Throughout the news section in this edition, readers will see examples of miners doing the right thing. This should come as no surprise, especially to those who have worked for or worked with mining companies. They genuinely care for local communities and vice versa. Readers should also note that many of the countries that imposed lockdowns to stop the spread of the coronavirus (COVID-19) have reclassified mining as essential and allowed them to reopen. In return, the mines are demonstrating that they can provide a healthy work environment.
As more governments lift COVID-19 lockdowns and businesses start to rebuild, they will begin to take stock of the damage. Already, the blame game has started with several countries threatening to take actions against China. Supply chains have been disrupted and it will take months to re-establish manufacturing processes. Some businesses will never recover, but opportunities will open for new ones as the world looks to diversify.
The metals demand shock created by COVID-19 already appears to be passing in China. Only time will tell if a second phase of the virus will return. For now, disrupted supply (ore production at the mines) is affecting the smelters in China. They consume most of the concentrate (refined ore) that mining companies produce today to smelt the metals consumed in manufacturing processes. Soon things will return to normal. Or will they?
One of the lessons COVID-19 taught the world is that they are hopelessly dependent on China for just about everything. Yes, of course, everyone knew it, but once supplies dried up and businesses could not move product, they felt it. They were, in a sense, whistling as they walked past the graveyard for a generation.
Industry often talks about diversification and sustainability, but it’s usually in the context of environmental, social and corporate governance (ES&G). Maybe businesses will now consider diversifying supply lines to make themselves more sustainable. Before they can do that, they must move away from the race to zero approach or buying supplies at the lowest cost. This topic is discussed in the blockchain article (See p. 48). When a manufacturer is buying tin or cobalt, for example, the transparency provided by blockchain would show them the value of paying a premium from a reputable source. Blockchain purchases will support mining companies that are abiding by ES&G principles.
Much of the world does not realize how we ended up in this position. By implementing strict environmental standards, resource-rich countries exported smelting and refining activities and the associated pollution to China and other Asian countries during the 1980s and 1990s. Perhaps it’s time for mining companies and their host countries to consider vertical integration, build modern smelters that meet today’s environmental standards, and remove the middleman. For that to happen, however, business and society would have to accept a fair price for the final product.