mining after covid-19...2020/05/07 · workforce & connecting technical leads, project...
TRANSCRIPT
Mining after COVID-19:
Rebuilding sustainable
operations
May 2020www.americasmi.com
AMI & leading experts
WEBINAR
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Introductions
Mining post COVID-19
©2020 Americas Market Intelligence. All rights reserved. ǀ Private and Confidential www.americasmi.com 4©2020 Americas Market Intelligence. All rights reserved. ǀ Private and Confidential
AMI is the leading above
ground risk &
advisory firm in Latin
American mining
Authors of Managing
Mining Risk in Latin
America
27 years experience in
the region
Full coverage
of Latin America and the
Caribbean
Our teams have
executed 3000+
client engagements
in Latin American &
Caribbean markets
since 1993
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Today’s Panelists
Moderator
Remi PietMining Practice Director
Panelists
John PriceManaging Director
Curator
Abel DelgadoDigital Marketing Director
Ana Candida de Mello
CarvalhoPartner
Arthur DeakinAnalyst
Stephanie ShumskyTechnical Manager
Sarah GordonCEO
7 areas of mining
risk
Mining post COVID-19
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Mining post COVID-19
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Poll Question 1
Which of the following risks to you consider to be the most impactful on a mine?
13%
10%
13%
6%
10%
42%
6%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Macroeconomic pressure
Reputation
Security
Regulatory and legal
Political interference
Local community opposition
Infrastructure and labour
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Mining post COVID-19
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Macro-economic pressure
Rising resource prices
Definition: High resource prices
can trigger public protests and
higher royalty policies.
COVID trend: Quarantines -> fiscal crisis
and governments will look to raise taxes
on export industries like mining
Lack of local funding
options
Definition: Absence or
underdevelopment of local capital
markets and private investors
COVID trend: Local fundraising in
emerging markets will be even more
costly and difficult.
Capital controls Definition: Capital controls can
destroy project viability.
COVID trend: Collapsing fiscal
discipline in many countries will lead
to capital flight and imposing capital
controls.
Currency
manipulation
Definition: Currency intervention
usually leads to an overvalued
currency.
COVID trend: A strong dollar world will
harm the competitiveness of dollarized
or dollar pegged jurisdictions.
Influence of external
debt and creditor
Definition: High external debt
obligations with a creditor
country expose a country to
external influence.
COVID trend: Fiscal crisis in many
jurisdictions will provide added
leverage to future bi-lateral lenders.
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Mining post COVID-19
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Introducing Pact
Mines to Markets (M2M) Signature Initiative
• Work with government, industry and miners themselves to make
artisanal and small-scale mining (ASM) formal, safer and more
productive
• Specializing health and safety in mining, human rights, traceability
and transparency, economic empowerment among miners, mercury
abatement, child labor reduction, mineral certification,
governance and ethical sourcing.
• Using Delve to organize a Covid-19 Task force to share information, ideas and resources, and
support action initiatives that will directly help ASM communities
• Launching a global innovation incubator, collecting over 150 ideas across our global
workforce & connecting technical leads, project development teams & donors
• Developing & implementing projects with existing partners to educate communities, supply
PPE and build public health response capacity
Covid-19 Response
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Mining post COVID-19
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Legacy of bad mining practices
Local community opposition
Definition: Previous unscrupulous mining practices can turn a
local community into permanent sceptics
Covid Trend: Covid has led gov’t and communities to
request unprecedented assistance, respond appropriately
and a new legacy could be launched.
Overlapping resource use
Definition: Neighboring actors vying for resources (water,
energy, land), including well-connected users
Covid Trend: Covid may present opportunities to
renegotiate, but, economic changes (i.e. unemployment)
drive land scarcity as communities turn to charcoal
production & other resource-intensive coping strategies.
Local content / local procurement
Definition: The community and government pressure to
source products and service locally.
Covid Trend: Covid is impacting international supply
chains, highlighting the benefits of local sourcing and
national hires. Opportunity to find new local suppliers &
invest in building their capacity.
Environmental ConcernsDefinition: Communities may be concerned about the
environmental impact of a mine, including water availability,
dust, waste management and toxic pollution.
Covid Trend: Communities may worry that environmental
impacts could increase Covid risks (i.e. dust exposure).
Mines must take this time to educate & act responsibly.
Indigenous Claims
Definition: Local indigenous communities aim to protect
territory, resources or ancestral rites and rituals.
Covid Trend: Covid is a threat to these communities but
supporting public health projects can demonstrate
benevolence of companies and can help build
relationships.
Grievance Management & Communication
Definition: Communities are frustrated by systems that
delay/avoid fair compensation. Communication is key to manage
rumors & relationships.
Covid Trend: Covid is worsening economic conditions &
misinformation spread. Invest to expedite payment
processing & control the narrative.
Informal mining operationsDefinition: Informal miners may feel their livelihoods and
rights to exploit resources are threatened and protest.
Covid Trend: ASM formalization is an attractive solution to
lost state revenues & widespread unemployment. Context-
adapted cooperation adapted could bring win-win solutions
for marginal deposits & lower prices.
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Political interference
Political ambitionDefinition: Political actor
putting his own ambition ahead
of mining investments.
COVID trend: Mining is a convenient scapegoat for
governments looking for a rise in popularity, but it
has fallen off the radar with Covid19
Political
campaigns and
party alliances
Definition: Align with anti-
mining interests to be chosen.
COVID trend: Candidates seek political stances
with high ROI. With ambitious Covid19 strategy,
miners can be part of the solution, rather than
part of the problems
Local political
power
Definition: The federal
government approves the
project but is then challenged
by the local political agenda.
COVID trend: With overflowing local authorities
(Covid19), miners can support, not weigh
administrative resources (administrative
institutionalism)
International
interference
Definition: Global border
dispute or international regime
(such as ILO 169)
COVID trend: Greater focus on the formalization
of ASM and implementation of the SDGs, regime
and international support (debt relief) but greater
scrutiny on process quality (Covid-19)
Nationalization /
Expropriation
Definition: Expropriation of
ownership or cancellation of
operating license.
COVID trend: Mining exports (USD), resource
nationalism rarely leads today to expropriation,
government's focus on public health (opportunity)
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Mining post COVID-19
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Introducing Barbosa Mussnich Aragao
We are a Brazilian full-service law firm
Founded in 1995 by lawyers with well-established reputations. Took part in a significant number of large transactions in Brazil. Built a solid reputation
as an innovative, cutting-edge law firm and experienced consistent growth.
▪ Business Crime
▪ Competition
▪ Compliance, Investigations and Law Enforcement
▪ Corporate and M&A
▪ Digital and New Technologies
▪ Employment
▪ Energy
▪ Environmental
▪ Finance and Capital Markets
▪ Government Relations
▪ Infrastructure and Regulatory & Government Affairs
▪ Insurance
▪ Intellectual Property
▪ Litigation and Arbitration
▪ Oil & Gas
▪ Real Estate
▪ Restructuring and Insolvency
▪ Superior Courts
▪ Tax
▪ Wealth Management and Succession Planning
What We Do
This is not just one of the very best firms in the Brazilian
market, it is the home of rainmakers who have famously
handled some of the most memorable transactions in the
country’s recent history.
“
”Latin Lawyer
Recent Awards & Recognitions
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Mining post COVID-19
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Tax And Income Distribution Regime
Regulatory & legal
Definition: How miners are taxed and royalty redistribution to
state and municipal levels.
COVID trend: Reduced production and royalties, in
addition to sanitary restrictions on transport and/or
boarder closures may affect local budgets. Reinforced
need to focus actions at the local and regional level to
build lasting partnerships.
Weak regulatory framework
Definition: Under defined regulations they can lead to careless
mining practices and reputational damage.
COVID trend: While regulatory oversight on public health
will be strengthened, some countries have been less
stringent or even determined continuity of economic
activities deemed essential (including mining and its supply
chain, such as Brazil’s case).Environmental assessment required
Definition: Onerous environmental assessments and
regulations (i.e. dam control) can delay or jeopardize
projects.
COVID trend: Environmental sustainability will remain a
strong imperative. The goal is to create an integral value
around a mining site. Covid only reinforces the public
health dimension, giving it enhanced importance.
Administrative obstacles
Definition: Bureaucratic proceedings to obtain permits can
delay projects by months, even years.
COVID trend: Delays will increase, public hearings are
suspended... Now is a time to focus on structural alliances
(local/regional)
Land and mineral rights
Definition: Competition from land and mineral claims may risk
the legal viability of a mine.
COVID trend: Few changes. Covid19 may offer arguments
for the legitimacy of operation and the presence in the
territory.
Corrupt rule of law
Definition: Powerful opponents (e.g. political leaders,
agribusiness, litigants) bribe judges to interpret the laws in their
favor.
COVID trend: Occurrence likely to decrease, in view of
increase collaboration between public and private
stakeholders. Legitimacy and local support can be built
against this risk in Covid's time. Attention to more flexible
regulations and law enforcement in post-Covid scenario,
which may stimulate a less obvious expression of this risk
Social Licensing
Definition: Highly complex stakeholder management process
COVID trend: Increased demand for project legacies on
foreign companies, specially related to social and health
improvement.
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Poll Question 2
Which mining region will be most negatively impacted by COVID-19?
1%
7%
19%
31%
36%
6%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Australia
Canada/US
Mexico and Central America
Africa
South America
Eurasia
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Security
Organized
Crime
Definition: Organized criminal
groups target mining operations to
extort money or drive them away.
COVID trend: In some jurisdictions, organized
criminal groups have proven more effective than
government in lending support to communities
facing an economic crisis.
Illegal mining Definition: Illegal miners invade
mining concessions, steal
equipment and can resort to
violence.
COVID trend: lockdowns impact several mining
operations. While they are dormant, the
temptation for illegal miners to invade
concessions rises.
Guerillas, Civil
War
Definition: Civil war can reduce
access to mines. Guerillas can
target miners for extortion or
resort to illegal mining.
COVID trend: Some civil warring parties agreed to
COVID ceasefires. Fighting may stop but armies
must be fed so extortion will continue.
KidnappingsDefinition: Criminal groups can
target foreign mining executives
who have kidnapping insurance.
COVID trend: Lockdowns temporarily lower
kidnapping risk but once mines resume, their
success versus other industries will attract
opportunists again.
Acts of GodDefinition: Earthquakes,
mudslides, hurricanes and
pandemics can disrupt mines,
threaten workers.
COVID trend: Business interruption insurance
policies almost never cover pandemics so the
lockdowns are very costly.
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Introducing Satarla
www.satarla.com
SATARLA has associates, teams and
clients based in Europe, Africa,
Americas, Middle East, Australasia.
SATARLA is a risk management
consultancy. Our diverse team has
hands-on experience in
implementing integrated and
sustainable risk management from
site to board level across multiple
geographies and industries. We
work across all sectors, however,
have specialist expertise in the
mining and extractives sector.
SATARLA RISK MANAGEMENT:
TRAINING | CONSULTANCY | RESEARCH
RESEARCH
Challenging risk management so that it is truly
practical, accessible and useful.
Organising conferences through to cutting edge
research (e.g. AI, IoT, big data etc…)
TRAINING
Preferred training deliverer for The Institute of Risk
Management together with many other institutions.
Face-to-face and online training, both bespoke in-
house and standard public courses.
CONSULTANCY
Board facilitation to full development of risk
management framework.
Broad range of organisations including: Mining;
Finance; Healthcare; Charities; Government; …
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Access to water and energy supplies
Infrastructure & labour
Road and rail connectivity
Definition: Infrastructure to move cargo and people in and out
of the mine.
COVID trend: Large government investments in infrastructure
will be postponed due to focus on health and social
infrastructure. Miners to move to other forms of private
transportation.
Availability of critical parts
Definition: Breakdown in supply chains result in an inability to
source critical components for equipment.
COVID trend: Critical spares not available for equipment
resulting in production stoppage and/or unsafe working
environments.
Availability of labour
Definition: Key skills not available where and when they are
needed.
COVID trend: Potential change in how mines are operated
with more online work, fewer expatriates. Could boost local
economy.
Ecosystem of limited service companies
Definition: Dependency on local suppliers boosts local economy
but can also cause stress in the system.
COVID trend: Relationships with suppliers must be redefined
with increased focus on quality standards, health protocols.
Focus by operators on supporting social enterprise to kick-
start local trade post covid-19.
Delay to projects
Definition: Capital projects delayed due to unavailability of key
labour and components
COVID trend: All projects have been delayed or paused. This
will result in lower production over the long term and impact on
supply of commodities to the market.
COVID trend: Operating costs have fallen with falling oil prices,
but the availability of water and power remains crucial. A
focus on renewable energy must be maintained for reputation
and long-term strategy (security, community). Definition: Confirmed ongoing access to reliable sources at
competitive prices.
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Environmental concerns
Reputation
Definition: Environmental mining degradation that damages
corporate reputation.
COVID trend: Covid offers a new blank page to change the
narrative and improve the reputation of the mining
company.
Indigenous rights
Definition: Access to indigenous land or impact to rituals can
lead to media-collected protests.
COVID trend: Indigenous claims are unaffected, but Covid
can offer ways to build new bridges, talk openly
(science/shamanism).
Worker safety
Definition: Lack of protocols and/or training can lead to miners'
deaths and reputational damage.
COVID trend: The focus will be on public health and the
highest standards are needed. Formal mining can make a
difference and have positive externalities in suppliers.
Unscrupulous press
Definition: Journalists trying to extort miners or paid for
opponents to attack a miner.
COVID trend: Journalists focus on Covid and are confined.
There are opportunities to play in the center of the stage
explaining the positive contribution of mining.
International Scrutiny
Definition: Pressure from the international community to adopt
sustainable extractive practices.
COVID trend: Global focus on the prevention of second
waves of the pandemic. Public health practices will be
central issues for the international community for several
months/years.
Illegal mining practices and surveillance
Definition: Illegal mining impact on the environment and
criminalization. Violent repression by the authorities.
COVID trend: Illegal mining practices are increasing more
in times of economic crisis. A balanced combination of
surveillance and socialization (formalization) is needed.
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Antioquia’s approach to sustainable mining in a tropical climate
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Poll Question 3
How do you feel about the mining investment climate today (May 7th) versus January 1st, 2020?
25%
39%
14%
17%
4%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
The mining investment climate is much worse
The mining investment climate is somewhat worse
The mining investment climate is unchanged
The mining investment climate is somewhat better
The mining investment climate is much better
Panel Q&A
Mining post COVID-19
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Your follow-up questions are welcome
Moderator Panelists
John [email protected]
Curator
Ana Candida de Mello
Arthur [email protected]
Stephanie [email protected]
Sarah [email protected]
Remi Piet
Abel Delgado