Mining's Brand Problem

Amongst myriad concerns, including permitting, financing and safety, miners need to wake up to the industry's much larger problem, namely that we are not trusted and suffer from a dreadful image.

Go to the profile of Chris Hinde
Apr 11, 2019
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A Reuters article by Clyde Russell two months ago concluded that "the public's lack of trust in the mining industry is its greatest threat". Mr Russell was writing shortly after Vale SA's horrendous dam collapse in Brazil. He commented that in the immediate aftermath the industry had focused on iron ore prices and how a disaster that killed some 300 people could be prevented from happening again. These are valid concerns, he said, but added "the risk of focusing on the immediate issues is that the much larger problems of the mining industry are once again glossed over. Namely that miners aren't trusted and suffer from a serious image problem."

Mr Russell admitted "it may seem somewhat trivial to talk about image in the face of such a human tragedy", but warned "mining's poor image across a range of stakeholders is the major issue for the industry".

Because of the public's poor image of mining with relation to safety, the environment and shared wealth, they are withdrawing support for exploration permitting and mine development. Under this scenario, retail investors will look elsewhere, and professional investors will become increasingly reluctant to commit funds if they fear damage to their own image. Moreover, as noted in the Picks & Blasts of March 21, the industry will struggle to attract millennials to its workforce.

Admittedly, much work has already been done at the mine level, and the now widely accepted 'licence to operate' concept includes a better working relationship with local communities. The problem for miners, however, is convincing an increasingly sceptical public of the necessity of metals extraction. As Mr Russell wrote, the industry "needs to do more than just recognise its image problems, it needs chief executives to make presenting and promoting a better picture their top priority, not just something they pay lip service to before handing off to junior, under-resourced public relations teams."

Clear Creek Digital (a Colorado-based social communications and media agency specialising in digital content strategies) addressed this issue two years ago when its president, Trevor Hall, noted that miners do not, typically, think of branding as necessary.

Mr Hall accepted that many of the major producers have established brands (albeit only out of pure marketing necessity) but warned that branding is typically an afterthought for juniors and mid-cap companies. He argued that branding is "fundamental for mining companies to build value in their operations and social license. A strong brand adds value to your mines by objectifying itself as a trustworthy and efficient operation for its communities."

Mr Hall noted that a mine's brand is more than a simple logo. It is, he said, "the over-arching extension of the operation into the community and the public. It includes external communications, a website, social media and employees. A strong brand of a mining company portrays the positive experience of operations and the industry as a whole. It is the pathway to social trust and clarity."

Established in 1996, London-based Brand Finance Group is an independent branded business valuation and strategy consultancy. The company produces an annual report on the mining sector, and in April 2018 unveiled BHP as the world's most valuable mining brand.

Brand Finance cited BHP's re-branding in 2017 and its 'Think Big' marketing campaign as the main reasons for the accolade in 2018. The most valuable mining brand of the previous year, Glencore, had seen a sharp erosion in its brand strength index (BSI) from 62.9 in the 2017 report to 55.3 in 2018, according to Brand Finance.

BHP has the top mining brand again this year, with a BSI of 72.8 and a brand valuation of almost US$6.0 billion — the company is the only mining entity with an 'AA' brand rating. ArcelorMittal has jumped into second place, from fifth in 2018, with a BSI of 67.2 and valuation of US$4.3 billion. Glencore drops a further one place to third with its BSI falling again (to 54.4), and a brand valuation of US$3.8 billion.

The CEO of Brand Finance, David Haigh, commented recently that "in a sector where brand and reputation have been largely ignored, now more than ever, mining companies are realising that branding matters. BHP is the perfect example of this, using a re-branding exercise to demonstrate its role in Australia's economy and community, substantially improving its brand value over the past two years." 

This year's mining report from Brand Finance is due to be published at the end of April. 

Go to the profile of Chris Hinde

Chris Hinde

Chief Commentator, Mining Beacon

Previously editorial director of Mining Journal, and more recently head of S&P Global Market Intelligence's metals and mining team, Chris is now Mining Beacon's editor-in-chief and lead commentator. He posts two blogs every week, one on Monday reviewing market conditions over the prior week, and a second on Thursday looking at issues on the global mining scene. There is also a quarterly blog on business opportunities in the sector.

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