26 Oct “We must build a more resilient industry”
Alejandra Wood, Cesco’s Executive Director, talked in Infinita radio station’s “Divina Proporción” program about the launching of the book Mining for Value, the mood perceived during the LME week and the projections of copper as a protagonist of a green industry.
“One of the conclusions that is there as a lesson is of course not forgetting the long term and also building a more resilient industry, with a focus on sustainability, innovation, and diversity as factors that are levers for value generation”. This is how Alejandra Wood explained one of the main lessons learned after the end of the supercycle included in the book “Mining for Value: industry leaders disclose lessons learned from the supercycle”, during her visit to Infinita radio studios to the program on economics “Divina Proporción”.
The executive director of Cesco explained in that the book encompasses a self-critical reflection of the main companies’ leaders of the industry – Anglo American, Freeport, BHP – around the consequences of the end of the supercycle. All this under the thesis of a long conversation between Spencer Stuart and Cesco: that the adverse conditions in which the industry was left after the supercycle are not only due to lower prices but also to deeper and more inherent reasons for this industry and its history.
“It basically has to do with forgetting the long-term focus on a cyclical industry; the exuberance in which it fell with wealth and that led to put production on the market at any cost, and therefore forget the generation of value. This ended in very painful cost reductions, with cash problems, in investments that were not profitable, in acquisitions or mergers that were more expensive, and ultimately not fulfilling the obligations with the stakeholders or with the shareholders”, she told.
Regarding the questions on how to add value to this sector, Alejandra Wood emphasized that this is given by building an industry of goods and services adjacent to mining production, a path taken by other mining countries such as Canada and Australia.
“Chilean mining has the capacity to generate large constructions for work, therefore the whole industry of goods and services, together with the academy, should be in a position to continue solving these challenges and be able to scale them up in order to be a world class provider. This is happening in some way through private-public cooperation programs that are bringing the needs of the industry closer to the supply chain, and to universities and research centers”, she pointed.
Likewise, she explained that copper projections are given by the future of electromobility and the green industry: “There is already a certain consensus that by 2030 30 million electric vehicles will be produced vs. about one million produced today. Copper is still the metal of choice”, she underlined when asked if graphene could become an effective substitute and a threat to copper.
Regarding the week of LME the executive said that although there is a good atmosphere, there is no appetite to invest. “It is projected that the price will be between 2.9 or 3 this and next year, and then there would be a deficit and the price will go up. But even so, you do not see that companies are buying nor are they making investment decisions”, she concluded.