Resilient and Resourceful

Mine 2020

De-risk critical supply chains

Global supply chains have proven highly effective in driving down the cost of mining, as has a focus on hyper-efficiency, lean principles and just-in-time techniques. But the pandemic has exposed the vulnerabilities of this model. When borders closed and factories went into lockdown, those miners reliant on transient workforces, minimal inventories and low diversification struggled the most. At least for their most critical supply chains, the Top 40 may need to consider an alternative approach: improved inventory management combined with globally diversified or locally sourced and financially viable resources. This would not only de-risk mining companies against a similarly disruptive event but also help develop and build resilience in local communities. Many are already doing it; Anglo American, Nornickel and BHP, among others, have announced initiatives to increase support for their domestic suppliers as a result of the pandemic.

Reconsider the benefits of diversification

Demand fluctuations are not new to mining. But miners that operate in one geography and rely on a single market or a single product offering are more likely to be impacted by events such as the COVID-19 pandemic. Although some miners have simplified their portfolio to focus on efficiencies, it is essential to strike a balance between a streamlined business and a diversified business. In the context of large markets, such as China and India, driving worldwide commodity growth, miners need to ask how they can diversify their customer base and fortify demand.

Build resilient communities

Mining’s social licence to operate has never been more critical than it is today as companies increasingly look to local communities for skills, resources, and supplies. Within weeks of the onset of the pandemic, large miners implemented concrete steps to build resilience through training, infrastructure, and assistance. The

majority of the Top 40 each contributed between $20m and $140m in direct support, and many continued to pay staff who were unable to work. It is likely that miners will need to boost investment in local communities for some time as the full impact of COVID-19 continues to play out. According to the International Labour Organisation, the crisis is expected to wipe out 6.7 per cent of working hours globally in the second quarter of 2020 — equivalent to 195 million full-time workers. Even mature, shockabsorbent mining businesses cannot endure such an impact in isolation. But this once-in-a-generation disruption also presents miners an opportunity to remind stakeholders of the integral part that they play in their local communities. For example, during the early stages of the global outbreak, the Minerals Council of South Africa and member companies acted decisively to support employee education and health worker readiness, and secure the supply of masks, sanitisers, temperature monitors and influenza vaccinations. In Peru, miners stepped up to help local communities with essential medical equipment and logistics. And in India, companies have repurposed their medical facilities to treat COVID-19 patients.

Automation can help in a crisis

Analysis

The global pandemic has shown that automation and digital operations can do more than reduce costs and drive efficiencies. Miners operating remotely or autonomously have found that technology also helps to manage the risks and impacts of COVID-19. They can better support remote workforces, reduce on-site presence, and monitor and control operations from outside the mine site setting. While recovery from COVID-19 will certainly involve the use of more technology, miners must also strike a balance between accelerating its implementation and supporting local employment to avoid putting further strain on job-affected communities.

What the pandemic can teach us

The Top 40 have shown they can innovate, adapt, and respond to this crisis along with the best. Now is a good time to assess which of those tactics were effective and should be codified to help miners prepare for future disruptive events. Miners may also find useful lessons that they can incorporate as standard practice. These include reduced office footprints, an increased local workforce, relocation of non-critical roles from sites, reassessment of investment criteria, redesigned rosters and shift patterns and working groups, as well as priorities towards the large and positive impact mining can have in communities. For example, Rio Tinto has realised unexpected efficiency gains by using alternative workforce delivery models, including remote working and roster changes. The revelation that they can significantly reduce travel time while keeping up production will likely see them making these changes permanent. By leveraging these kinds of positive pandemic experiences, miners will not only enable a faster recovery but also set mining up for a brighter future.

Pandemic response

How has the mining industry responded to COVID-19?

The COVID-19 pandemic is undoubtedly the defining global health crisis of our time, with governments and health services alike racing to slow the spread of the virus. But beyond the impact on global health, COVID-19 has shown its potential to create devastating social, economic, and political challenges that will have lasting repercussions.

Pandemic response

The mining industry’s response has been swift and aligned, and has been driven by two key priorities. Firstly, protecting the health and safety of employees and local communities; and secondly, laying the groundwork to support the longerterm economic recovery which includes supporting livelihoods, protecting severely disrupted supply chains, and helping to build long-term community resilience to any future crises. What this response has made immediately clear is that companies, governments, and communities must work in collaboration to aid recovery efforts. Working independently will only hinder the ability to recover and rebuild. Collaboration has been the cornerstone of the International Council on Mining and Metals (ICMM) members’ response to the pandemic. In practice this has meant regularly convening ICMM’s 27 member companies and 35 national and commodity association members to share guidance and information to accelerate learning. Through these conversations we have seen key themes emerge; health and safety as a fundamental shared value, the importance of communicating mining’s role and the shared commitment all companies must build forward better.

Health and safety – a fundamental shared value

Some criticism has been levelled at the mining industry for being focused on keeping operations open in some countries, despite the perceived risk to the health and safety of communities and workers. Health and safety is a fundamental shared value for the mining industry, and one which is at the centre of every responsible mining company’s business strategy. This has meant ICMM members are well placed to draw on their existing breath of expertise in managing other health crises – for example Ebola, TB, and malaria. They also have the knowledge to efficiently and effectively implement the vital protocols and measures needed to continue to operate safely. These measures include temperature screening at site, COVID-19 testing, and increased hygiene measures such as social distancing and reduced shift sizes. Companies have placed restrictions on work-related travel and have set up hotlines operating 24/7 that provide medical and wellbeing advice, including signposted access to mental health services, for employees and those in the local community. ICMM companies operate in more than 50 countries. Each country has responded differently to the pandemic and in many countries the response differs across states and regions. Our members are therefore working closely with health authorities to ensure all sites are adhering to national and local guidance. Continuing to share learnings from different responses and knowledge of specific health protocols will be critical to help flatten the curve and ensure workers and communities are kept safe.

Communicating mining’s role

A key insight that has arisen from ICMM’s conversations is the importance for communities, NGOs and civil society to have a greater understanding of the mining sector and the critical role it plays in socio-economic development. Not only do local mining operations provide jobs and security to communities, but they also support livelihoods by supplying the vital goods and services needed in some of the most remote regions on earth. Due to the complex nature of mining operations and the remote locations in which they are often located, the mining industry has a relationship with and special commitment to local communities that is like no other sector. The teams at site are therefore in a unique position to listen to concerns and adapt quickly where needed. This has been shown by companies providing for example food parcels, medical assistance, medical supplies (ventilators, PPE, and medicine), educational materials, basic infrastructure (sanitation facilities, drinking water and roads) and information about COVID-19. In some cases where local government is at full capacity, this support has been invaluable. While the sector may not have got it right every time, COVID-19 has undoubtably led to the refocusing and reframing of relationships with local community groups. This is one positive to emerge from the crisis, and something we must learn from and continue to encourage as we move from the response to the recovery phase. A shared commitment This has been a steep learning curve for all of us – governments, business, and individuals – and I think the mining industry has shown adaptability, resilience, and compassion through its response to the pandemic. ICMM was founded on a fundamental set of principles that promote sustainable economic growth, the building of resilient and inclusive communities and developing the innovations needed to urgently address climate change. These shared commitments give me optimism that the mining industry can and will support long-term recovery, helping communities to recover and rebuild. There will be continued demand for the metals and minerals needed to support a greener and more sustainable future. As our members continue to meet that demand, we will also continue to help protect workers and safeguard livelihoods, and help communities recover and build resilience towards a better future.