Serenity in the Face of ChangeWed, 05/08/2019 - 12:15
Q: How optimistic is Industrias Peñoles regarding industry growth, considering the volatility of the sector?
A: There are many people within the mining industry who speculate but few who actually understand what is happening. Precious metals are highly volatile and companies cannot alter their plans every time there is an unexpected change. Successful companies need to have a long-term vision and not let themselves get carried away by the ups and downs of the price cycle. We need to focus on the few things we can control such as reducing costs, increasing productivity and being highly efficient; everything else will fall into place.
Our company is over 100 years old and is used to constant change and turbulence. We even had to overcome the Mexican revolution. Peñoles finds that volatility is a normal part of the industry. The landscape may always be in flux but the country’s mineral deposits will always remain, as will demand for this material. We are strong believers in having a long-term vision and making sure everything is congruent with our goals. With a clear vision and consistency in commitments, great things can be achieved. From the beginning, we knew that we wanted to be an international leader in the industry and this vision is reflected in everything we do.
There are four main factors that differentiate us from the rest: the quality of our products, our processes, the excellence of our team and the ethical manner in which we manage our business. To achieve excellence, an operator must not only demand it from its collaborators but also incorporate processes that uphold this benchmark from recruitment to training and development. This applies to everything. It sounds simple but congruency is not easy to put into practice.
Q: How would you describe the key factors behind Industrias Peñoles’ success?
A: There are four key principles that companies should always invest in no matter the price cycle to assure success: security, technology, training and maintenance. These elements are sacred to us and even in times of dire budget restrictions, we do not cut costs in these divisions. We understand the importance of having trained people who know how to use technology safely. There is no other way to do business.
We are investing in developing our main training facility in Velardeña where we will have state-of-the-art technology and simulators. We use cabins to educate our operators for several weeks and have them simulate a variety of situations that are likely to occur in everyday operations. The training center will certify operators through governmental programs that teach them how to properly handle machines and carry out maintenance. This training helps keep our mines safe and productive. It is part of the secret recipe behind our high levels of production, reduced costs and employee retention.
Q: What does the country need to become a more competitive mining jurisdiction?
A: To experience a boost in the industry, Mexico truly needs clearer public policies. The automotive industry is a good example of this. Many years ago, someone saw the potential Mexico had in the automotive industry and decided to establish a series of public policies to incentivize the development of this sector. The country now plays an important role in the automotive sector thanks to the vision this person established. The mining industry in Mexico needs a similar set of actions to take full advantage of the potential of the mining sector.
To see more projects in the country, we need less jurisdictional volatility to incentivize investment because mining law plays a crucial role in competitivity. The results of the Frasier Institute Report are a clear example of this. In 2011, Mexico’s mining sector experienced US$15 billion in investment, a record high, while in 2017 it dropped to US$3 billion thanks to the changes in the law. Considering that the industry requires a long-term investment, public policies should also have a long-term vision.