WHY IS SAND MINING AN ISSUE?
In our recent Amity Insight: Sustainable Cities - we looked at how cities have changed and some of the challenges they face, as they seek to adapt to accommodate ever more people. One of the issues we explored in the Insight was the increasing demand
for construction sand as cities struggle to keep up with housing demand whilst competing to build the tallest buildings all over the world. In this RI Expert Briefing we look deeper into this area of increasing concern. Sand is used for a large variety
of applications, ranging from water filtering to the production of semi-conductors, to the making of glass as well as paint, and it can even be found in cosmetics. However, it is the construction sector that requires sand in large amounts as it is
the main component for concrete and asphalt. In fact, concrete is the most used man-made material in the world, with twice as much concrete used in construction than wood, steel, plastic and aluminium combined. As a result, sand is the second most
consumed natural resource after water.
Sand is used for a large variety of applications, ranging from water filtering to the production of semi-conductors, to the making of glass as well as paint, and it can even be found in cosmetics. . However, it is the construction sector that requires sand in large amounts as it is the main component for concrete and asphalt. In fact, concrete is the most used man-made material in the world, with twice as much concrete used in construction than wood, steel, plastic and aluminium combined. As a result, sand is the second most consumed natural resource after water.
HOW MUCH SAND DO WE USE?
Sand has become a globalised commodity and it is estimated that the world now consumes 15 billion tonnes of it every year. Statistics
are however uncertain, as national accounting is inconsistent and some uses of sand are often not reported – such as the sand used for fracking or land reclamation.
With rising urbanisation, demand for construction sand has increased significantly.
In the US alone, use of construction sand has increased by 24% from 2011 to 2016. In developing countries, demand has risen even more rapidly: in India, the amount of construction sand used annually has more than tripled since 2000 and continues to
rise, whilst China used more cement between 2011 and 2013 than the US used in the entire 20th century. Places like Singapore and Abu Dhabi have also used vast amounts of sand over recent decades to allow them to expand through reclaiming land from
WHERE DOES SAND COME FROM?
Sand is not a renewable material. Instead it is formed by erosive processes over time - in fact a very long time as the process takes thousands of years. Through wind, rain and other weather conditions, rocks are broken down into smaller particles. In the past we have extracted sand from quarries, however as these sources have become exhausted, sourcing now occurs from riverbeds and even from the bottom of the oceans.
It is true that there is a lot of sand on Earth and sand is a common resource which is easy to access. For instance the Sahara, the largest desert on earth, covers 10% of the size of the continent of Africa and is the size of the United States. As mentioned earlier, however, sand is not a renewable resource. In addition, not all sand is equal and therefore not all sand can be used for construction. Rounded sand grains found in sub-tropical or coastal deserts do not aggregate well in construction materials, whereas high salt levels in ocean sand requires cleansing first. In practice this means that places like Abu Dhabi, although on the edge of a desert, need to import sand from other countries.
WHAT ARE THE CONSEQUENCES?
Sand extraction has caused severe environmental damage including soil erosion, landslides, and disturbances to ecosystems, as well as beach disappearances. Sand plays an important role in protecting coast lines, and studies show that intensive sand mining
has made tsunamis more devastating: when beaches disappear there is no natural barrier to flooding. Sand mining in river beds and lakes also causes problems as dredging destroys local habitats and thus fish disappear. Intensive sand mining has also
led to infrastructure damage: globally there have been several cases of collapsing bridges, whilst in the US several coastal areas have seen the foundations of seafront houses break down. In Indonesia, sand mining from ocean beds has even led to the
disappearance of over 20 small islands.
Access to construction sand has become scarce and therefore a source of conflict. The extraction of sand has consequently been linked to so-called “sand mafias” and corruption. Criminal groups are allegedly dredging sand without the consent of local communities and opponents have been killed whilst local authorities have allegedly accepted bribes to allow the activities to continue. As with all mining operations, relations with
local communities are a key issue and companies operating in this sector should aim to support and protect human rights.
WHY IS THIS AN ISSUE FOR INVESTORS?
Companies in a variety of sectors rely heavily on sand to manufacture their products. Within the construction sector, building companies as well as manufacturers of building materials should ensure they source sand in a sustainable manner without causing
environmental damage or fuelling local conflicts. Both represent areas of risk with potential reputational risk and could also put a company’s license to operate in a region in jeopardy.
WHAT IS EDENTREE'S APPROACH?
At EdenTree we invest in responsible companies and engage
on a variety of relevant issues with our holdings. Through our positive screening process we are unable to invest directly in extractives companies. However we may invest in companies further up the supply chain that source raw materials to make their
own products. Whether it is cobalt to make batteries, wood to make packaging or sand to make concrete, we expect companies to have robust sourcing policies in place, to question their suppliers and ensure resources have been extracted in a responsible
manner. As this is an emerging area of risk, we will be scoping our exposure to sand use and seeking to engage where appropriate.