Insight into Mexico’s Leading Mines
You can watch the video of this panel here.
Mexico's top mining companies must take into consideration multiple strategies, challenges and innovations to adhere to competitiveness and overcome obstacles brought on by the pandemic. Experts are confident investments will increase this year as new projects start commercial production. Despite this optimistic scenario, most challenges will remain.
Leading mines in Mexico count on pivotal elements making their companies stand out from the rest in regards to operations, revenue and stability. “Long-term project mines need to tackle exploration and production, along with various internal and external processes such as regulations, community context and environmental requirements,” explained Jaime Gutiérrez Núñez, President, CAMIMEX.
Nuñez considered experience, adaptability and the ability to change and be ready to solve external and internal market and government issues is key to succeed in this industry. He exemplified this process by mentioning a company called Bacis, which has had a consistent evolution for more than 100 years, starting from a small family business to a leading production mining company. “Companies must remember that the main competitors are themselves and their costs, since this is the true key to be competitive.”
Rafael Rebollar, CEO, Industrias Peñoles said that a second strategy implemented to obtain success is by counting on an experienced team and having the right equipment. These two are the basis to performing better, regardless of external scenarios. Additionally, Rebollar commented that the ability to relate to key actors is essential, whether it is with the government, union or community, “companies must be able to prove their value.”
Having an excellent execution and focus on risk management employing an operating system that is constantly improving is regarded to be another essential step that leading mining companies must apply, according to Peter Hughes-Hallet, Country Manager, Newmont Mexico.
“Overall, companies need to prove they care about the well-being of workers and the community and this is mostly achieved through genuine leadership and a holistic wellness view from the company,” said Hughes-Hallet.
From Hughes-Hallet perspective, the latter will increase the company’s margins and they will spur a culture of continuous improvement to develop competitive advantages through human talent. “Responsible mining operations through and through will goatee profitability.”
In addition, other companies consider the implementation of various strategies a winning recipe. For instance, Faysal Rodriguez, VP, Torex Gold, Resources Mexico considered that enacting operational protocols for efficiency and productivity has been the top strategy for Torex Gold. “That coupled with a strong environmental, social and corporate commitment.”
Despite these strategies, each company will have to tackle their very own challenges related to the region they work in. “Guerrero, for instance, is one of the poorest states in the country, with a social complexity that does not resemble. For us the strategies need to go beyond corporate responsibility and really connect with the community to understand its social structure and not be disruptive,” said Rodriguez.
Every region has a different political, social, economic and legal risk. Rebollar considered that in order to solve these issues companies need to do a risk identification exercise to identify their current challenges.“At Peñoles, just when we started two new projects, we had to establish technological ways to carry out remote operations because, due to the COVID-19 restrictions, not everyone could be in the field,” said Rebollar. Moreover, companies also need to deal with daily political circumstances, whether local or national, as well as the financial side of the business.
According to Rebollar, “metal prices are key and do not depend on us, however, keeping costs low to be competitive is a fundamental factor despite those shifts.”
In addition, one must consider that permanent challenges with specific aspects to focus arise on a daily basis, said Gutierrez. “The key is to know how to manage the progress of the operation and its environment. However, Mexico has a problem of inequity in the distribution of its wealth. This is why our companies want to help distribute this wealth through the wealth we produce.”
Technology is another fundamental element needed to lead a successful world-class mining operation, said Karen Flores, General Director at CAMIMEX.
“Tech helps with everything. It spurs efficiency, helps with environmental compliance and reduces risk exposure for operators,” explained Hughes-Hallet. Its effectiveness for the industry has been such that Newmont Mexico announced an alliance with Caterpillar, a leading producer of mining technology, to develop an automated and zero-emission system, which aims to support the goal of reducing greenhouse gas emissions.
Additionally, Newmont Mexico wants to transform mining with automation. “We are investing US$100 million on 26 first-of-its-kind autonomous and electric mining equipment for underground and open pit mines,” said Hughes-Hallet. In terms of safety, the company is working with smart watches to measure hours of sleep and the habits of operators who change shifts.
Technology also makes possible the electrical efficiency in underground mine and, for companies such as Torex Gold, it has reduced 40 percent of the water waste in the underground mine, which has been recycled and reused in the same process.
Top mining companies must also show compliance with ESG policies and practices, which according to Rebollar, influence the ability of companies to generate value for their stakeholders. “Investment plus ESG commitment must converge, as a result, companies and societies win.” Peñoles has three high-impact goals for their ESG commitments. The first one is to be a benchmark in governance, the second deals with having a positive socio-environmental performance and lastly, to be recognized as ESG leaders.
In regards to overall challenges for mining companies, Gutierrez said there are communication barriers with authorities. “The future of mining is in mining concessions, if we do not have mines, there is no industry, regardless of the equipment and staff we have.”
The passing of the electric reform is another concern for these mining companies. Gutierrez explained that it threatens to raise costs and to provide limited supply of electrical energy.
In addition, the reform imposes limits for companies to invest in clean energy efficiency in their projects. “The vast majority of companies have greenhouse gas reduction goals, for us is 30 percent by 2030 and zero emissions by 2050,” said Hughes-Hallet.