Industry Downturn Could Lead to Talent GapWed, 05/08/2019 - 12:22
Q: What is the single greatest obstacle that Fresnillo will have to overcome in the coming years?
A: We used to consider our growth objectives to be the biggest challenge that we faced but now that we are about to meet our IPO goals of doubling production in 10 years, we consider the lack of human talent to be a greater obstacle. We have a large portfolio of projects but we consider the most precious asset in our company to be our talent. The downcycle in the mining industry caused many people to stop working in the industry and now there are many gaps to fill in medium to high-level positions.
Q: How will the new anti-bribery and corruption legislation impact the mining industry?
A: This is a very positive initiative not only for the mining industry but for the entire country. We are listed on the LSE and since day one we have had to comply with the UK Bribery and Corruption Act. It is very strict but with our company’s values and profile we have not had compliance problems and we have seen and we know the benefits of following these types of norms. As a company with an already-strict governance structure we comply with this new initiative in Mexico. The sector is responding positively to the legislation.
Q: What does the company want to see in Guerrero before advancing projects in this state?
A: Security can be an issue in certain isolated areas within the country and even though we have an interesting project in Guerrero we have not been able to deploy exploration in the area due to these issues. We have tried a couple of times to start exploring it but unfortunately, we have experienced safety problems and have removed our people from the area. Thanks to our large project portfolio we can pause our efforts in this area and direct them toward less challenging regions. We hope that the area will be at a more stable stage in the future. The growing presence of the mining industry has the possibility of changing the reality of the state as it will bring economic growth and quality jobs.
Q: Why did the company decide to list on the LSE over more traditional mining markets such as the TSX?
A: Before deciding to list on the LSE, we thoroughly reviewed the markets in London, New York and Toronto. Due to the size of the listing we reduced our options to New York and London. And then we saw that mining had greater weight in London than in New York. Due to the listing being primary and a secondary, the tax implications also had a weight on the decision. As a Mexican company with more than a century in mining, it was very important that despite the fact that Fresnillo would be incorporated as a UK company, we would be able to pay all taxes of the listing and then those required in Mexico. This was a strong priority that brought us to the LSE. We have been studying the possibility of a dual listing in another market but since only 25 percent of our capital is in the UK market, further dividing this percentage would only put more pressure on the liquidity of our shares. For this reason, we are not considering it at the moment.
Q: What would you like the new administration to prioritize when it comes to the mining industry?
A: The new administration needs to understand the importance of the mining industry in Mexico and its ability to compete globally with other jurisdictions. Larger companies have the privilege of being able to choose or buy projects in different countries and they prioritize investments in regions that have the best investment platform in terms of permitting processes, taxes, infrastructure, mining law, clear and defined mining development policies and human talent. It is crucial that the new mining authorities prioritize strengthening the areas in which we lack competitiveness. We need to make exploration 100 percent deductible. We need an efficient and clear permitting process, clear rules and processes for indigenous consultation when and if applicable, access to land policies and guidelines and a reduction in security issues to lower the cost of operations in Mexico.