THE ROLE OF THE INTERNATIONAL COUNCIL ON METALS AND THE ENVIRONMENT AND OF OTHER TRADE ASSOCIATIONS IN THE NONFERROUS METALS INDUSTRY

• Jurisdiction: United States

International Environmental Law for Natural Resources Practitioners
(Mar 1997)
CHAPTER 12B
THE ROLE OF THE INTERNATIONAL COUNCIL ON METALS AND THE ENVIRONMENT AND OF OTHER TRADE ASSOCIATIONS IN THE NONFERROUS METALS INDUSTRY
Robert J. Muth
ASARCO Incorporated
New York, New York

National and international trade associations have traditionally played an important role in the nonferrous metals industry. At one time trade associations were viewed as important largely in the context of gathering aggregate production and consumption data and conducting materials research and product and market development. In the past 20 years environmental issues have come to the fore and in some cases now dominate the association agenda.

The important role of trade associations in the nonferrous metals industry is due in part to the structure of mining firms and to the commodity nature of our products. Nonferrous metal producers in general are not integrated forward into the manufacture of metal-containing products. There are, of course, exceptions but in general metal mining companies will at most process their materials through the smelting and refining stage. They thus are sellers of refined metals, produced to standard specifications and sold at substantially uniform prices and terms, prices being established on commodity exchanges such as the London Metals Exchange and the New York Commodities Exchange.

Thus in the nonferrous metals industry, money spent by a single firm in expanding or protecting a market or in responding to proposed environmental laws or regulations yields benefits that accrue equally to the firm and to its competitors. Unlike the situation in manufacturing industries, environmental regulations seldom produce winners

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and losers among competing mining companies within a single jurisdiction. And as similarities increase among environmental regulations worldwide, firms must be increasingly sensitive to regulatory developments even in jurisdictions in which they do not currently operate.

Under such circumstances there is every incentive for firms to share through trade associations the cost of developing and protecting markets and of responding to environmental regulations that may impact on markets, production costs or access to mineral deposits for development.

The International Council on Metals and the Environment was formed in 1991 to represent producers of nonferrous metals in the international environmental arena. From an initial membership of 11 firms ICME has now grown to a membership of about 30 of the largest private and state-owned metal mining enterprises. Its mission includes representing the industry in international fora on environmental issues that are of broad significance to the industry. Before going into more detail about the work of ICME, I should describe briefly the trade associations that existed in the industry prior to the formation of ICME so that you can better understand why the industry came together in such remarkable fashion in support of still one more association.

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Traditionally the mining industry has been represented by national trade associations that have concerned themselves with matters effecting mining and mineral processing operations. In the U.S., for example, the National Mining Association represents companies that mine, smelt and refine nonferrous metals as well as companies that mine coal, fertilizer materials and industrial minerals. The association concerns itself with issues of access to public lands for mineral exploration, and environmental, tax and other laws and regulations that impact upon mining or mineral processing firms with operations in the U.S. Membership includes suppliers to the industry, but not customers.

The NMA does not generally address matters that effect the ability of firms to produce or market particular metals. Instead those matters are dealt with by what we can call commodity associations. Among these in the U.S. would be The Silver Institute, The Gold Institute, the American Zinc Association, the Copper Development Association and the Lead Industries Association. These commodity associations traditionally focused on gathering statistics and on market development and today are in varying degrees engaged in dealing with environmental concerns that impact the production of or markets for a particular metal. Membership in commodity associations typically includes major first tier customers: Copper and brass fabricators, zinc die cast alloyers, lead acid battery producers, for example.

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There were also international commodity associations. For example, the International Copper Association and the International Lead Zinc Research Organization have traditionally concerned themselves with, respectively, expanding and defending markets for copper, and for lead and zinc, and their alloys. This is done in cooperation with national commodity associations.

Because lead has been recognized as a toxic metal with human health exposure consequences, ILZRO has long concerned itself with research on the toxic effects of lead. For zinc and copper, human health has seldom been an issue, and eco-toxic effects are of only recent concern. Thus only recently have these organizations equipped themselves to address in a major way issues of health and the environment.

This array of trade associations, which is more or less mimicked from one country and one metal to the next, served the needs of the day. It did not, however, provide a mechanism by which the industry could address at the international level concerns over the environmental and social consequences of mining or mineral processing generally, or over the continued use of nonferrous metals as a class of materials.

And for a number of reasons this organizational gap was becoming of more and more concern. First, the matter of international institution building. Beginning with the

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United Nations and the GATT, now the World Trade Organization, we have progressed to the United Nations Environmental Program, the Commission on Sustainable Development, the UN Conference on Trade and Development, the UN Economic Commission for Europe, the Organization for Economic Cooperation and Development, the World Bank and on and on. And in each case these organizations, including those formed for economic objectives, are today addressing an ever widening range of environmental issues.

Couple this with the globalization of industry and the breakdown of socialist and right wing authoritarian regimes, leading to the growing importance of foreign direct investment and commensurate shrinking of state-sponsored foreign aid. While certainly a great boon to the people of the world in terms of economic advancement, foreign direct investment raises fears and concerns over the ability of host nations to control the environmental consequences of rapid development...