At a mere 5-10%, the percentage of women in the mining industry is the smallest of any major global industry. That is the damning – but not necessarily surprising – statistic that opens the latest report on women in the mining industry conducted by PriceWaterhouseCoopers (PwC) and UK-based non-profit organisation Women in Mining (WIM)1. Drawing the latest statistics from this report, Juliet Langton examines the role of women in the mining industry today.
Women can excel in the mining industry: that much is made clear by the very wealthy and very (in)famous Gina Rinehart.
Said to be worth a staggering US$17.7 billion by Forbes Magazine in its Australia’s 50 Richest list, Rinehart is the richest person in Australia by a great margin2. Much of her wealth – like her interest in mining – was inherited from her father Lang Hancock; but through hard work, reads a profile published in The New Yorker, she has “multiplied the value of the business she inherited several hundred times over”3. Her mining company, Hancock Prospecting Pty Ltd, expects to start shipping from the giant Roy Hill iron ore project in 2015. The New Yorker profile proposes that, “since only Rinehart controls Hancock Prospecting, success at Roy Hill and the company’s other projects would likely make her the world’s richest person”.
The next richest Australian after Rinehart is manufacturing tycoon Anthony Pratt, who is worth a comparatively paltry $7 billion. A far greater margin, however, sits between Rinehart and the next woman on Forbes’ list: Angela Bennett, another mining magnate who sits 25th on the list with a value of $1.01 billion. They are the only two women on the entire list.
While a list covering Australian wealth from all sources cannot make conclusions on the global mining industry, it does put forward two suggestions concerning women in mining. First, that the mining industry is the best (if not only) way for a woman to become hugely rich and successful in Australia; second, that very few women have taken or been granted that opportunity.
What are the facts?
Recent statistics indicate that successful women in mining are equally scarce everywhere. PwC and WIM’s Mining for talent 2014 report (hereafter referred to as ‘MFT 2014’, or ‘the report’) found that women held just 7.2% of director positions in the world’s top 500 mining companies, and 10.3% in the top 100 mining companies (see sidebar for definitions). Of 106 female directors in the top 100, only three of them held more than one directorship, suggesting that this small pool is being under-utilised. Another interesting discovery of the report was that female directors were more likely to be non-executive, with non-executive board positions accounting for 85% of all female positions within the top 500 mining companies. Within the top 500 mining companies, only 4% of executive directorships were held by women, compared with 8.4% of non-executive directorships.
On average, women within the top 500 companies were nearly half as likely to be executives as men. These figures suggest that even if a woman gets onto a company’s board, her influence over the company’s management is likely to be less than that of her male counterparts.
The figures for female chairpersons and CEOs were even starker. Of the top 100 mining companies, only two were chaired by women. Even worse, following Cynthia Carroll’s departure from Anglo American (LSE: AAL; JSE: AGLJ) in 2012, the top 100 contains only one female CEO: Kay Priestly of Turquoise Hill Resources (TSX, NYSE: TRQ).
Increase the sample to the top 500 mining companies and the number of female CEOs increases to a paltry seven. Just to put that into perspective – presuming each company of the top 500 has one CEO – women make up just 1.4% of CEOs within the world’s top 500 mining companies.
While these statistics cannot be applied to all mining companies, they show without a doubt that women are vastly underrepresented on the boards of higher-tier mining companies.
The figures for women on these companies’ executive management teams are marginally better, but still a long way from sufficient representation. MFT 2014 found that women held 11.5% of executive and senior management positions across the top 500 mining companies, compared to 7.2% of board positions.
Where are all the women?
Many presumptions have been made and myths promulgated as to why there aren’t more women in the mining industry. MFT 2014 includes an interview with Lord Davies of Abersoch, a life peer in the UK’s House of Lords who has championed gender diversity across all industries. He refers to mining companies making “excuses” when questioned on why they don’t have more women in senior positions: “The mining companies make excuses, saying: ‘We have difficult jobs; we don’t have women in the industry,’ etcetera. If you look at the reality, Anglo American had a female CEO and Rio Tinto has a number of women on the board.”
In the past, certainly, mining would have been seen as too physical, too dirty and too dangerous an activity for women, who were more likely to be homemakers. Mining is now more technologically driven and safer as a result, but it remains a challenging career that often requires large amounts of travel and work within inhospitable environments. While women are now much more likely to work in traditionally male roles, it could be argued that their biological attributes – not least their ability to become mothers – makes them less suited to the physical and logistical challenges of mining.
In his MFT 2014 interview, Lord Davies says that it is the responsibility of mining companies to find solutions to these challenges, so that they do not end up shutting women – or indeed talented people of any sex – out of the industry.
“If you are going to move an individual every two years to different parts of the world, how are they going to cope with schooling if they have children, if two of them [a couple] have careers, if they’re married?” he remarks.
“We are in a world now where work-life balance needs to be addressed if you want to attract talent. Forget about women – you won’t attract graduates of the highest calibre if you don’t think about work-life balance, if you don’t think about the stress of remote locations, and if you don’t think about terrorism and such issues.”
However, even if these logistical challenges are insurmountable for some, a career in the mining industry encompasses such a wide selection of non-physical and static roles that the challenges of mine-site work can be avoided. It is very possible for a woman to secure a senior position in a mining company without ever needing to have laboured on a mine site, or to have travelled far away from her family.
In a similar vein, it is often argued that far fewer women than men study engineering – a key skill in mining – at college and university, resulting in far fewer female engineers for mining companies to recruit. However, according to MFT 2014, only 32.6% of men on boards have an engineering degree (although it is the most commonly held qualification). This suggests that lacking engineering knowledge is by no means an impediment to joining a mining company board.
Indeed, looking at the few women on mining company boards currently, only 15% had prior career experience in the mining industry (compared with 50% of male directors) and only 6.5% had a degree in engineering. Most women on boards had backgrounds in finance, accounting, law or government. The report also points out that Turquoise Hill’s Kay Priestly, the sole female CEO within the top 100 mining companies, “was a tax partner at Arthur Andersen for the first 24 years of her career,” while former Anglo American CEO Cynthia Carroll “started out as a petroleum geologist, demonstrating that there are different paths to the boards of mining companies”.
Why does mining need women? – The case for financial value
There seems to be no definitive explanation as to why there are not more women in the mining industry, and no unavoidable reason why they could and should not be. It follows that there is nothing standing in the way of women succeeding in the mining industry except a general disinclination or apathy among mining companies in general towards recruiting and promoting women. This is obviously an issue of equality and fairness; but what the people running mining companies really want is proven, business-led reasons to invest more in women.
MFT 2014 provides many such reasons. Overall, it found “a consistent and significant correlation between having more women in management and on the board, with improved company performance across a number of matrices, including governance, financial, social and environmental”. To evaluate how female board presence influenced company finance, the report calculated the financial value of companies that had boards with no women; boards with one woman; and boards with two or more women. It looked first at the companies’ Return on Assets (an indication of how profitable a company is relative to its assets) to get an idea of how effective their management was at generating profit.
The findings were extremely revealing, ranging from an average Return on Assets score of -2.86 for companies with all-male boards, to one of +6.40 for companies with boards with two or more women. MFT 2014 explains: “In simple terms this means that, on average, for every £1 invested in a business those with all-male boards have a 2% loss on their investment and those with two or more women make a return of 6% on their investment.”
MFT 2014’s second yardstick was Enterprise Value to Reserves ratio: a company’s value in the market, compared with the value of its geological reserves. A high ratio indicates that the company is trading at a premium, while a low ratio indicates that the company might be undervalued. Once again, the report made some significant discoveries.
Within the top 100 mining companies, the average Enterprise Value to Reserves ratio for companies with two or more female directors was 0.90: 106% higher than the average 0.44 ratio of companies with all-male boards. This indicated that the market values the assets of companies with two or more female board members twice as highly as those belonging to companies with none.
“There could be many reasons for this, including that larger and more experienced boards are those which have more women on the boards,” the report states. “However, it could also be that a more diverse board is a more effective one. This is something that a growing body of evidence supports4 .”
In a ‘point of view’ article included within MFT 2014, Dafna Tapiero, Leader of the International Finance Corporation’s (IFC) Global Strategic Community Investment Practice, comments: “Women on boards have proven to increase companies’ profit margins, high return on equity and higher returns on investments and sales. Research has also shown that inclusion of female directors has a direct and positive impact on a company’s profits and risk management, and increases the company’s market knowledge.”5
Tapiero also references the IFC’s discovery that for each extra woman on a company’s board, its attempted takeover bids reduce by 7.6% on average. MFT 2014 refers to recent research conducted by UBC’s Sauder School of Business, which shows that the cost of a successful business acquisition is reduced by 15.4% with each female director serving on a board.
Why does mining need women? – The case for corporate responsibility
In this modern age, a mining company’s interaction with its environment is extremely important, and increasingly so. This includes how sustainable its operations are – how well it manages resources such as water, for example – and how socially responsible they are in running those operations. It is a hackneyed stereotype that women tend to be more conscientious and empathetic than men, but MFT 2014’s findings seem to complement that ideology. They suggest that the presence of women on a mining company’s board increases that company’s environmental and social stewardship.
MFT 2014 examined water use as a measure of companies’ environmental responsibility and sustainability. Interestingly, the average total water use of companies with all-male boards was 483,000 cubic metres of water, while that of companies with two or more female directors was significantly lower at 130,000 cubic metres. In-keeping with this trend, companies with two or more women on their board tended to have a higher level of disclosure and transparency, reflected by their achieving the highest average Bloomberg Environmental, Social and Governance disclosure score. This was 39.61, compared with 25.25 achieved by companies with all-male boards.
Nowadays mining companies are expected to contribute in a positive way to the communities living near their mines, and are often judged on how much effort and investment they put into helping local people. In this respect, the presence of two or more women on a company board appeared to make a huge difference. MFT 2014 found that, on average, companies with two or more women on the board spent 5.59% of their profits before tax on community engagement, which was five times more than the amount spent by companies with all-male boards (1.11%).
In correlation, companies with at least two female board members were also far more likely to have a Corporate Social Responsibility/Sustainability committee than companies with none. The average percentage of all-male boards with such a committee was 29.7%, whereas that for boards with two or more women was 65.5%. The latter group were also 22% more likely to have an anti-bribery ethics policy than the former.
MFT 2014 concludes: “Mining companies have moved towards an increased focus on Corporate Social Responsibility to support the sustainability of their businesses and women have made a measurable impact on the level of disclosure, as well as the management of the environmental, social and governance issues addressed by those companies. It can be argued that the security of a company’s social licence to operate may be improved by having women on the board.”
In her contribution to MFT 2014, Dafna Tapiero of the IFC comments: “Having gender diversity at all levels of the mining industry enhances a company’s relations with the local community and ensures a decrease in certain risks and impacts. By fully engaging women in this discourse, such risks and impacts – like increased exposure to HIV/AIDS from influx workforce – can be accounted for and addressed through better informed corporate responsibility strategies. Hence, we see a balance in discussions, innovation and improved decision-making processes. Companies like Anglo American and Rio Tinto have already identified those economic benefits and have extended those benefits to local communities, where they are seeing positive impacts on team performance, market growth, profits and shareholder returns.”
She also highlights the role of employing women from the local, rural communities in perpetuating sustainable economic growth within developing countries. “Women’s economic participation, and their ownership and control of productive assets, speeds up development, helps overcome poverty, reduces inequalities and improves children’s nutrition, health and school attendance,” she says.
“By hiring and investing in women, you are actually directly investing in the community, thereby helping its sustainable development. The main message is that gender equality absolutely matters for development outcomes and development policy making.”
How can it be done?
The present facts and figures may be dire, but they are at least better than they were. According to MFT 2014’s findings, recent years have seen a notable improvement in the proportion of board appointments going to women, which in 2013 was a fifth of all appointments made within the top 100 mining companies. At the end of 2013, 58% of the top 100 had at least one woman on the board, compared with just 46% in 2012.
MFT 2014 calculated that the average percentage of women on top 100 company boards had increased over the past five years at a rate averaging 2%. If board appointments continued to increase at this pace, it would take until 2033 for the percentage of female board members to reach 30%: the “critical mass” where “the full benefit of gender diversity can be achieved,” the report states. At present, only 14 of the top 500 mining companies have achieved this critical mass, six of them in the top 100.
The report continues: “We have seen some progress on improving female representation. However, at the current rate of change it will take 20 years to reach the much mooted 30% level, which is simply too slow.”
Some mining companies have set their own targets for appointing more female board members and these are recorded in Lord Davies’ Women on Boards report produced for the UK Department of Business, Innovation and Skills in April 20136. Anglo American had a 30% target for 2013; BHP Billiton (ASX, LSE, NYSE, JSE: BHP) had a 25% target for 2013; and Eurasian Natural Resources Corporation (LSE: ENRC) had a 20% target for 2015. There is evidence in BHP’s approach to achieving this target in certain job listings on its website, in which it states: “We are committed to attracting and retaining a diverse workforce and therefore, where candidate’s applicable skills and experiences are relatively equal, preference for hiring may be given to Aboriginal candidates and/or women in a non-traditional role.” (This was for a Manager Purchasing role in Saskatoon, Canada)
Lord Davies’ Women on Boards report found that there were six companies on the UK’s FTSE 100 with all-male boards, five of which were on mining companies, which the peer deems “shameful”. But he believes that self-regulation is a better solution than quotas, which he says in his MFT 2014 interview, “would be an admittance of failure”.
He adds: “If we don’t get 25% [female board members in FTSE 100 companies] by 2015 will we introduce quotas? Absolutely, yes. So there is the threat, but voluntary rectification is much better.”
Lord Davies goes on to suggest that more mentoring and networking opportunities for women would increase the likelihood of them securing senior positions in mining companies.
“My view is that, particularly for women on a journey to the top where there are more men, I think mentoring is hugely important,” he says. “Given that women network in a different way to men, the reality is that you’ve got to have formal processes in a company for mentoring.”
Expanding on the subject of networking, he observes an increasing amount of networking events for women and remarks on how important they are. “Networking properly is a key aspect of top management,” he remarks.
Lord Davies adds that he recognises how “tough” it can be for a lone women, or one of only a few, in a large business division and says business leaders need to be “sympathetic” to this issue. He says that businesses need to continuously monitor the diversity of their workforce, while always seeking to improve it. The findings and conclusions of MFT 2014 provide solid proof that diversity is beneficial to mining companies and well worth seeking to improve, however challenging it may be.
Dafna Tapiero of the IFC summarises the overwhelming conclusion of the report in her concluding contribution, in which she deems women “an untapped resource, limiting the full potential for a company to develop more efficiently and sustainably.” The message for mining companies is clear: invest in women, or else lose out.
Written by Juliet Langton for The International Resource Journal, February 2014
Footnotes:
1. PriceWaterhouseCoopers and Women in Mining, Mining for talent 2014 (January 2014) http://www.womeninmining.org.uk/wordpress/wp-content/uploads/2013/02/Mining-for-Talent-2014-research-report2.pdf
2. Forbes, Australia’s 50 Richest, (2013) http://www.forbes.com/australia-billionaires
3. The New Yorker, The Miner’s Daughter (March 2013) http://www.newyorker.com/reporting/2013/03/25/130325fa_fact_finnegan
4. Credit Suisse Research Institute, Gender Diversity and Corporate Performance (August 2012) http://www.credit-suisse.com/newsletter/doc/gender_diversity.pdf
5. International Finance Corporation, Focus: Women on Boards: A Conversation with Male Directors (International Finance Corporation 2011) http://www.ifc.org/wps/wcm/connect/b51198804b07d3b2acabad77fcc2938e/Focus9_Women_on_Boards.pdf
6. UK Department of Business, Innovation and Skills, Women on Boards (April 2013) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/182602/bis-13-p135-women-on-boards-2013.pdf
Juliet Langton 