ESG Practices Are Here to Stay

You can read our editorial coverage of this panel here.

Elena Espinoza, Acting Head of Social Issues at Principles for Responsible Investment (PRI), kicked off day 2 of Mexico Mining Forum 2021, hosted by Mexico Business News, with the panel “Precious Metals Market & The ESG Investment Revolution.” The panel focused on ESG practices and the importance of investors in their implementation. “What we don’t grow, we mine. Mining is incredibly important to the global economy and we have a responsibility to our communities and our environment,” Espinoza said during her opening remarks as moderator.

Terry Heymann, CFO of the World Gold Council explained there are many different frameworks of what constitutes responsible mining, highlighting a growing demand for ESG practices. “To mine gold, we established Responsible Gold Mining Principles, which define all material issues associated with gold mining and are based on best practices,” he said. Heymann added that mining has a high potential to positively impact the fight against climate change. However, results will depend on the implementation of ESG practices. “Regulation is only one of the drivers for ESG. It is helpful but needs to be mindfully constructed. I believe that investors have an important role, too,” said Heymann.

Heymann also highlighted the importance of gold and how the metal has become essential for technologies used to fight the COVID-19 pandemic. He also emphasized that at the beginning of the pandemic, there were concerns regarding the importance of ESG practices, which fortunately has only increased. For Heymann, ESG and gold will be the important issues in 2020 and Mexico will play an important role in both.

Javier Reyes, Chairman and CEO of Accendo Banco, explained that the US political environment will affect the world, especially as the country has an unpayable debt. Reyes said the company is focusing on metals in a low interest rate and low growth rate environment, which is positive for mining investments. In addition, Reyes said that for the company, the most important thing for investments is transparency and the implementation of ESG practices.

Nowadays, investments in mining depend 50 percent on the country’s jurisdiction and 50 percent on the company’s management regarding ESG practices. Reyes said Mexico has a great potential, since it has one of the most important jurisdictions in the world. He emphasized the company is excited to continue working in Mexico and that it is ready to work with miners that want to improve their ESG practices.

“Accendo Banco is a solid financial institution that operates under international standards and offers different types of financing and advisory services to the Mexican mining industry. Accendo Banco’s extensive experience in mining in Latin America and a team of experts in different areas of mining make us the perfect partner for your mining project,” reported the company.

“ESG and environmental concerns have been more important than ever for major mining companies. Notably, visiting mining sites can give you an entirely different view on these issues,” said Matt Geiger, Managing Partner of MJC Capital Fund. He explained that proximity with communities is needed to change companies’ mindsets on the importance of implementing ESG practices and emphasized that having a good relationship with communities makes permits and projects easier to obtain. Geiger added it is necessary for companies to embrace ESG practices, including programs to decrease CO2 emissions and tailings disposals. At the same time, Geiger addressed mining’s role in the green revolution, citing the World Bank study “Minerals for Climate Change.” “Copper, lithium and nickel will have a clear advantage over other metals because of their green edge in the next years. Silver might be sold more easily than gold, as well,” he said.

"Silver is truly a green metal and it is playing a vital role in EVs and photovoltaic development," said Michael DiRienzo, Executive Director of The Silver Institute (SI). DiRienzo explained that SI is highly engaged with ESG issues, especially because silver will have a vital role in the decarbonization of societies. In addition, DiRienzo explained silver can also be used for water purification and is expected to become the solution to many countries where there are water shortages. SI is committed to ensuring that silver mining is done responsibly as it believes mining can improve people's lives. Mexico is the largest silver producer and, therefore, the country will play a fundamental role in the decarbonization of the industry, said DiRienzo.

Back in November, the instiute released its Interim Silver Market Review, featuring historical supply and demand statistics and provisional estimates for 2020. Physical silver investment is expected to surge to a five-year high, even when the COVID-19 outbreak affected global demand and mine supply. Mexico, the world’s top silver producer, is poised to benefit from these trends, reported MBN.

James Rasteh, Partner at Coast Capital Management, said investors also have a great responsibility in ensuring the implementation of ESG practices. “As investors, we are the architects of these companies. However, most of us do not realize our role in pushing companies on the right path.” Rasteh emphasized that investors must demand detailed information regarding ESG practices and in case the company has not implemented them, “investors can make a difference by contacting the board directly and including the biggest investors, using a well-researched proposal.” Investors need to make sure companies look out for communities, the environment and employees, and hold the board accountable if they have not made the right choices, said Rasteh.

Mexico is a great mining jurisdiction and the government is creating a stable environment for mining, increasing its investment attractiveness, according to Rasteh. “The country can be a leading example of responsible mining through the adoption of new clean technologies, which could lead other companies to adopt ESG practices.