The meeting, which took place on December 9, was attended by Eduardo Valente from EY, Aaron Puna from Anglo American Chile, and Alejandra Wood, Cesco’s executive director.

Social license to operate, productivity, increased costs, and decarbonization and environment, were some of the main concerns that marked the 2021 version of the study “10 Risks and Opportunities for Mining”, a survey carried out by the EY consultancy to more than 250 executives of the sector globally. Besides, in this editionburst into force the risk of high impact, related to the health crisis that is experienced throughout the world..

The results of this study were presented on December 9 in the webinar “10 Risks and Opportunities for Mining 2021”, where Paul Mitchell, EY’s global leader in mining and metals; Alejandra Wood, executive director of Cesco and Eduardo Valente, mining and metals leader of EY Chile, gave presentations. Subsequently, and led by Wood, a panel discussion was held with the participation of Aaron Puna, executive president of Anglo American Chile; Alfredo Álvarez, leader of energy and digital solutions for EY Latin America North; and Víctor Burga, mining and metals audit leader for EY Peru.

During her speech, Alejandra Wood gave her vision in the short and medium-term of the mining sector for Latin America, from the perspective of the weight of the sector in the GDP of the mining countries, the prices of commodities, and the investments in the sector in new projects, in addition to the sustained decline in investment in exploration.

Likewise, the director of Cesco referred to the importance that issues such as decarbonization, responsible production, and care for the environment have taken on. “The study of mining risks launched by EY on this occasion resonates with us as a third urgent bell: the social license to operate is in first place for the third consecutive year, and 4 of the first 5 risks are from our social and environmental context “, she pointed.

Wood highlighted the excellent market and price prospects, and the global megatrends that today offer the opportunity to create a new narrative for mining, necessary for humanity’s progress. “Our countries have a privileged endowment of resources to play a key role in this context”, said the executive. “But, on the other hand, we are in a time of fragmentation of power, in which stakeholders have a greater degree of organization, connectivity, and coordination, with new situational leaderships, more informed and better prepared”.

“The ‘Mining’ brand at a global level does not enjoy a great reputation. It has an image of polluting industry, conservative and reactive to changes, especially among the younger population”, Wood said. “Its fame up to now is not based on its increasingly evident virtuous effects, but on its environmental impacts, on the territory and the communities, especially open-pit mines, tailings dams, the impact on glaciers, or the use of water in desert areas or their contamination in more humid regions”.

For Wood, “the key to avoiding what is coming to us is undoubtedly to be a serious part of the decarbonization of production, of caring for the environment, of the virtuous relationship with sustainability and digital technologies, with communities and States that host it and the local industries that revolve around mining, of the traceability of their performance in these areas and their correct communication using the ESG, ODS and other languages ​​that are suitable for different audiences”.

To finish, the executive pointed out that mining has always been perceived as a point of tension between economic growth and caring for the environment, generating broad sectors of citizens and authorities in conflict with its growth. “It is urgent to solve it, ‘being and looking like’ an industry of the future. The companies that do the best will be the ‘preferred partners’ to put in value the endowments of natural resources of our countries”.

The conclusions of the EY study

For 63% of the world’s mining companies, the License to Operate is the greatest risk for their business, according to the 13th annual study “Top 10 risks and opportunities for mining” developed by EY. In second place are the “high impact risks”, related to what everyone is currently experiencing with Covid-19, and this industry has not been immune to the health crisis.

The replacement of resources by the lack of discoveries and the lower investment during the last decade is likely to leave the industry in a structural deficit. “Many new deposits have a lower copper grade and require higher prices to guarantee a return on investment. The copper market is likely to run into a long-term deficit as supply decreases and demand increases as a result of the energy transition. With constant uncertainty, companies are prioritizing liquidity and business continuity over investment in new projects”, said Eduardo Valente.

Increasing productivity and costs remain on the radar as mining complexity increases. Decreasing ore grades, and higher extraction costs and raw material prices come under pressure as a result of economic uncertainty. High energy and labor costs are reducing margins. The impact of Covid-19 has been mixed, with some restrictions imposing new unforeseen costs and other measures removing the obstacles that hamper productivity.

Decarbonization and the green agenda are high on the priorities of mining companies, as investors have a clear focus on considering data related to environment, society, and governance (ESG) before making investment decisions. The ability of miners to access capital is highly influenced by their relationships with society. Especially in Chile, there is a focus on improving the management of water use, as well as reducing its carbon emissions.