ore grades, quantity
any opportunity for the country to levy corporate produced, schedules of production). Panellists
income tax. Following such experiences, the agreed that more data is certainly useful when
Zambian government is increasingly entering it is well understood and used, but to turn data
into agreements and building partnerships with availability into opportunities, certain conditions
investors to take significant stakes in their must first be met:
business.
• Governments must necessarily invest in
Investment in the same level of technology digitalization, including tax administrations.
used by mining companies is unaffordable for • Governments should learn more about
most African countries. Therefore, the cost complex multinational organizational
of technology is an additional argument for architecture and understand the integration
African countries to go outside the traditional between affiliated companies.
tax regimes based on profit and have simpler
• Comprehensive solutions must be found
ways and means of benefiting from the main
across the different economic sectors.
activities in their country. Standardizing tax-
related technologies may help in this regard. • Data should be collected in a more
“standardized approach” or hosted in more
Mosioma further emphasized that the debate standardized platforms and language to
is more complex, as the digital debate has not avoid swamping tax administration with
clarified whether digital sales tax is a gross tax different sets of data that require different
or a revenue tax, but it appears that it is not a skills and analysis systems (software).
profit tax. Furthermore, the complexity of the
mineral valuation and the tales of unsuccessful Increased co-operation and information sharing
attempts to collect corporate income in among tax authorities in jurisdictions where the
more than a few countries suggest the need same multinationals operate was also seen as
for simpler tax schemes. Corrick closed the essential to preventing deliberate tax avoidance.
discussion on this question by highlighting
that other fiscal tools might be used, such as
production-sharing agreements rather than
profit-sharing agreements. In either case,
governments might face the same challenges For more information about the
as they face in current corporate income tax IGF please contact the Secretariat:
regimes. 220 Laurier Avenue West, Suite 1100
Ottawa, Ontario Canada K1P 5Z9
There was broad agreement in the room that
Email: Secretariat@IGFMining.org
developing countries should explore innovative
Phone: +1 613-778-8767 (Ext. 105)
ways and long-term solutions to BEPS issues
in the mining sector through simplified
regimes. The view was also expressed that a
more comprehensive reform at the global level IGFMining.org
should ensure that profits from companies face
the same level of taxation regardless of their
@IGFMining
location.
Secretariat hosted by
NEW TECHNOLOGY, DATA AND
GOVERNMENT TAX REVENUES
Mann framed the final discussion question
around the opportunities that come from a very
Secretariat funded by
data-rich mine: investments in technology result
in companies having access to real-time data
on the various characteristics of their operations
© 2020 International Institute for Sustainable Development
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