Workers at El Teniente, Chile. Image from Codelco.
No large-scale industry operates in quite as far flung and remote locations as mining does, which increases the potential of the pandemic to significantly impact global metal and mineral supply chains.
A new report by management consultants PwC says the global mining industry “managed to weather the first phase of the crisis relatively unscathed”:
“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.”
The authors of the report covering the world’s largest mining companies say ever-deeper community involvement and local sourcing – already a strong trend in mining before covid-19 hit – will de-risk mining companies against similar disruption and at the same time “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, says PwC.
“It’s 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% of working hours globally in the second quarter of 2020 — equivalent to 195 million full-time workers.
Even mature, shock-absorbent mining businesses cannot endure such an impact in isolation, PwC asserts.