Miners in Mexico Respond to COVID-19 RiskThu, 03/26/2020 - 15:44
In his ranking of the major business risks and opportunities that the world’s mining industry would face in 2020, Paul Mitchell, Global Metals and Assets Leader at EY, placed “high impact risks” in fifth place after “license to operate,” “future of workforce,” “digital and data optimization” and “reducing carbon footprint.”
Mitchell explains that most mining companies are able to articulate their crucial risks and handle the most noticeable and frequent risks in their operations. To this end, most miners use a traditional risk matrix. On its vertical axis, there is the likelihood of a particular event taking place, from rare to almost certain. On its horizontal axis, there is the event’s potential impact, from insignificant to catastrophic. An almost certain event coupled with a catastrophic potential impact results in an extreme risk. Meanwhile, a rare event coupled with an insignificant potential impact results in a low risk.
However, Mitchell points out that “the risks in traditional matrixes are often static and stay on the risk register in much the same format for many years.” Companies need to assess portfolios in terms of what would happen if something radical were to take place. He goes on to explain that one could, for example, imagine a major breakthrough in construction technology that rendered steel rods obsolete and impacted the iron ore business. Or, if governments around the world passed regulations mandating that half of the copper used in industrial processes should come from recycling, copper miners would have to assess how that would impact their prospects.
Currently, the world is experiencing the acute impact of the COVID-19 pandemic. The health crisis has not yet waned but the mining industry is already feeling its consequences, as supply chains are disrupted, metal prices plunge, demand is curtailed, operations are slowed down or halted and financing becomes tighter.
It remains to be seen how prepared mining companies are for dealing with a high-impact, hard-to-anticipate risk such as a pandemic. At the moment, Mexico’s mines keep operating normally —authorities have not yet issued orders preventing them to do so. However, miners in Mexico are juggling to keep production going while simultaneously mitigating risks associated with the health crisis. The main actions companies are taking are limiting travel and visits to the mines, aggressively intensifying hygiene measures and guaranteeing a sufficient amount of key supplies so as to remain in production. The following links lead to statements of some of Mexico’s top operators regarding the COVID-19 contingency:
Newmont Goldcorp: www.newmont.com/operations-projects/health-and-safety/
Avino Silver & Gold Mines: www.avino.com/news/2020/avino-responds-to-covid-19-related-market-uncertainty/