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This book describes a process of building research capacity in the area of mining and the environment. This process began in the mid-1980s in Latin America, when a number of policy researchers — working together within International Development Research Centre (IDRC)-supported projects on issues of competitiveness, production efficiency, and technological change — began observing a noticeable association between production inefficiencies and environmental damage.

This was at a time when countries such as Bolivia, Brazil, Chile, and Peru either had a poorly developed or nonexistent environmental regulatory regime or lacked the institutional capacity to implement environmental policy. An early observation, examined in detail in this book, was that environmental regulation seemed to fail as the prime determinant of good environmental practice. Environmental performance of firms seemed to differ as much within one regulatory regime as between different regulatory regimes. These observations suggested the need for empirical research at the firm and plant levels, both to describe the environmental practices observed and to check these against the types of operations, vintages of technology, and competitive situations of the minerals sectors of the Americas. Our rationale was to learn how to improve public policies and corporate strategies for the environment.

This research was unfolding in two interrelated contexts. First, many mineral-producing countries were entering a period of economic liberalization, with privatization of previously state-owned mining companies and investment regimes opening up to attract international mining firms. Second, an environmental imperative was fast emerging, with increasingly stringent environmental regulations; growing voice-of-society concerns; environmental conditions often being attached to credit and insurance for new or expanding mining operations; and environmental pressures appearing throughout the supply chain, as industry was increasingly demanding that its suppliers meet new environmental standards. It is also important to recognize that this research was conducted in the early 1990s, when the importance of such diagnostic work was first recognized and we urgently needed descriptive analysis to be able to draw policy lessons.

A collaborative framework was devised to undertake this research, and proposals for its funding were submitted to a number of key agencies with portfolios in environment and development. Seed funding from the Organisation for Economic Co-operation and Development (OECD) Development Centre and the Overseas Development Administration made it possible, in 1991, to establish the Mining and Environment Research Network (MERN), a collaborative project involving researchers from the following institutions: the University of São Paulo and the Centre for Mineral Technology (Centro de Tecnologia Mineral) in Brazil; the Institute for Research on Public Health (Instituto de Salud Popular) and the Catholic University of Peru (Pontificia Universidad de la Católica del Perú) in Lima, Peru; the Centre for Studies in Mining and Development (Centro de Estudios Mineria y Desarrollo) in La Paz, Bolivia; and the Centre for Studies of Copper and Mining (Centro de Estudios del Cobre y de la Mineria) in Santiago, Chile. The collaborative research project developed and won the prestigious John D. and Catherine T. MacArthur Foundation Collaborative Studies competition in 1991. Together with complementary funding for the Bolivia project from IDRC, this launched the first phase of MERN, which is the subject of this book. MERN fast expanded to include a range of different types of interdisciplinary centres of excellence in mineral-producing developing and industrialized countries. The current list of members is summarized by institution and country in Table 1.

From the outset, MERN aimed to provide research analysis to inform environmental public policy and to help mining companies achieve environmental compliance and improve competitiveness in the context of growing environmental regulation and technological innovation (see Box 1). The international collaborative research program first set out to examine the relationship between environmental regulation, technical change, and competitiveness in the nonferrous-minerals industry. In particular, it investigated how the process of technological innovation and organizational change could be harnessed to prevent environmental degradation while enhancing productivity and sustainability.

The rationale for the international focus of the research effort, in the developing and industrialized countries, was the need to learn from the experience of more competitive and environmentally proactive firms while focusing on the challenges of achieving environmental best practice in each participating country. The reason for adopting a network approach, as opposed to working independently, was to build up an international pool of interdisciplinary research competence. In other words, research capacity-building was a goal of the network from the outset.

A number of environmental concerns made us decide to work collaboratively toward our research objectives. Our early research profiles were all in the area of minerals policy and technological change in the mining sector and in the countries where we worked; many of us had done field work in the Andean region. We were all increasingly observing environmental damage associated with minerals extraction or processing activities: Figure 1 shows the relationships between the mining process, its waste products, and the hazards they present. This relates to environmental impacts affecting the three environmental media of land, water, and air, as well as the effects on local communities. Although in each country and at each mine site, environmental damage differed, some common explanatory factors seemed to emerge. Some of these, we immediately recognized, flew in the face of conventional wisdom. Conventional wisdom maintains the pollution-haven thesis that suggests international firms locate their production activities where they can most easily externalize the environmental-damage costs of their production, that is, in developing countries where environmental regulations are either limited or poorly enforced. However, an early, common observation explored in these studies was that environmental damage was not evenly distributed within the minerals sector of each developing country studied but that seemed to vary according to a number of other factors, such as type of mineral; vintage of technology; stage of investment; stage of operation; level of integration; effectiveness of environmental regulation and its enforcement; and socioeconomic context (including poverty in local communities and work-force education and training). Most of all, environmental performance varied according to the firm's inherent technological dynamism.

Box 1 The Mining and Environment Research Network MERN is an international collaborative research program involving centres of excellence in the major minerals-producing countries of the world. The program was established in 1991, with the aim of helping mining companies to achieve environmental compliance and improve competitiveness in the context of growing environmental regulation and technological innovation. Our current research examines the relationship between environmental regulation, technical change, and competitiveness in the nonferrous-minerals industry. We investigate how the processes of technological innovation and organizational change can be harnessed to prevent environmental degradation while enhancing productivity and sustainability. The liberalization of investment regimes worldwide, combined with growing environmental regulation and more frequent requirements for an environmental-impact analysis as a precondition for loans, means that objective and well-documented policy analyses are urgently needed to support decision-making in industry, donor agencies, government, and nongovernmental organizations. This program of collaborative research aims to facilitate the global diffusion of such policy analyses and contribute to building international research competence in this area. Taking this into account and building on our diagnostic research, the next phase of MERN research covers three interrelated themes: Comparative analysis of environmental performance and its relationship with production efficiency — MERN research has demonstrated that good environmental management in the firm is more closely related to production efficiency and capacity to innovate than to regulatory regime. Environmental degradation tends to be greatest in high-cost operations working with obsolete technology, limited capital, and inadequate human-resource management. Because these problems are characteristic of much of the minerals production of developing countries, they are a special, but not exclusive, focus of MERN research. A major area of empirical research is an international benchmarking exercise to investigate environmental performance. Analysis of international environmental regulations and the definition of improved policy options — Building on an international comparative analysis of the effectiveness of current environmental regulations, researchers are investigating a range of policy approaches to achieve sustained and competitive improvements in environmental management and to achieve pollution prevention, as opposed to pollution treatment. The research will make an original contribution by evaluating the potential of technology transfer and training (particularly if governed by joint-venture agreements and are linked to credit conditionality) to accelerate the development and diffusion of improved environmental-management practices. Researchers are also analyzing the environmental implications of new trade policies and agreements, such as the General Agreement on Tariffs and Trade and the North American Free Trade Agreement. Toward best practice: corporate trends in environmental management — A preliminary conclusion of MERN research is that technical change, stimulated by the drive for improved competitiveness and the environmental imperative, is reducing both production and environmental costs, to the advantage of those companies that have the resources and capacity to innovate. Our current phase of research is intended to evaluate and compare trends in environmental best practice for nonferrous-minerals production in different socioeconomic and policy contexts, drawing out the lessons for both corporate strategy and government policy. This includes empirical research on planning for closure within the minerals industry. Past and current sponsors of MERN research and dissemination activities include the John D. and Catherine T. MacArthur Foundation; IDRC, Canada; the Overseas Development Administration, United Kingdom; the Economic and Social Research Council, United Kingdom; the OECD, Paris; the US Bureau of Mines; the United Nations Environment Programme, Paris; the Science, Technology, Energy, Environment and Natural Resources Division of the United Nations; Industry, Science and Technology Canada and Environment Canada; the Chinese State Science and Technology Commission; the Columbian Institute for the Development of Science and Industry (Instituto Columbiano para el Desarrollo de la Ciencia y Tecnologia), Colombia; the British Council; and a growing number of MERN Industry Club sponsors. The output of MERN includes ongoing publication of research articles and reports, conference papers, books (including edited volumes of case studies), a biannual bulletin and briefing papers for sponsors, national workshops, and an annual international conference. As the MERN members develop research capability and define new areas of work and as demands on MERN's central resources increase, new funding is being sought. The benefits for MERN's sponsors include full access to MERN's central services and research findings (which include the results of detailed empirical studies in most of the major minerals-producing countries) and to a network of contacts, including interdisciplinary teams in well-placed centres of excellence. For further details on membership, sponsorship, or research, please contact Professor Alyson Warhurst Director of the Mining and Environment Research Network International Centre for the Environment School of Management University of Bath Bath, UK BA2 7AY Tel: +44 (0)1225 826156 Fax: +44 (0)1255 826157

These studies are therefore unique in refusing to accept a prior conventional wisdom and seeking to investigate actual environmental performance and its determinants at the mine site and across a range of site-specific factors.

The intellectual benefits of working together in a network and collaborating across a range of research and dissemination activities were greater than they would have been as the sum of the efforts of each institution working alone. Our networking activities included the coordination of our efforts through an electronic database and information system. As we grew from an initial 6 institutions to 56, luckily so did information technology grow in sophistication. We now do most of our networking activities via electronic communication. The network produces a bulletin twice annually, and this contains progress reports from each group, policy updates, industry news, professional articles, and a conference calendar. We recently completed Bulletin No. 10; collectively, the bulletins record MERN's growth over the years.

Figure 1. The mining process and the environment. Source: Warhurst (1991a).

Once a year, MERN meets for a research workshop on a theme-by-theme basis. Workshop themes have included mining and sustainable development; pollution prevention, risk, and responsibility; planning for closure; and best practice in the management of mining's ecological impacts. Each workshop includes special sessions for research feedback and dissemination. Each of the chapters of this book went through such a peer-review process.

Finally, competence-building was absolutely paramount in this research process — these research studies were also undertaken as an education and training exercise. Two of the researchers who contributed chapters to this book, Maria Hanai and Fernando Loayza, were awarded Ph.Ds for their work. All the researchers, including the editor, Alyson Warhurst, built on the network-research experience to develop their research programs. Each has now achieved either promotion within an existing role or a new position of decision-making responsibility relating to minerals development in their countries.

Organization

It remains to briefly review each chapter and describe the perspectives of the authors on these emerging themes in mining and the environment.

In Chapter 1, Alyson Warhurst develops a framework for the analysis of the case studies of environmental practices. Building on her training in the Earth sciences and in policy research, she describes the characteristics of dynamic firms that innovate to prevent pollution rather than reducing it after it has occurred. She analyzes these cases from the perspective of companies' strategies to externalize and internalize the environmental-damage costs of their production. Dynamic firms are those that not only internalize the environmental-damage costs of their production in response to the environmental imperative but also innovate to reduce their direct production and future abatement costs and so diminish the environmental–economic trade-off that conventional economic theory regards as the constraint on environmental progress. She then uses these findings to analyze changes in environmental–regulation approaches. A paradigm shift is occurring from command-and-control environmental regulations to ensure the polluter pays to environmental regulations governed by the principle that pollution prevention pays. However, Warhurst concludes that current policy mechanisms fail to promote technological and organizational change within firms to ensure pollution is prevented from the outset. She recommends broadening the range of regulatory mechanisms and making the technology-policy mechanisms and economic instruments needed to support them combine both regulation and promotion of industrial development. This new approach she terms environmental innovation.

In Chapter 2, Juanita Gana draws on her training in Chile as an engineer and her postgraduate training in the United States in minerals economics to examine the US experience of developing regulatory approaches in the minerals sector. She investigates waste disposal and the control of SO₂ emissions and concludes that even US environmental policy is still very much in the trial-and-error phase and that solutions to environmental threats are constrained by our lack of scientific knowledge about the ecosystem and the impacts of human activities like mining. Gana ends by drawing some lessons for Chile from US experience. She concludes that, particularly in a developing country, cost-effective policies are crucial and that site-specificity should be examined to ensure that regulations are relevant to the site-specific pollution hazards. She argues for the ecoregional administrative approach to economic policy and therefore to environmental regulation in Chile and for a case-by-case approach to negotiating site-specific environmental controls. Gana highlights Chile's potential to learn from the mistakes and failures of other regulatory regimes and to begin its efforts with more appropriate environmental-policy objectives.

In Chapter 3, Gustavo Lagos, an engineering specialist in the mining industry, and Patricio Velasco develop these ideas through an analysis of environmental policies and practices in Chilean mining. They trace the environmental impacts of mining in Chile back to colonial times but recognize that environmental problems became more acute during the 1980s because of the growth of mining. A progressive impoverishment of ore grades was leading to increasing volumes of metallic impurities in tailings from processing plants and in smelter-feed material. Public awareness in Chile and international concern about environmental impacts also grew during the 1980s. Lagos's earlier research identified SO₂ and particulate emissions from the country's six smelters as the key sources of pollution, followed closely by leakages from tailing dams and leaching operations, resulting in river and sea contamination.

Because of the lack of previous research in Chile on environmental pollution from mining and its policy, Lagos and Velasco's study mainly describes and identifies practices, trends, and policy issues. A major part of their analysis focuses on the very diverse environmental criteria adopted by different regional agencies and ministries and the diverse approaches adopted by the regulatory authorities to state, national private, and international operations. The authors report that several international mining firms adopted environmental practices in advance of legislated norms and institutional recommendations. But the state-owned companies face massive challenges in dealing with their sins of the past, in terms of accumulated environmental problems, combined with other factors such as the state companies' history, culture, and resource constraints.

The authors also report that consensus is more commonly obtained in other spheres of Chile's political, economic, and social development, such as in industrial development and the role of the private sector, than in environmental policy. Apparently, some people believe that sacrifices in the quality of the environment are needed to achieve fast economic development. Lagos and Velasco expect that environmental-management standards will be achieved before air-emission standards because the former are less dependent on capital investment. However, Congress now supports the new Environmental Framework Legislation, and the authors report that 1990 was a watershed for public companies' setting realistic and effective regulatory goals.

In Chapter 4, Alfredo Núñez-Barriga, a mining engineer with training in development studies, examines the range of environmental problems of the diverse mining industry in Peru and investigates their site-specific and policy-related factors. He concludes that ownership — private, domestic, foreign, or state — is not a key explanatory factor in environmental performance, whereas the time in operation or, as he calls it, the "longevity of production capabilities," is. Centromín Perú S.A., which is more than 100 years old and has experienced periods of foreign and state ownership, illustrates this well.

Núñez-Barriga also argues that the vintage of technology is a key factor: the older the technology the greater the pollution problem is likely to be and the more radical and costly the solutions for those pollution problems are likely to be. Núñez-Barriga also reports that size of the firm fails to explain poor environmental practice, if pollution per unit of production is considered. Núñez-Barriga makes some interesting remarks regarding the relationship between mineralogical complexity and environmental pollution. He argues that there are barriers to the acquisition and transfer of clean technology that relate to the polymetallic nature of many Peruvian mineral ores.

This Peruvian case study illustrates the recent but growing environmental awareness of the country's main production enterprises across a range of minerals and regions. Most important, it highlights that change has come about through industry and state collaboration, rather than through government imposition of unrealistic regulations, with costly compliance and potential bankruptcy for some firms. Under the new legislative regime, most companies have developed site-specific environmental management and adequation programs. However, Núñez-Barriga reports that the mining industry in Peru tends to rely on established, external consultants to undertake environmental assessments and the planning of environmental-impact-mitigation measures, even where local capacity for this exists.

In Chapter 5, Maria Hanai, a sociologist, compares the economic roles of formal and garimpo gold mining in Brazil. She analyzes their environmental impacts and draws lessons for their mitigation. Hanai highlights the economic importance of the garimpo sector during the 1980s and its decline relative to formal gold mining during the 1990s, with garimpo mining supplying about 75% of gold production in the late 1980s and less than 50% in the early 1990s.

Hanai examines relationships among gold-mining techniques and their environmental implications. Small-scale garimpo mining is particularly polluting, with the hazards of mercury use and frequent large-scale land and watercourse degradation. Notwithstanding, she reports a fundamental link apparent throughout South America between poverty, or socioeconomic context, and environmental practice. This appears in the constraints these miners face acquiring credit to invest in improved technologies and in the lack of opportunities for education that also inhibits their adoption of improved environmental-management practices.

Hanai makes some policy recommendation as a basis for further research. These include technology-policy initiatives for education and innovation incentives for garimpo mining, as well as the adaptation of mining legislation to incorporate garimpo gold production.

In Chapter 6, Teresinha Andrade, a minerals-technology researcher, examines the environmental issues in Brazilian tin production. She also describes an industry divided between garimpos producers and mining companies and analyzes the different environmental problems with each type of production. By relating them to evolving environmental legislation, she identifies areas of potential convergence and conflict in the future relationship of tin mining to the environment. She reports that the industry is under pressure and has few resources for environmental concerns. Because of the low price of tin on the international market following its price collapse in the 1980s and because of competition from cheaper tin from China, the Brazilian tin industry has difficulty implementing the new environment-recovery plans and, for the most part, concentrates on the remediation of land degraded through past tin mining in response to regulatory pressures, rather than proactively responding to societal pressures.

Andrade comments that the most serious pollution problem is nonpoint-source pollution across mining regions, such as the silting up of large tracts of rivers. Scientists are reporting irreversible ecological degradation, the modification of gene banks and profiles of animal and plant life, changes to the soil structure, and new incidences of pests and disease. Andrade notes that current environmental legislation is retrospective and focuses on cleaning up existing pollution with current technology. She recommends emphasizing policy mechanisms to stimulate pollution prevention from the outset by providing incentives for technological and organizational change. On the basis of her interviews, she argues that this would be more attractive to mining companies, and she argues that a more democratic and regional approach to developing environmental policies is needed to find integrated and lasting solutions to the environmental impacts of Brazilian tin mining.

Liliana Acero reports, in Chapter 7, on the bauxite, alumina, and aluminum industry in Brazil. Her objectives are to document various companies' managerial approaches to the environment; to relate these practices to recent laws and regulations regarding environmental controls and planning; to measure and illustrate changes in the ways companies' environmental practices respond to specific new environmental legislation; and to describe some of the environmental effects experienced by local communities. Acero argues that regulating the environmental practices of transnational bauxite, alumina, and aluminum producers, either locally or in their home countries, is a necessary but not sufficient condition for effectively implementing sound environmental policy at the operational level. She finds that some regulations are adhered to more systematically than others and that this relates more to the economic benefits that accrue to the company than to either government or societal pressures, unless the environmental problem is very visible and has triggered a specific public response. Acero attributes some environmentally proficient practices of some transnational firms to their greater technological capacity and financial resources, although some transnational operations are not at the forefront of environmental proficiency in Brazil. She favours the strategy of Companñía Vale do Rio Doce S.A. (the state mineral producer) for reforesting and rehabilitating mined lands, which she argues is superior to the strategies of the international firms. Acero also describes lag phases in local implementation of practices already adopted in the companies' more stringently regulated home countries. She describes loopholes in local laws and regulations, along with failures in their effective implementation, which means that companies need to be proactive to achieve sound environmental track records. Acero concludes that environmental soundness depends not only on effective environmental regulation and efficient technical choices but also on the institutional context; the support, if any, given to environmental policies; and having the educational capacity and political interests needed to operationalize the law. Without the latter, Acero asserts, neither regulation nor technical or managerial solutions are sufficient to achieve truly environmentally sensitive minerals production.

Finally, in Chapter 8, Fernando Loayza analyzes, from a minerals-economics perspective, the links between competitiveness, environmental performance, and technical change in the Bolivian mining industry. He develops a dynamic economic model of the mining firm, which is empirically tested in a multiple-case study of four Bolivian mining companies and seven mining operations. This model combines an economic theory of depletion and a theory of pollution and relates investment behaviour to pollution per unit of output. It starts from the assumptions that companies compete through technical change and that competitive companies can increase their production capacity and technological capability over time.

The significance of Loayza's study is its theoretical and empirical demonstration of how mining firms' dynamic efficiency affects the internalization of environmental-damage costs. Dynamic efficiency — the ability to innovate and gain economies of scale — is not only a significant influence on a firm's ability to compete but also a principal determinant of its environmental performance. Because increased competitiveness encourages investment in technological capability and production capacity, an improvement in competitiveness tends to reduce pollution per unit of output, whereas a decline in competitiveness tends to increase pollution per unit of output. Thus, Loayza's analysis illustrates how pollution results not only from a market failure to adequately price environmental resources but also from a lack of dynamic efficiency within firms. The implication for environmental policy is that regulatory initiatives to reduce pollution should both consider mechanisms to make firms internalize externalities and address the inefficiencies of some firms, along with the dynamic capacities of others. Policy mechanisms should promote both environmental proficiency and economic efficiency.

The methodology of Loayza's study justifies applying its conclusions beyond Bolivia to other mineral-producing countries.

Conclusion

On a final note, the environmental imperative has been gaining momentum in recent years, along with the liberalization policies of Bolivia, Brazil, Chile, and Peru. Therefore, by the time these studies are published, some of the regulatory initiatives they describe may be out of date. Readers are therefore urged to view this book not only for the information it contains but also for its value as an historical document that, through empirical investigation, challenged some of the conventional wisdom that surrounded the dawn of the environmental imperative. It should also be seen as a record of a process of research and education that in turn highlights the advantages of working together across both disciplines and national boundaries to ensure that future paths are forged to more environmentally sustainable development. We hope that MERN has contribute to ensuring a more sustainable future.

Document(s) 4 de 14