Israel Méndez Becerra
Association of Miners and Cooperative of Mexico (AMICOM)
Expert Contributor

Crisis in the Mining Industry

By Israel Méndez Becerra | Wed, 03/24/2021 - 12:45

The juncture the mining sector finds itself in is very discouraging due to the minimal levels of investment and the poor income caused by the systemic fall in pricing worldwide. In this scenario, mining company leaders must be aware that their cost-reduction management needs to consider variables related to social and environmental conflicts.

Despite the importance of mining in our country, the sector has been in a constant decline over the last two years due to its inability to communicate to the population the benefits of a responsible mine, one that respects the environment and guarantees community development. The reasons behind this regrettable reality ranges from the laziness of the government, fake political agendas, lack of communication and transparency all the way to the reputation of companies being affected by past mismanagement. The final result is to stop investment, which not only affects paralyzed projects, but also the arrival of capital for potential investments in the sector. 

In an environment such as this, the mining companies in our country struggle to maintain their business while coping with serious prejudices. The issues they face are related to the price drop, the bureaucracy of legal normativity, environmental and social conflict management, security and, of course, political risks. 

Today’s reality clearly shows us that the management of costs by itself does not guarantee the survival of the mining sector. Currently, there will be no business if the social and environmental conflicts cannot be managed. Therefore, no cost reduction strategy passes if it ignores these two variables that are vital to continue working.

The cost of closing a mine is prohibitive. We are talking about a sector whose exit barriers are very high due to the levels of committed investment. In situations like this, it is required to review plans, focus goals and take another look at the strategic variable of the mining business: costs. This subject, which seems obvious, sometimes is not because when you experience a boom, you do not fall into the inefficiency that could exist in the processes.

First of all, it is essential to review with clarity the objectives of the company to ensure that every member inside the organization understands their role regarding the achievement of the proposed goals. Secondly, performance monitoring must be permanent and accurate. Finally, there needs to be an intensive use of communication technology to achieve the maximum process efficiency.

Photo by:   Israel Méndez