Corporate Governance: Mining geotechnics and the storage of tailings

Wouter Hartman, Senior Principal Geotechnical Engineer, Cartledge Mining and Geotechnics

While there isn't one complete definition of corporate governance, the Governance Institute defines good governance  as encompassing not only the system by which organisations are controlled, but the mechanisms by which organisations and those who comprise them are held to account. Good governance is also demonstrated when all directors and senior executives have a shared understanding of risk.

The focus of governments, regulators and security exchanges has been to improve the regulatory, compliance and risk management processes that underpin how a corporation conducts its business. Corporate collapses, near-collapses and ‘scandals’ continue to highlight the crucial role of the board in governance and risk management.

Jurisdictions

In Australia, Mining Companies listed on the ASX, are bound by mechanisms by which companies, and those in control, are held to account. It therefore is underpinned by the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations (ASX Corporate Governance Council). Under Listing Rule 4.10.3, ASX listed entities are required to benchmark their corporate governance practices against the Council’s recommendations and, where they do not conform, to disclose that fact and the reasons why. The rule effectively encourages listed entities to adopt the Council’s recommended practices but does not force them to do so. It gives a listed entity the flexibility to adopt alternative corporate governance practices, if its board considers those to be more suitable to its circumstances, subject to the requirement for the board to explain its reasons for adopting those alternative practices. The ASX Corporate Governance Council has recently released a Consultation Draft and related materials for a proposed 5th Edition of the Council's Corporate Governance Principles and Recommendations (2024):

• Principle 1: Lay solid foundations for management and oversight

• Principle 2: Structure the board to add value

• Principle 3: Act ethically and responsibly

• Principle 4: Safeguard integrity in corporate reporting

• Principle 5: Make timely and balanced disclosure

• Principle 6: Respect the rights of security holders

• Principle 7: Recognise and manage risk

• Principle 8: Remunerate fairly and responsibly
  

Principal 7 (Recognising and Manage Risk) in particular, will be the main topic of this article, discussing “Mining Geotechnical and the Storage of Tailings (TSF’s)”, where the Board of a listed entity should oversee a sound Risk Management Framework and the periodic review of the effectiveness of that Framework in particular Geotechnical Risk Management (Ground Control), which for most companies, if not all, is a Material Risk.

Geotechnical risk management experience: Corporate governance failures

After more than 30 years of exposure to geotechnical and hydro risk, my personal experience with corporate risk management frameworks and their underlying documentations, e.g. Geotechnical and Tailing Storage Facility (TSF) Critical Risk Standards, is mixed. The reason for this view is that the level of geotechnical risk management awareness, application and accountability for various organisations range from good to extremely poor. The underlying effect may very well be due to a range of factors including misaligned corporate goals.      

Ground related instability incidents resulting from exposure to, or the unintentional release of energy sources e.g. significant rainfall events associated with subsequent hydrological and/or hydrogeological system exceedance, rapid groundwater infiltration causing excess pore pressure within open pit slopes, tailings embankments etc. To exacerbate the subsequent catastrophic event, it sometimes coincides with seismicity/earthquake/local vibrations or other triggers resulting in serious injuries, fatalities and/or business (financial) related losses.

The common causes of and factors contributing to these incidents have been identified:

• Inadequate ground related hazard awareness for Green Field Exploration (GFE), mining areas (e.g. open pit, underground), Heap Leach Operation (HLO), ponds, water dams or Tailings Storage Facilities (TSF)

• Geological and mining teams lack of understanding of the specific risk environment, e.g. steep topography for exploration programs, open pit geotechnical hazards, underground mining geotechnical hazards, heap leach operations and above ground embankment dams

• Failing to conduct proper geotechnical-hydro inspections and investigations

• Inadequate geotechnical assessments, analysis and designs

• Inadequate communication of the design, mine plan or infrastructure plan

• Inadequate implementation of the design, mine plan or infrastructure plan

• Inadequate quality control or quality assurance for geotechnical-hydro processes

• Lessons from previous incidents and failures not incorporated within the risk management strategy

• Inadequate ground awareness training

• A lack in experienced Geotechnical-Hydro Engineers and/or Supervisors.

Systems of work: Understanding the geotechnical and hydrorisk environment

All organisations and geotechnical groups must recognise the responsible management of health, safety, environmental, and that external relations management are integral to an effective and successful company and are critical for sustainable development within a company’s Operational and Projects areas. Organisations should ensure the following:

• Systems are in place to understand and manage the geotechnical and hydro risk environment.

• A geotechnical and hydro risk management framework must be established to provide a guide towards responsible geotechnical, hydrology and hydrogeological risk management (below is a snapshot of such a framework).

Conclusion

My views related to geotechnical corporate governance and its underlying Critical Risk Standards, are that each company should have a well thought out Geotechnical and Hydro Risk Standard which represents the principals to establish a consistent approach to geotechnical risk management at the corporate and operational level. Critical Risk Standards need to provide the necessary guidelines to ensure geotechnical risk is managed at an acceptable level. These standards need to further define the minimum requirements for managing the geotechnical risk at and where personnel, equipment and surface infrastructure are exposed to ground deformation or rockfalls in and around exploration, surface and underground mining operations, at heap leach operations, at surface stockpiles, around tailings storage facilities (including embankment protection armor), water dam/pond embankments, waste rock dumps, trenches and other similar locations.

Obviously, legislative requirements shall take precedence where the legislative standard is higher than what is included in an organisations Geotechnical and Hydro Critical Risk Standard.

From a corporate group perspective, the following requirements are seen as essential:

• Maintain an Independent Ground Control (Geotechnical/Rock Mechanics) Review Board consisting of suitably qualified and experienced open pit geotechnical/hydrogeological, underground geotechnical / rock mechanics, heap leach, dams and tailings consulting engineers, which must be accountable for producing an annual stability report on all surface and underground related operations.   

• Deliver an assurance program in support of the Ground Control (Geotechnical) Critical Standard and Risk Management Framework.

• Ensure specialist support and technical oversight to all operations associated with exploration, open pit mining, underground mining, heap leaching, water storage and / or tailing storage facilities are provided throughout the life of the mine.

• Lastly, but essential, ensure quarterly reviews of Geotechnical Risk Registers are conducted and mitigating controls are effectively implemented through assigned accountability.

This way corporate governance is maintained and conforms to a regularly reviewed Corporate Risk Management Framework for a suitable Resilience Strategy and adhering to the ASX Guidance and Recommendations.