COVID-19: Pressure Points: The Global Impact on the Mining Industry

The COVID-19 pandemic is an unprecedented humanitarian and economic crisis. The mining industry has sought to respond quickly to protect the health of its employees and its communities. These steps are in response to (and often ahead of) emergency measures and lockdowns implemented by governments across the world to control the spread of the pandemic.

Government measures targeting the mining industry have to achieve a fine balance. Mine sites must be operated differently now in order to protect employees and guidelines have been issued on health screening, personal protective equipment and social distancing. On the other hand, most governments recognise that mining cannot stop completely. Mining companies play a critical role in protecting jobs, offering accommodation and health services to employees and the community, and meeting community needs like water supply. Mining is essential for many parts of everyday life from power plants to medical equipment. Some level of activity will also be essential to safely monitor tailings facilities and mines in care and maintenance.

• Restrictions currently in place on mining operations, including absolute lockdowns, partial suspensions, restrictions on production, social distancing rules and other such restrictions which directly affect miners' ability to operate in each jurisdiction.
• Exceptions for mining operations, including (for example) continued transport of goods, security operations, and more significant operations that cannot be easily shut down and restarted.
• Insights on any future policy decisions including expected duration of restrictions and proposed changes or relaxations.
• Impact on associated activities and the broader supply chain such as measures affecting suppliers, essential services (water, hospitals), transport of goods (ports, border closures) and support for employees.

Emerging Themes

Australia

While mining in Australia has had to make a number of adaptions, the mining industry in Australia is operating at usual levels. This is the result of careful and ongoing engagement with government and recognition by Federal and State governments of the mining industry as an essential service. Mining companies and unions have been in close collaboration during this time and significant steps have been taken to make personnel and communities safe such that there have been no outbreaks at mine-sites.

Southern Africa: Botswana, Namibia, South Africa and Zimbabwe

Government responses in these jurisdictions reflect the heavy reliance of these economies on mining. While each of the four jurisdictions we have examined implemented national lockdowns, in some form or another, mining has been permitted to continue, and mining has been amongst the first of industries where lockdown carve-outs and exemptions have been implemented.

This stands in contrast to other African states: Tanzania, for example, where no lockdown measures have been implemented at all and mining activities are permitted to continue without restriction.

South Africa, having implemented one of the most restrictive lockdown regimes in the world, initially allowed mining of coal (to fuel its coal fired power stations), and minimal mining activities in relation to gold and platinum-group metals, to the extent needed for medical equipment or otherwise to avoid turning off smelters. This has recently been relaxed to allow all mining activities to resume provided that mines only produce at 50% of capacity. Maintaining social distancing protocols in the deep level underground mines of Southern Africa is going to present a distinct challenge. These mines are typically labour intensive operations with significantly lower levels of automation when compared with mines in many developed economies.

By contrast Botswana, Zimbabwe and Namibia are now all permitting full scale operations, but subject to strict health and safety precautions.

The Americas: Argentina, Brazil, Canada, Chile and Peru

Within this diverse group of countries, government responses vary greatly, sometimes within the same country in light of different approaches at the regional level. All countries have imposed lockdowns but the impact on the mining industry varies:

• In Brazil, mining has been recently declared as an essential activity. Therefore operations are allowed to continue subject to implementing safety and control measures.
• In Peru, mining activities with minimum personnel are permitted in order to assure the sustainability of critical operations. The mining regulator has issued protocols for operators to follow to protect health at mine sites.
• A state of emergency has been declared in Chile with restrictions on movement and work which may apply to mining operations.
• In Canada, each province and territory has declared mining an essential service (or exempted mining operations from closure orders) and operations are permitted under safety guidelines. In the Northwest Territory (as well as the Yukon Territory and Nunavut), special attention has been given to travel restrictions but mining workers are permitted to travel into and out of the territory. There are also efforts to protect workers in remote work camps and local, isolated communities.
• Mining has been declared an essential service in Argentina at the federal level. The National Secretariat of Mines has issued recommendations that related to the level of activities at mines and safety measures for employees. A biosecurity protocol has been published by the Chamber of Mining Business setting out best practices for safety.

Impact on the future of the mining industry?

The industry has been focussed on its people, the communities it operates in and the broader impact of its actions in response to the crisis. ESG concerns were already acutely in focus prior to the pandemic and have been key factors in assessing how to respond and recover. With the implementation of emergency measures and the resultant lock downs and reductions in some operations, the emphasis has necessarily shifted more towards the “S” in ESG (the “social” part), including a closer consideration of business and human rights.

This focus on ESG will continue post-crisis, although there may well be different levels of emphasis on the various component parts than before.

Looking further forward, a number of more specific changes brought about by COVID-19 may stay including:

• Regular health screenings both on-site and also at airports
• Reduction in fly-in-fly-out (FIFO) workforces, and greater regional location
• Move off-site of some services
• Greater remote working for corporate offices.

The crisis is likely to significantly delay mining companies’ roll out of larger scale autonomous operations, as for the foreseeable future it may be considered politically or socially unpalatable to reduce workforce numbers materially.

That said, crises fuel innovation and create the conditions for expanded levels of creativity and problem solving. For those parts of the industry already focussed on innovation there will emerge new ways of thinking about old problems.

This may in turn drive greater levels of collaboration in the industry, especially where issues such as health are concerned.

There will be an important policy question as to the impact of the crisis on underground mining, especially in less developed countries where there may be less access to healthcare and screenings, and where operations are less automated.

Major mining companies will likely take a leadership role in defining and setting the standards for the levels of health screenings and healthcare adopted at mine sites, and how, as part of the their ESG policies, they contribute to the solutions required to deal with the pandemic. This has happened with previous health crises where mining companies took leadership roles in e.g. HIV/AIDS and TB testing and treatment.