TCFD and TNFD for mining

TCFD and TNFD for mining

May 25th, 2022

TCFD and TNFD for mining: concepts, examples and caveats, is the paper we presented at #CIMBC22 Mineral Economics and Finance.

Recent failure at Pau Branco Mine

Photograph provided by: Adolfo Tribst Corrêa

We asked the audience if they were familiar with the:

Only a couple hands rose.

Significant points of our discussion on TCFD and TNFD for mining

Once again, as discussed in the two prior issues of this blog and in detail in our recent book entitled Convergent Leadership-Divergent Exposures we stressed that time for nice “talking” about critical issues is gone.

Indeed we believe that TCFD and TNFD may become as important as the ICMM GISTM. Furthermore the term Financial Disclosure hints, and the protocols are quite clear on this, at the requirement to disclose “real numbers”, and not only deliver “nice words”.

The fact that the Stock Exchange Commission recently sued Vale (U.S. regulator sues Brazilian miner Vale over ‘false and misleading’ dam claims | Reuters) sends a strong signal reinforcing our point of view. If big share value losses, or catastrophic accidents occur, we can expect that, from now on, scrutiny of all declarations and annual reports.

Another point we made was that innovation and changes oftentimes come with side effects. That means that “going green” or “going circular” or whatever new wave a company decides to ride will generally come with side-effects. There is no magic pill, no snake oil that ensure success if hazards and risks have not been carefully evaluated.

We actually showed a recent example in the industry. That is a mine that adopted a “no dam” solution, publicized it extensively, got an environmental award. Mother Nature did not take long to show the promoters that even “no dams” solutions can fail!

Closing remarks on TCFD and TNFD for mining

We have oftentimes expressed our concerns on excessive enthusiasm with innovation. A rational approach to innovation requires understanding upward and downward risks. Upward risks are those that will bring a positive reward, a gain. Downward risks are those that bring nefarious results.

Unfortunately, even nowadays, industries oftentimes look only at the rosy side of risk, i.e. to the upward side. Years ago we were claiming that the common practice approach of NPV is one of the culprits of many failed projects. Indeed, it’s formulation rarely includes risks, but simply “gains and expenses”. As a result, especially in times of climate change, many projects with robust NPVs may be “dead man walking”.  

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Category: Consequences, Mitigations, ORE2_Tailings, Risk analysis, Risk management, Tolerance/Acceptability

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