Publication / 06 Dec 2004

Metal Mining: Between a Rock and a Hard Place

Trucost’s report analyses how the environmental performance of metal mining companies affect company valuations.

Trucost wanted to analyse the environmental impacts of metal mining companies and how these impacts affect each company’s valuation. The report examines the financial and environmental reporting of thirteen of the largest metal miners looking for discussion and disclosure of environmental issues.

In the absence of disclosed data, Trucost has estimated companies’ heavy metal emissions based on the mix of metals mined in order to produce comparable results. This analysis serves as an indicator for the vulnerability of companies to risks resulting from heavy metal emissions.

The findings are that relative company valuations are not well correlated with environmental disclosure and performance levels. Conversely, there is no evidence to substantiate the fear that transparency leads to an equity discount. Investors are not adequately informed about key risk areas, particularly heavy metal emissions and the management of tailings dams. Heavy metals pollution can cause conflict between the operator and local authorities, with significant repercussions for the companies’ licences to operate.

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