Koffee with Khetan :System Restore

after the mining is over, conservation and restoration of the natural environment is becoming a concern says Sumit Khetan

sumitjiResource and mining companies are the favourite whipping boys for any crime whatsoever around the world nowadays. A case in point is the proposed new tax regime in Australia. The Australian government’s plan to impose a structural change to the taxation of the Australian resources sector will result in significant and disproportionate additional taxation on the industry and could well curb the large-scale, long-term investments required to develop Australia’s natural resources for the benefit of all Australians.

In an increasingly energy hungry world, the importance of resources cannot be over-emphasized. However, in the back of the mind is the latent fear that sooner than later these resources will become exhausted and that in our mad haste to grow, we are, in fact. paying scant regards to conservation and are only expediting our inevitable tryst with doomsday.

However, the biggest challenge to resource plays is today from a rainbow coalition of environmentalists who are screaming murder, their combined voice becoming shriller by the hour. Depleting natural resources, mindless mining, destruction of ecological balance, denigrating the forest cover, changing the face of nature …. the allegations are countless and growing everyday.

To be fair to the resource companies, they do adhere to the strict norms  which all mining companies are subject to around the world. However, my personal feeling is that even this is not enough and that the companies should take on themselves, as ecologically and socially conscious citizens, the onus to do more.

Take the fact that all mining companies are expected to replace the material they mine out so that the Earth’s balance is maintained. They are also expected to ensure that the rehabilitation of the mined area takes place. They do these things religiously – in letter certainly and often in spirit too.

However, they can do a lot more. For example, the huge tracts of mining land can be used to harness the power of the sun and the wind to generate electricity which the companies can effectively use to offset their carbon footprint. Another innovative step forward will be to employ the displaced people, in any, to plant trees and aid the process of forestation, which too needs no elaboration.

The resource companies should set aside a certain predetermined amount of their profits, which should be utilized for such specific earth-friendly projects. Every year’s fund should be spread over three years which will ensure that progressively more amount of money will be available for the project and there will be a sense of purpose and direction as opposed to knee-jerk reactions that such projects normally are.

Resource majors like BHP Billiton, Rio Tinto, Xestrara, Coal India, and a host of others have the necessary wherewithal and the financial muscle to embrace such moves and can seize the opportunity to set the yardstick against which all such efforts will be measured in the future. Imagine a future world order, where companies may be mining fossil fuels, but their own requirements for energy is generated using green non-conventional sources –- that is clean development for you!

(Sumit Khetan is the CFO of the Concast Group and is an expert in overseas acquisitions and global financing. This particular piece had appeared in the May 2010 issue of the Core Sector Communique)