Sheila Khama is an extraordinary voice in mining. In September 2020, the renowned mining executive, former CEO of De Beers Botswana, and DPI Board Member sat down with DPI Board Chair Peter Bryant for a conversation. Their exchange touched on issues including building trust between mining companies and the communities they wish to operate in; how asymmetries in understanding the mining process can lead to misunderstandings; and what steps we need to take to make responsible sourcing truly sustainable and effective.
We've published a three-part series on this rich and engaging dialogue which captures the depth of Sheila’s experience and perspectives. Here is the final installment:
PB: Going back to one of your original comments about communities really understanding how it all operates, what are the mechanics of mining? It’s all about understanding. But on whose shoulders does what you just described rest, Sheila? Is it the government? Is it the company? And you might say it’s all together, but somebody’s got to lead.
SK: If I think about it, I think it’s the governments and the corporations equally. For two reasons: The governments have not just a legal and a moral responsibility to lead. I say to people all the time, look, I’m mindful of what De Beers may or may not do. I’m mindful that, as a matter of fact, they may occasionally be in omission. But it isn’t De Beers I voted for. It’s the Botswana government. So, governments have no choice from the perspective of being host governments having a legal and a moral and a political responsibility to lead. But they will lead, naturally, from a specific perspective.
Corporates, on the other hand, also have no choice. Their livelihood depends on them being able to raise finance, and being able to access these resources, and being able to enter into relationships. So, this is the one space where I can find no stronger argument for a more intimate relationship between multinationals and governments, in order to save their own national and corporate livelihood.
But I don’t think it can be one or the other. And this is part of what I meant about speaking truth to power: somebody ought to fly into Botswana and say to President Masisi, “Sir, you can’t pull this off unless we do this together. This is your contribution in this space, and here is why...” Now, the President may not agree on that one day, and so you keep coming back until they see the point, because the stakes are that high.
PB: It takes work to build those relationships. Elon Musk made a quote, and this is broader than Africa now, Sheila, so it’s still in the ESG realm, he said something along the lines of, “As it relates to nickel, just show me nickel that is mined responsibly, in a sustainable way, and you’ll have a contract for life with Tesla.”
He just kind of threw that out there in the middle of an analyst call, and it was kind of a poke at mining and its lack of sustainability. So, when you think about mining’s performance, where do we need to go? Because the perception is that we’re really bad performers. The truth is probably better, but we’ve got a long way to go. What’s the industry to do?
SK: You remind me of an event at Oxford University a couple of years ago, maybe two or so. And we were discussing, essentially, the reduction of carbon emissions both in mining and the fossil fuel industry, and the role of the circular economy. And I remember sitting there and looking in the room and finding out there were only two Africans. I remember being asked to express a view, and I want to express it now. Because I think, with all due respect, Mr Musk misses the point.
"The assumption that the answer lies just in somebody procuring the mineral responsibly is flawed. The entire value chain must be responsible, including the user end."
The assumption that the answer lies just in somebody procuring the mineral responsibly is flawed. The entire value chain must be responsible, including the user end. Including innovators like himself. This problem will not be solved by sheer responsible procurement. So, that’s important.
But the thing I did in Oxford was this: it was 80% people from the global North, and then the others were from Asia. The Latin Americans and the Africans were conspicuous in their absence. And I said what I will say now: If this notion of responsible sourcing, if this notion of a clean mining space, if this notion of the circular economy takes place away from the people whose laws and policies are an essential part of the chain of command, we will not succeed.
"If this notion of responsible sourcing, if this notion of a clean mining space, if this notion of the circular economy takes place away from the people whose laws and policies are an essential part of the chain of command, we will not succeed."
We will end up in a situation where we are now with the rankings for the environment and the resource countries crying foul and saying, "How can you render our economic resources redundant with the stroke of a pen?" We need to take those countries along with us now, before Elon Musk says, “I am not buying nickel from Africa,” and turns the tap off.
Now is the time to make sure we understand how that might become manifest, so that we prevent it from becoming manifest. Simply pronouncing a decision from somewhere in the suburbs of California won’t do. Why? Because, actually, they didn’t hear him. Why? Many of them don’t even know he exists. That’s just a fact.
PB: That is a fact. And this is really powerful, because the work we’re doing with the Rockefeller Foundation on responsible sourcing - mine to consumer is really kind of digging into these issues. We’re already seeing tension in the system with the consumer-facing companies thinking one thing and other people along the value chain thinking something else. And the closer you get to mines and communities, that’s where the real disconnect starts.
So, where to from here? You mentioned the circular economy, and I want to go there. How should the mining companies and the mining industries look at the circular economy?
SK: I think they must embrace it for two reasons. Minerals aren’t infinite; they will run out. I see the circular economy as part of the mining value chain. My sense is that companies may consider redefining themselves. If I was mining iron ore, and I was saying, “Ok! A hundred years from now, my iron ore won’t be underground. It’ll be in concrete buildings that are being brought down, and I’m reclaiming this and I’m now selling scrap iron.”
It’s part of the value chain. In my view, they must embrace it because it stands to reason when you’re dealing with a finite resource, your single most important preoccupation is: where the next one is coming from? The next one is going to be recycled; that’s just how it is.
The second thing is that it is the responsible thing to do, because what it does is, it slows down demand for the raw material, and it shifts that demand to the recycled. But more importantly, it brings the consumer into the loop.
I was rather intrigued. I was somewhere in Europe recently, in a hotel and I remember watching a television screen with activists outside of a petroleum producer. And I remember thinking, ‘Somebody’s not getting it here.’ Because every one of them, whether it was the things they were wearing to protect themselves against the weather, whether it was the tents they had pitched, whether it was the placards…almost 90% of it was petrochemicals. Somebody ought to help somebody understand here that they are part of the problem - at least for now.
But if they want to be part of the solution, they can’t look only at the production end. The circular economy is important in this way, in that it reminds the consumer that they are part of the cycle of problems. Every time we buy our grandchildren an iPhone each year, we are adding to the problem. But nobody seems to say that. They think if you just bash the mining companies, things will be ok. Well, they won’t be ok. So, in that context, I think this conversation is important for everybody, because we all have a stake in it.
"The circular economy is important in this way, in that it reminds the consumer that they are part of the cycle of problems."
PB: I want to go back…and this is with regard to Africa, but I think it’s a Latin American problem too. I know at the World Bank and the African Development Bank you looked at this and I’ve listened to enough resource minister conferences saying one of the difficulties they face is, we want to develop the resources; the companies are there, they want to develop the resources; and the communities and indigenous people are saying, No! And the reason they’re saying no, is they don’t see the benefits of mining. The mine comes, they get jobs, but actually there’s no sustained benefit that’s coming to them from the mine, so why should they allow the mine? Countries seem to be struggling with how they distribute wealth back down to the communities in a meaningful way.
So, how do you do that better? And are there good examples that you can draw on where this is being done well?
SK: I think it’s fair to say that mining faces a mammoth task because of two things. Firstly, expectations for mining to be the ultimate solution for global or national poverty – that’s just not going to work. Mining can’t solve everything. So, the first thing we need to do is just articulate this, and to do this it brings us back to the partnership we spoke about between mining companies and governments.
I’m reminded of sitting with a minister in an African country and saying, “Sir, you must tell your people that, in the big scheme of the things, the oil you are pumping now is nothing.”
And I said, “You don’t have to preach. Just take an advert. Put it in the paper. And create a bar graph for the next six months and show where Saudi Arabia is, where Nigeria is, where Libya is, where Venezuela is, and then show your country. And then tell your people how few jobs you’re going to create. Educate them in not expecting unrealistic things.”
The minister couldn’t do it. Because it flatters the political sentiment to feel like ‘I brought oil production; it’s my oil.’
The unintended consequence is disproportionate expectations. So, a huge part of what we’re seeing, in my view, stems from the inability of governments to articulate realistically what can be expected.
The second part is, of course, the corporates themselves failing to articulate the inability to deliver immediately. Every one of the mining companies knows that when you go and spend a billion US dollars, whether it is in Mongolia to extract copper, or cobalt in the DRC, that you are going to wait in line as a community before you get the benefits. People are petrified to tell this truth, because they don’t know how to answer the question, “My God, you mean I’m going to wait 20 years? Why should I?”
"We can’t, as governments and corporates, live under the fear that if we tell people the truth about what the financial structure of a project is, that we will never be welcomed back."
Unbundling the economics of mineral projects can be complex. But I have never known a human being who, if you speak truth sincerely, cannot minimally say, well, let me think about this. We can’t, as governments and corporates, live under the fear that if we tell people the truth about what the financial structure of a project is, that we will never be welcomed back. Sure, people will be upset, but we have no choice. And if we don’t explain, then the expectations by communities are always going to be a little ahead of where we are. And if they don’t get met, then naturally, they will be displeased.
So, my remedy is: manage these expectations upfront or else they will come to haunt you. And this is basically what I think is happening. And this is the collective error of politicians and corporates, because corporates want to pump the stock. And so, they too, send the CEO and the CFO to the media to speak so well about the project. I’m listening here in Botswana and I’m thinking, “Gee, that’s a lot of money.” What I’m missing in that is, they’re not talking about the money that’s coming to me, they’re talking about the money that’s going into buying the equipment, and commissioning the mine, and that the banks are first in line. And then you see how the pyramid just doesn’t speak to the reality on the ground.
I’m sorry, I belabour that point, but I think it is an important one because all the time I hear people here, my nephews, my grandnephews saying to me, “Oh, Auntie Sheila, why should we partner with De Beers?”
And I say, “Well, maybe, just maybe because they found the oil. Maybe, just maybe because they financed it. Maybe, just maybe because they have the expertise to market it. Maybe, just maybe because we don’t have any of that. Have you thought about it? Maybe not.”
PB: Sheila, we could go on for another couple of hours on this. But I’ll tell you one word that stuck out for me is ‘truth.’ You’ve mentioned it through everything…it’s about speaking the truth and doing it immediately, because we see a lot of these problems based upon the fact that we don’t know the truth.
Sheila, thank you so very much. It’s been a delight.
SK: It’s a pleasure. Thank you everybody.