Mining is known as a speculative play, meaning that those who lack experience, patience, commitment and a strong constitution will likely fail. The engineering professionals who plan and manage projects that span generations face countless known and unknown variables. The ability to remain versatile in the face of adversity ultimately leads to success.
This month, E&MJ reports that BHP decided to move forward with the Jansen Project in Canada, and Codelco inaugurated Rajo Inca at its Andina division in Chile. These two capital-intensive projects will likely operate for another generation or two. It’s safe to say that society will continue to require fertilizer and copper. Today, these long-term investments appear to be safe bets in traditional mining jurisdictions, but they will likely face headwinds between now and 2050. When Freeport commenced operations at Grasberg in the late 1980s, did they know 30 years later the open-pit mine would transition to underground caving operations and that they would be building a smelter?
No one knows what the future holds and, with everything that’s happening today, assessing and managing risk has become even more important. The geology and characteristics of the deposit dictate many of the decisions and the importance of a practical feasibility study cannot be over emphasized. The ability to design and operate mines and mineral processing plants is essential to succeed. Today’s mining professionals have plenty of tools at their disposal to properly
engineer these projects. They have also learned to factor in other influences such as all-in sustainable costs and environmental, social and corporate governance (ESG) goals.
The impact of COVID-19 on mining and business in general has been profound. The pandemic has forever changed how companies conduct business and perceive risk. The virus persists and more mining companies are leading the charge on vaccinations. Cliffs is reportedly offering bonuses to incentivize workers to get vaccinated. Rio Tinto is working with the Western Australian government to encourage vaccinations. Even though mines for the most part operate in remote locations, they could not hide or protect themselves from COVID-19.
Who could have predicted the impact the virus would have on supply lines? It exposed weaknesses and some businesses paid the ultimate price while others thrived. The article Forging Stronger Chains (See Supply Chain Optimization, p. 44.) discusses some of the strategies that have been deployed to optimize today’s supply lines. It’s remarkable to think that the lack of microchips could affect the delivery of an ultra-class haul truck, but it’s happening. What’s even more incredible is that people found a way to succeed logistically.
Then there are the variables that no one controls, such as socioeconomic issues. Riots break out. People overthrow the government. Anymore, it seems the traditional districts where mining is acceptable are becoming less friendly and the risky places are a little more risky. The highly polarized nature of today’s society often leads to unexpected policy and regulatory decisions. Granted, elections have consequences. But, if policy changes too frequently, the consequence is that the business and investment dollars will relocate to a more risk-averse setting.