Mining Industry and the COVID-19
COVID-19 is today a concept that encompasses not only the pandemic as a threat to global health, but also a risk or decisive factor for all economic sectors of different industries. The mining industry may seem like one of those that would not be affected, but nothing is further from the truth. The mining industry has been and will continue to be directly affected by the COVID-19 pandemic.
To understand this statement, it is necessary to resort to an explanation of a natural mining process in very general terms, highlighting which are the points of inflection and risk that have been key for the industry to be affected:
“As Tom Butler, President and Chief Executive Officer, International Council on Mining and Metals (ICMM), has said in the World Economic Forum:
The COVID-19 pandemic is undoubtedly the defining global health crisis of our time, with governments and health services alike racing to slow the spread of the virus. But beyond the impact on global health, COVID-19 has shown its potential to create devastating social, economic and political challenges that will have lasting repercussions...” - Tom Butler
The industry has been embroiled in a number of logistical, corporate, financial and bureaucratic problems and challenges. Part of these challenges have been to be able to transfer the personnel to the work sector, given that the vast majority of mining companies are not located in the place of mining exploitation, so the routine task is to assign a team to the coordinates of work and implement a stay camp during the specific work period.
The closure of borders, national and international legislation for the entry and exit of people, the health control processes of each country, the corporate health control processes of the activity, added to the urgent restructuring of all these guidelines for the fundamental health sectors and security (among others) have caused the industry to pause and slow down its processes, at the same time restructuring and / or canceling certain projects due to the simple and complex difficulty of being able to continue with its obligations in the midst of so much chaos.
Taking in consideration what Andrew Swart, Global Sector Leader—Mining & Metals for Deloitte have written in his article:
“The commodity markets have been affected by the COVID-19 crisis in a variety of ways. Company operations themselves have been affected through isolated outbreaks and government-mandated shutdowns in markets like South Africa and Peru. Demand for many commodities like copper, iron ore and zinc remain low as markets anticipate a lower near-term demand outlook for these commodities. One of the key exceptions to this trend has been gold, which typically benefits from higher levels of uncertainty. As China emerges from the COVID-19 crisis, we are seeing Chinese manufacturing, mining and metals companies back online, but a wider increase in commodity demand prices are likely to remain low for a few quarters. One silver lining for the mining industry has been lower energy prices. With energy typically constituting 20-25 percent of direct operating costs, companies with unhedged positions in energy are able to benefit from this new pricing regime.”
We can understand that as many problems have appeared for the industry, also have opportunities, mostly related to the amount and price of certain types of minerals. However, although the industry has a positive outlook towards the future due to its capacity and confidence in facing and responding quickly and effectively to this crisis; It is clear that there will be visible changes in the traditional processes as well as in the typical collaborations and cooperations of the industry, which is currently turning to cooperative work with different smaller local cells that can overcome the vast majority of impediments at the international level, such as it is happening with the international projects of global companies.
If we take back the opinion of Andrew Swart:
“Practical next steps
Mining and metals leaders will be defined by what they do along the three dimensions of managing a crisis: Respond, Recover, and Thrive. Some key next steps include:
And again the one from Tom Butler, President and Chief Executive Officer, International Council on Mining and Metals (ICMM), has said in the World Economic Forum:
“...Companies have placed restrictions on work-related travel and have set up hotlines operating 24/7 that provide medical and wellbeing advice, including signposted access to mental health services, for employees and those in the local community.
...Each country has responded differently to the pandemic and in many countries the response differs across states and regions. Our members are therefore working closely with health authorities to ensure all sites are adhering to national and local guidance…”
...While the sector may not have got it right every time, COVID-19 has undoubtedly led to the refocusing and reframing of relationships with local community groups...”
We can understand that although the logistical economic blow is very important in the mining industry, both from the companies and the authorities of each country, the focus has been placed on collaboration with local communities and their local capacities always under the adoption of new agreements and strategic alliances that work with the extra health and safety regulations that the pandemic has imposed.
This mutual commitment is estimated to be very useful to compensate the losses of the industrial sector, to recover the speed of the processes, reaffirm the relationship with local communities and distribute the opportunities of the work chain to the small and medium-sized companies of each region.
As a result of this strategy of collaboration and restructuring from global to local, industry leaders estimate that 2021 will see a change in the ways of working, processes, and thus also an expansion of projects, giving rise to the emergence of "new" companies with local scope for global projects.