Donovan Sánchez
Mining Director
SGS
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View from the Top

A Business Offering for the Mining Value Chain

Thu, 10/17/2019 - 11:19

Q: Where are you adding the most value to Mexican mining?
A: We cover the whole value chain of the mining industry, from the beginning of exploration to the trading of the processed mineral. I believe that we are one of the few mining companies offering solutions for each stage of the process. We can help with geological modeling and metallurgic research in exploration, re-engineering of projects and increasing productivity in mine operations and land recovery at closing. We also offer security and health solutions.
But being a company with such a diversified portfolio, we must ensure that we remain competitive compared to companies that focus on one stage. We tackle this with a commitment to the constant improvement of our cost-benefit offering. For example, we worked with a customer to improve its metallurgical process and increased productivity by 5 percent, which translates into a huge profit for the company. We also focus on accompanying our clients. To that end, we opened a new laboratory in Hermosillo in November 2018 to be closer to the market in Sonora and the northwestern region. We are also improving our operations in Guaymas by completely rehabilitating and modernizing our laboratory facilities. The company additionally made a significant investment to consolidate our operations in Manzanillo. As a global business, SGS can also add value through its experts around the world with experience in solving multiple problems and who are at the disposal of our clients.
We are certifying the company to guarantee we comply with the highest standards and we will soon have the IMO certification. We also always renew our previous certifications, such as that conferred by SCC on our Durango laboratory. If we increase our efficiency, we can also offer these same returns to our clients. To achieve this, we analyze and re-engineer our processes while also investing in new equipment. Our goal is to be better, faster and more integrated. As a consequence, we can reduce costs and shorten response times.
Q: What are the advantages of having on-site laboratories at mines and what are the potential returns in terms of down times, earnings and productivity?
A: We are not the only company offering on-site laboratories but we have the most experience. We have two operating in Mexico, one in Guanajuato and the other in Guerrero. We offer our clients the possibility of having certified laboratories whose results can be trusted. Regarding the cost-benefit choice, an on-site laboratory is rarely cheaper but this decision is linked to the reliability of the sample and result. We can adapt to the model that suits our client best. If it is more beneficial for SGS to set up the facility and the customer operates it, we can do that. But we can also make the investment in the laboratory and operate it as well. The latter is more common.
Q: How would you boost mineral exploration in Mexico and what is most needed to do so?
A: There is a part of the equation that the industry cannot control: the price of metals. But exploration in Mexico has also been significantly affected by the tax levied on exploration. I think this tax should disappear. To explore is to risk money, as nobody can know for certain that the exploration target will yield a mine. Exploration must be favored to generate new projects that can become operational and later guarantee a constant tax income for the government when producing. I think that it is simply not correct to tax companies that are already assuming the high risks of exploration and betting their money. As for service providers like us, we can assume part of the risk by also investing in our process, our people and the solutions that we offer.