Essington Lewis Memorial Lecture urges industry to redefine concept of value
For the 47th Essington Lewis Memorial Lecture on 18 November, the AusIMM Adelaide Branch was delighted to host a face-to-face presentation by OZ Minerals CEO Andrew Cole FAusIMM in the Exhibition Hall of the National Wine Centre, Adelaide. Andrew’s topic was ‘Shaping a sustainable future with purpose’.
Around 100 guests were treated to a truly thought-provoking discussion about the business imperative for all companies to own and implement their sustainability practices. Andrew provided many examples of using renewable energy, recycling and repurposing, minimising negative environmental and social impacts whilst maximising creation of social and economic value prosperity for all stakeholders.
Through the magic of technology, and lots of hard work by Committee member Chris Sykes FAusIMM, the lecture was also live streamed across Australia with over 60 people logging in for the event and being able to submit questions for the speaker.
Before he introduced Andrew Cole, Adelaide Branch Chair Stuart Emery FAusIMM provided a short reminder of the life of Essington Lewis, from his birth in the SA town of Burra in 1881, through schooling in Adelaide and starting work in Broken Hill. Essington rose to the highest leadership role in BHP and was key to BHP becoming the largest resources company in the world. He also established the Commonwealth Aircraft Corporation and a number of munitions factories prior to the Second World War, and served as AusIMM President in 1935.
After acknowledging the traditional owners of the lands OZ Minerals works on – the Kaurna, Ngaanyatjarra, Kokatha and Antakirinja peoples – Andrew proposed that the mining industry is at a cross road.
‘Whilst the vast majority of our history is positive and loaded with good news, celebrations and successes, and we’ve created tremendous financial wealth, it is unevenly distributed around the world, and has come at the expense of the health of our planet, a growing segregation of the “haves and have nots”, and has resulted in a deterioration of many people’s mental health.’
Andrew said that COVID-19 ‘has taught us that we are all human, and despite our differences we are all the same. It’s allowed us to talk more freely about mental health. It has also given us time to think and reflect on what’s important to us, as individuals, as families and as a society. It has tested our value chains, our international relationships, and the very fabric of how we operate. When the challenge is imminent and enormous, and despite a few hiccups along the way, the world can unify and work together.’
There is a need for us to redefine how we think about value
Andrew explored how shareholders have historically been at arms-length, and driven the relentless pursuit of profitability, far enough away from decision-making allowing us to all rest at ease, irrespective of the costs of doing so. We are faced with dilemmas every day during which we use a subconscious definition of value. And he asserted that the definition changes depending on the circumstance. We tend to get the greatest joy from:
- seeing a newborn come into the world
- celebrating with family, friends, and colleagues
- seeing the joy on someone’s face when you help them
- or reuniting with loved ones at the airport arrivals after a long time apart.
We rarely remember the time we saved 10 per cent off our production costs.
And yet company frameworks often prioritise financial return over all other aspects, despite it being against our very human nature.
OZ Minerals has now ‘formally defined value as being the value created for our shareholders, employees, communities, governments and suppliers. There is no one more important than another – they are all equal and we believe when they all win, they are all better off, but when one group is worse off, they are all worse off in the long run,’ Andrew said.
‘We have also rebuilt our risk system so that risk now means threats and opportunities. In our system, whenever a person needs to make a decision, big or small, they must formally assess the value they are creating (or not) for all five stakeholder groups, and the threats and opportunities that they are creating for all these groups.’
‘This leaves them having to make judgement-based decisions on how to allocate value amongst stakeholders – a discussion that people are not used to having, and have not been trained to have, but it does appeal to their inner being as they can now talk about how they can help create value for people in non-monetary measured ways. This appeals to the underlying care that we all have, as people for one another. It helps them bring their whole self to work.’
‘As a result, OZ Minerals is working to enable every person to work flexibly at times that suit them given their personal circumstances, and to operate virtually wherever they are at their best and where the work doesn’t currently allow flexibility, we are working on incorporating technology into our business to eventually allow flexibility for all.’
This creating value for employees is driving the technology roadmap
Andrew said that while the company was still largely recruiting for roles, their next system update will be to change the recruitment process to look for great people who fit the company as the first step, and only then will the company package work that they love doing around them.
‘The belief that we need to use a performance management system to score their contribution, tell them what they have and haven’t done well, and then pay them a pro-rated amount as a “reward”, defies everything we know about motivating people. It also symbolically says; we don’t trust you.
We have abolished the performance management system and changed our remuneration model so that we pay people a fixed salary at the top of the market – we work hard to recruit people who can add to our business, we pay them really well, we expect them to perform, and we don’t score them.’
When it came time for OZ Minerals to design a new mine at Carrapateena, one of the first things they did was to engage with the Traditional Owners, the Kokatha people, who had been on the land for thousands of years, and the pastoralists who had farmed the land for several generations prior. They engaged in a way that gave these stakeholders the right to influence and help guide in the design, build, and now operation. They managed to create real value for the Traditional Owners, the pastoralists and shareholders. They developed a unique partnering agreement that went beyond compliance by focusing on how the parties would work together. Engagement with the Kokatha people was not just to sign an agreement – they are partners in managing the resource and the land, working to help one another realise their respective strategies and visions.
Andrew said, 'We generally underestimate what we can achieve and the power of the collective over that of the individual. By working together, by empowering and trusting our people, and by rethinking how we define value and the systems and processes within our companies, we can make a real difference, quickly. This is the challenge that we all face together, and it’s hard.
‘But, it enables transformative change.
‘This is our moral and ethical duty to lead.
‘We need to listen and be guided by what matters to people instead of getting lost in platitudes and bureaucracy or hierarchy.
‘We need to take away our egos and together turn these business imperatives into sustainable practices, but I’d caution that its only when we create value for all stakeholders, when there are no winners and losers, do we truly create value, and do we truly have a sustainable future.’
After a lively session of Q&A, Derek Carter was then called upon to make the official Vote of Thanks. He congratulated Andrew on an excellent lecture, reinforced his message of the importance of the resources sector to Australia’s economy, and presented Andrew with a slice of steel rail from Whyalla, mounted on a plaque.
Diana Todd (granddaughter of Essington Lewis) and her husband John were once again special guests for the event.
The evening concluded with an opportunity for all to socialise with canapes and drinks, kindly supported by BHP.
Thanks to all who attended and support the event and we look forward to next years’ lecture.