03 Dec “Industry itself created conditions for the end of the supercycle”
This was stated by the President and Executive Director of Codelco, Nelson Pizarro, in the framework of the third day of ASIA COPPER WEEK 2018, where he made a presentation on the lessons learned after the supercycle of metals.
The need to maintain business discipline in areas such as the investment plan, new projects, costs, and productivity, among others, were the topics addressed by the CEO of Codelco, Nelson Pizarro, during the third day of ASIA COPPER WEEK. In it, the executive broke down the Chilean experience and the state mining company ’s with several lessons from the book “Mining for Value: Industry leaders disclose lessons learned from the supercycle”, edited by CESCO and Spencer Stuart.
“Participating in this project has been an interesting exercise, as well as verifying that most of the interviewees agree on the most important insights. In my case and through my experience in Codelco, the main lesson is to maintain discipline on all fronts”, he said, adding that the super price cycle stimulated the development of new mining projects in Chile, which generated a race for benefiting from the attractive market conditions, accelerating the development of projects (fast-track) and scaling capital and operational costs.
“The industry itself created the conditions for the end of the supercycle, generating high expectations of investment that the decline in prices quickly corrected”, said Nelson Pizarro in his reflection on the lessons in the book and its impact on Codelco.
The executive also referred to the governance of projects, assuring that Codelco’s portfolio of structural projects is its biggest challenge in terms of investment. “There must be good investments, well executed, based on solid business cases and aligned with the company’s strategy, and follow all procedures incorporating lessons from the execution of previous projects”, he underscored.
His final message is that the industry cannot be satisfied just by surviving the next cycle, but must anticipate long-term trends: ensure access to strategic resources such as water and places for tailings disposal and transit to a post-commodity copper, through sustainability and a technology-enabled mining.
José Luis Barroilhet, Leader of Mining Practice from Spencer Stuart and co-editor of the book, who also participated in the presentation, noted that “from now on, we will see changes in the way mining companies handle risk, with more conservative balance sheets, with different ownership models of their projects in order to share the risks, the management of stakeholders as the main priority and the revision of the diversification strategies of their portfolios”. He also referred to the future changes in the composition of the companies’ boards, their forms of work and, finally, to the changes in the type of leadership of the companies.