STRATEGIC SOCIAL AND ENVIRONMENTAL SOURCING STRATEGIES

In 2022, the price of machinery and raw materials increased because of supply chain constraints, which raised production expenses for both equipment makers and end users. Faced with this problem, experts argue that the success of a project now depends on the ability of companies to integrate local talent and resources into their plans. Other than being locally available, suppliers must be environmentally and socially responsible.

Luis Ibarlucea, Director of Supply Chain, First Majestic, said an efficient local supply chain should have standardized equipment to facilitate new projects, feature solid contracts with key suppliers that get involved with clients and visit mining projects to offer tailored service and contractors with proven experience in the mining sector, as well as good team management skills.

Fortunately, Mexico is a highly relevant country for the mining industry. This enables companies to look for local solutions. “We live in a country with a 500-year mining history. This is an advantage because the most important manufacturers of machinery, equipment and technology have offices here. Most of them even manufacture in Mexico, which really makes communication easier,” Ibarlucea added.

He said that sometimes, innovation teams want to bring products or ideas from other countries while Mexico has the same or even higher-quality products. “For this reason, it is important to participate in forums and go to expositions or conventions to see what players are doing in different states. This is where the opportunities are,” he continued.

Cooperation and collaboration are also important to develop a local supply chain and harness innovative operation approaches. “The Sonora Mining Cluster constantly promotes alliances. We seek better practices through contact with embassies to learn what happens abroad, examine successful cases and bring them to Mexico,” said Fernando

Estrada, General Director, the Sonora Mining Cluster. Estrada highlighted the work of the cluster in promoting contact between local suppliers with bigger companies, as suppliers sometimes do not know how to reach major mining players or adapt to the requirements to work with them.

Industry insiders said governments and community leaders today want to encourage partnerships between mining operators and local suppliers since they can add significant value to communities, particularly in marginalized regions. “Suppliers are strategic in this sense because from them we obtain the solutions, technology and innovation. There is room to pivot and collaborate between suppliers and bigger companies to create value proposals that fit updated best environmental, social and governance (ESG) practices,” Ibarlucea said, adding that suppliers should be aware of their limitations so that they do not take on projects beyond their capabilities.

“ESG is an issue for the entire industry to face challenges like maintaining a positive corporate image and optimal operational standards. It is important to create synergies between mining developers and their suppliers, which must follow these standards. It therefore key to build up said suppliers since these companies can then go on to provide greater support in the future as they grow in size,” said José Jabalera, an independent mining consultant.

Ibarlucea highlighted First Majestic’s commitment to develop its local supply chain while collaborating with communities. For instance, the company trains inhabitants of nearby villages to provide services to the mine and teaches them skills that may be a benefit to the community after the mining project finishes.

Several experts emphasized the solution to these problems lies in the localization of materials, suppliers and services. Norine said that one of the biggest advantages of localization is cost reduction since local talent and materials will always be more cost-effective. In addition, great savings are achieved by reducing shipping costs, customs duties and transportation delays. Building a local supply chain is difficult but the benefits speak for themselves.

Mining companies could make mining a more tech-oriented industry with improved safety conditions. “One of the best-equipped CONALEPs is in Zacatecas, near Peñasquito. It stands out because mining companies help educate students, which in the long term will benefit the mining project. In the future, mining operation rooms will consist of millennials with joysticks and screens rather than people getting hurt with a drill on the ground. Workers will operate their equipment remotely,” Ibarlucea added.

According to Estrada, the notion that new technology will shrink the number of jobs in the mining sector is inaccurate. The same was said when the first computers showed up, after all. On the contrary, new technologies provide workers with more time to think and foster a better decision-making process.

Estrada highlighted the cluster’s commitment to promoting better practices in the mining supply chain. This year, it awarded 46 companies that maintained or were awarded the Socially Responsible Company (ESR) label. “This is always going to be the trend: companies able to combine their service portfolio with a social responsibility strategy will have better opportunities to be a boon to the mining supply chain, one that adds value and provides solutions,” he added.

In addition, industry leaders aim to ensure that environmental and social issues are on the industry’s agenda. “The cluster has a vision of integrating four pillars: investors, academia, the state and society. Together, they are to cover the needs that can arise in any mining project,” he said, adding that “the mining industry today needs capabilities that were previously not considered relevant in the sector,” said Estrada.

AUTOMATION, DIGITIZATION: KEY FOR UNDERGROUND MINING

In 2022, Mexican authorities announced that no more permits for open-pit mining projects will be issued during López Obrador’s remaining term, set to end in September 2024. While some companies are opting more for separate underground operations, others have decided to keep trying to advance their open-pit projects. For those looking to go underground, technological advancements provide a slew of advantages, industry experts said.

Nevertheless, technology does not stall, advancements in technology have altered the outlook for underground and open-pit operations. According to Ariel Navarro, VP Exploration, Reyna Gold, one of underground mining’s biggest challenges is sticking to stricter rules and regulations. “It is very important to understand that in mining, you do not really choose what type of mining you resort to. Nature chooses and companies must adapt their operations to these conditions,” says Navarro.

There may be a reason why underground mines are less of an issue to Mexico’s government. “Regulation favors underground mining the most because open-pit projects are more eye-catching. Lawmakers appear to be responding to the general public’s concerns. It is clear then that our challenge is a public relations matter,” said Arturo Vaca Durán, Vice President Energy and Technology, Peñoles.

Vaca also emphasized that modern mines must adhere to the strictest security and environmental standards. If the mining sector did a better job of communicating these practices, the perspective on mining and regulation would change drastically.

Furthermore, experts agreed that mining technology has greatly helped to further achieve ESG targets. Among the most beneficial developments, experts mentioned electrification, automation and digitalization. “The mining industry has shown that it can evolve and meet all the challenges imposed on its operations. Today, mining ought to be clean, safe, efficient and friendly to the environment. We should be proud that everyday mining is forging ahead despite these challenges and doing so while improving its practices,” said René Valle, General Manager, MacLean Engineering. Moreover, experts said that by looking at environmental, social and governance (ESG) benchmark compliance, the authorities can be certain that the mining industry is a responsible one.

Valle explained that the deployment of automation and digitization technologies was a great opportunity to attract new talent to the mining industry. Nevertheless, he underlined training and education are paramount to this end. “We are excited about what the machines are capable of doing but it is the people who control and develop them that truly create value,” he added. Valle pointed out the capacity to train workers under simulations so that they can gain valuable experience without being exposed as a boon to operational safety.

Rodrigo Guzmán, Underground product & Sales Support Lead, Epiroc, discussed the advantages of implementing state-of-theart technology, which is constantly evolving and can tackle production issues, improve safety and protect the environment. However, he recognized investment as a challenge to further implement solutions. “Technology always has a cost and excessive spending can detract further investment. Nevertheless, as we have seen, these investments can be recovered in short periods and dramatically increase safety and productivity. It is our job to demonstrate that these solutions are worth the money,” said Guzmán. “They mean that we can carry out our operations, drastically diminishing safety risks for the personnel,” Navarro concurred.

Automation may add a wealth of value to underground projects. Mining insiders agreed on the advantages of running autonomous technology in the mines. In addition to this, electrification sets another key trend for mining. According to Gabriel Furlong, Director of Mining Business Development, Austrade, electrification is an energy trend as much as it is a mining issue. He added that the transition toward new electricity technologies is a matter of culture. Furlong therefore insisted on education regarding best practices that can greatly enhance safety standards and productivity results.

“Great strides are being made in optimizing underground mining. Although some developments are still in the initial stages, there is no doubt that we have made progress as an industry. It is important to continue training ourselves and our staff. For this, private and public support is important. Hopefully, these new technologies can also help the public understand that the mining industry implements best practices wherever possible,” explained Navarro.

Digitalization Leads To The Ideal Mine

The COVID-19 pandemic accelerated the adoption of technology in various industries, including mining. Experts in the industry agree the sector could be developed further through digitalization and become more integrated as well as responsible. Digitized operations may increase productivity and foster operational safety. However, there are some challenges to tackle, like technological gaps for some older mines and an extensive adaptation process.

The mining industry is known to be hazardous with accident rates among the highest of all industries. Digitalization and automation are tools that can be used to mitigate these inherent risks. Companies, therefore, need to find solutions that can train mining operators to enhance safety, increase productivity and reduce costs. The easy, efficient answer appears to be digitalization. “The use of digital technologies brings benefits throughout the mine’s lifecycle. For instance, new technologies allow us to design mines digitally from scratch, improve productivity through virtual training and plan supplies more efficiently. It also allows us to kick-start a project quicker and safer,” said Bernardo Marinho, Business Development and Sales Manager, Siemens.

Industry experts agree that the potential for digitized improvement is tangible. Technology can help mining operators to engender fully safe mines without accidents or harmful emissions, use recycled water and prevent discharges, as well as foster a great metallurgical recovery rate and fully optimized productivity. “Our focus is on employees working underground. In Chile, accidents were in the double-digit figures 15 years ago. Now, this number was reduced considerably. However, even having a low 1% accident rate means at least one worker will not go back home and we cannot accept this. For this reason, we focus on virtual learning without risk. Here, we can make mistakes without losing human lives and equipment,” said Jorge Garate, CEO, Minverso.

“The ideal mine of the future is safe, simple, smart, circular in its functioning and sustainable,” said Arturo Vaca, Energy Director, Peñoles. The key to getting there is digitalization, which is “the biggest lever toward development that the industry has seen in the past 20 years or so,” he added.

One of the main digital trends is remote monitoring, which can help miners make decisions and enable predictive maintenance through AI and automation. Operations can be done remotely to improve safety and cut costs, although cybersecurity would need to be considered, too. In addition, the development of digital twins helps companies to predict output and prevent problems by running a digitized modeled clone of the operation. “Emerson offers algorithms that can learn from past actions and predict when a failure or incident is going to happen through the detection of anomalous behaviors. Our algorithms can be re-trained to adapt to different conditions and positively impact production and energy use. It can also reduce pollution and eliminate risk, among other applications,” said José Aguirre, Latin America Sales Director Software and Services Digital Transformation, Emerson.

Mining is said to be reluctant to change. It is therefore considered to be hesitant to adopt new technologies. Nonetheless, in the past few years, the sector has broken through this paradigm in the mission to increase productivity. A potential breakthrough can be reached through digital and technological innovations that can transform the industry’s key aspects.

Aguirre concurs, highlighting that companies with digitized operations report competitive advantages compared with their competitors in a highly competitive industry. “The digital revolution in the mining industry is already happening. Whoever is not joining the trend is losing points in the market,” added Argenis Bauza, Head of Digital Lighthouse KPMG in Mexico and Central America, KPMG Mexico.

The use of data is important for the mining industry. Nevertheless, technology provides large amounts of information, which could make it difficult to identify relevant findings.

“The sheer amount of available data sometimes makes decision-making more difficult. Having the context of the information and understanding its correct use is what really adds value to the market. In the end, this makes processes more efficient and safe,” said Mauricio Orea, Heavy Industry Sales Manager, Rockwell Automation.

Experts agreed that there are some barriers when adopting new technologies. Garate identified “neo-phobia” as an issue, a common problem especially apparent in older workers used to work in set ways. Nevertheless, companies risk missing the boat and becoming spectators in the industry if they do not innovate.

Marinho pointed out that older projects are not as capable of adopting new technologies as new projects because they relied on outdated technology. Studies about the technological maturity of a project before construction could therefore help operators to identify technological gaps and create a proper infrastructure fit for future additions. “It is important to have a change management team in parallel to a technical development team for digital transformation programs. Both will work closely with the implementation team and communicate with stakeholders during the technology adoption stage,” he added.

For Orea, fostering a culture based on innovation is key, Nevertheless, this does not mean companies need to acquire vast technological infrastructure. “Mining operators must be specialists in mining, not in technological advances. Of course, they must have some knowledge of technology. At Rockwell, we understand this issue and create synergies with clients to educate them on this issue,” Orea highlighted.

Experts agree that technology is moving at an accelerated pace. New technologies emerge frequently and companies must adapt quickly to these changes. “Almost every month, new technologies are launched, especially in the metaverse. We aim to integrate them into the real world. We must live the industry, not just watch it through a screen,” Garate added.

5G, IOT SOLUTIONS ARE TRANSFORMING THE MINING INDUSTRY

Many mines still lack the communications infrastructure to support the innovation that automated mining operations demand. However, the need to enhance and implement these technologies is becoming increasingly relevant for mines. 5G technology can provide opportunities to the sector, enhancing automation and remote operations that will improve coverage, lower latency and enable higher reliability at every stage of the mining operation.

Renato Bueno, Head of Sales for Digital Industries Latin America, Nokia, shared his insights on the wide array of benefits from implementing 4G and 5G infrastructure to open-pit and underground mining operations. As leaders in 4G and 5G connectivity, Nokia’s Nokia Bell Labs envisions mining operations 10 years in the future to bring technology insights that can support the mining industry in improving connectivity, productivity and safety solutions. The leading trends that guide new technologies for the mining industry in Latin America are efficiency to produce more with the same resources, productivity to retrieve more resources and environmental, social and governance (ESG) benchmark compliance.

5G connectivity will support mine operators in protecting their workers from harm by creating unmanned mines that are both safer and smarter. Moreover, 5G industrial environments will deliver ultrahigh-definition video and sub-millisecond latency. This enables real-time remote control of high-speed robots and drones and will connect IoT sensors with industrial devices above and underground. “The main initiatives we see in Latin America in terms of safety consider minimizing the presence of operators in dangerous environments. What is more, having real-time information about dangerous activities in the mine means operators can act and prevent any accidents,” said Bueno.

As for productivity, enhanced connectivity offers the fastest automation systems, which eliminate bottlenecks and streamline operations. 5G applications can increase effective production hours by removing downtime, enabling remote operation, increasing transparency and delivering insights toward enhanced critical decisionmaking. These benefits can in turn lead to greener operations.

Nokia said many of its customers in the sector have already begun testing and trialing 5G technology. For example, in Chile, copper company Codelco is running a 5G pilot at its Radomiro Tomic mine. There, high-definition cameras transmit real-time video from the mine’s crushing area to its new Integrated Operations Center in Santiago, 1,500km away. The Nokia 5G network is expected to increase the facility’s capacity tenfold to capture more data and improve big data applications. This will enable Codelco to analyze waiting and material unloading times almost immediately to optimize its processes.

Communication stability has shifted from a trend to a necessity, especially in underground mining, where internet connections play a key role both in production and safety. The development of higher bandwidth connections is necessary to continue to keep up with the latest technological developments, as technologies such as Wi-Fi or Wi-Max do not function well underground

Bueno underlines the benefits of 4G and 5G connectivity, as these lack the deficiencies that Wi-Fi or Bluetooth operations struggle with. Moreover, according to Bueno, the total impact of digital automation on mining productivity, reaches up to 17.2% in an openpit scenario, which reflects on working hours, retrieved tonnes as well as income and utilit y savings.

The Mexican mining industry seems to have taken an important step in the development and implementation of new technologies. These developments must be accompanied by powerful security systems that fight cyberattacks, considered the Achilles’ heel of this new mining revolution. To this end, Nokia’s connectivity solutions are accompanied by military-grade security systems that protect private mining operations from network problems.

SOFT SKILLS: KEY FOR MINING’S TECHNOLOGICAL FUTURE

Mining companies understand that investment in technology will help them reach their sustainability benchmarks while hitting growth and production goals. This makes technology a central element of mining’s future, leading tech developers to seek to improve safety, sustainability and productivity. However, mining companies must adopt swiftly and consider a broad range of soft skills to make this technology a success.

According to a report by PwC, one of the key factors to maximizing returns lies in how fast mining companies adopt new mining techniques and technologies. “In this future, equipment has a shorter useful life as OEMs continue their relentless drive for greater operating efficiency. Leading mines have onsite recycling facilities as machinery is decommissioned and rebuilt in situ using 3D printing technology. Drones are used throughout most mines, even those underground,” reads the report. In addition, the consultancy agency says that mine operators with more agile mine plans and cultures supporting change will be the ones rewarded.

Moreover, PwC reports that mining decisions will increasingly become more sophisticated and driven by big data. This will create more certainty about ore body characteristics. “With technology delivering measurements down to the cubic meter, geological ‘surprises’ become a thing of the past and mine managers can effectively mine to order,” writes PwC.

Industry 4.0, digitalization and automation have helped mining operators to make better-informed decisions, thereby improving efficiency. What is more, it has helped to make operations safer for workers, a key priority of the industry. Currently, the three technology areas that mining companies are investing in the most are data analytics, digital connectivity and integrated automation. The investment in cloud infrastructure is also growing in importance and will remain a relevant issue in the technological future of mining. Mine operators are starting to ask themselves how they can transport the data in a safe way, where it is going to be stored and how it will be analyzed, too. Building the right infrastructure to transport and store data will be essential.

Baldomero Gutiérrez, Corporate IT Manager, Fresnillo noted that the issue is whether technologies developed for the mining industry can compensate for low productivity in operations where technologies are not used. While mining companies adopt technologies to build the mine of the future, the focus on operational excellence is the number one priority on the agenda. Productivity has an acute relevance in the mining industry because companies naturally incur more costs as they dig deeper,” added G utiérrez.

More importantly, Gutiérrez highlighted that any technology must be examined for its potential value regarding processes and people. Regarding people, companies need to support workers to develop the necessary skills to manage the technologies. Leadership skills to maintain a social license are equally essential. “To be agile, companies need to know what technology to implement and when to use it,” he said, adding that “innovation happens at the speed of trust.”

Furthermore, he explained that in an automated and digitized market, soft skills will become imperative because they will differentiate companies in a highly automated, and therefore standardized, mining world. “The change toward a more automated and digitized market is happening at an accelerating pace. Eighty-two percent of business leaders believe that equipment operated by both humans and robots will be the standard in 5 years. In that scenario, soft skills will be more important than ever because they will differentiate us in an automated world,” he said.

Gutiérrez emphasized companies risk becoming obsolete if they do not innovate.

In 2013, Fresnillo embarked on a digital transformation plan and defined two stages: from 2013 to 2018 and from 2018 to 2023, defining the necessary basic capacities that a mining operation needs first.

Material Handling And Human Capital Will Increase Productivity

When it comes to enhancing material handling, the mining industry must solve ore separation challenges through intelligent machines and plants, say leading experts. Additionally, the need to improve productivity demands higher levels of cleanliness for fluids and water to decrease waste and lower operating costs. The industry insiders concur that having prepared human capital is key to improving th ese areas.

Regarding the handling of materials, tailings dams have long since been identified as risks that might lead to major environmental and social issues. Mining companies should start to look at the adaptation of new technology to replace traditional approaches with higher risks of failing. Diego Torroella, General Director, TAKRAF, explains that implementing an approach such as the Dry Stack Tailings (DST) system offered by his company provides significant environmental and social benefits, as well as financial ad vantages.

Ore sorting technology can generate a major operational shift in the industry due to the importance processing has in the mining supply chain. High-tech companies are developing machines that, using 3D cameras, lasers, inductors and X-rays, can sort any ore and quickly detect its value. This technology can reduce the mining operator’s capital expenditure as well as save valuable energy and water in the process. “Flotation cells are widely used to separate, recover and concentrate valuable minerals. Water reuse systems are also important, as companies require better liquids management to recover most of the increasingly scarce water,” Torro ella said.

According to Alvaro Rendon, Director ECN Scientific, ECN Automation, variations in feed size along with ore composition and grindability strongly affect the mill performance. Furthermore, the online measurement of these variations is crucial to define the mill throughput model. Product sizes are used to determine the optimal size of the feed for maximum efficiency and determine which feed size losses occur in the plant to reduce these issues. Technology can help to make this process faster and more precise.

Since 2015, deep convolutional neural networks (DCNNs) have been used to efficiently extract features for classification and regression tasks. Using a DCNN for bulk solid size distribution estimation for a conveyor belt is a novel approach. In 2019, the first embedded system using GPUs running DCNN was introduced to measure particle size distribution in fine ore-feeding primary ball mills using highresolutio n cameras.

In addition, Rendon explains that traditional technologies have some limitations in recognizing small rock sizes below 3mm as well as fine ore cracking that can generate segmentation detection errors. New technology based on deep learning techniques guarantees smaller size detection and avoids detection errors.

Since technology represents high upfront costs, companies will be careful with what kind of equipment they acquire. “Technological appliances are difficult to sell. Companies want to see your product being applied somewhere else before deciding their purchase and it becomes even more complicated since they want to see the solution functioning in a project resembling theirs,” said Antonia Talarico, Vice President of Operations, Centric Minin g Systems.

Experts believe that the efficient planning of a mining project is crucial when companies are looking to enhance their productivity. “When designing any system, you must look at all different angles and integrate these issues holistically to design mining tunnels in the most efficient way,” said Fred Stanford, CEO, Muckahi.

“GRUMIMEX believes in starting from the beginning, it is important to conduct both internal and external analysis to determine which modifications in the mining process should be made. We encourage customers to consider potential changes in the original plan and create adequate spaces for such changes. Doing this will prevent potential bottlenecks,” added Cynthia Villa, General Manager, Grupo Minero Mexicano (GRUMIMEX).

However, industry insiders believe that integrating machinery and technology based on extensive planning is insufficient; companies must take a look at their human capital, too. Villa mentioned that said bottlenecks are sometimes caused by a lack of effective communication rather than failing technology, which leads to a lack of knowledge of a particular part of the process. Similarly, companies must be careful that their talent is involved in changes if new tech is implemented. “People only resist change when they are excluded from the process, so workers must become a part of this shift. I find it more productive to allow the people that will be affected by the change to have a say in it,” said Stanford.

“Continuous training of workers plays a determining role in technology implementation. It does not matter if you utilize up-to-date equipment if you do not have trained workers or properly communicate with them,” Torroella agreed.

Moving From Risk Management To Strategic Resilience

Risk management should be an essential part of any industrial operation. Nevertheless, such management approaches can be restrictive, as experts argue companies should move beyond risk management and develop the ability to look ahead by predicting, managing and preventing future risks to gain enhanced efficiency.

Risk management involves identifying, assessing and controlling the financial, legal, strategic, and security risks to an organization’s assets and profits. These risks can stem from various sources such as financial instability, legal obligations, poor strategic planning, accidents and natural disasters.

The strategic resilience required to adequately tackle risks involves anticipating future challenges while navigating present problems and adapting to changing circumstances while maintaining focus on long-term goals. Strategic resilience is forged in a dynamic and fluid operating environment.

Osvaldo Barrios, Chief Risk Officer, Fresnillo, highlights the importance of considering all the possible risks in mining projects to be able to prevent and control them. “Faced with so many variants and risks, I stress the importance of creating different scenarios to be able to visualize how the risks can be managed,” said Barrios.

Barrios thinks every company must start by questioning whether they have identified their operational risks. He divides risks into several categories: the short-term of up to six months ahead, the medium-term of about three years ahead and long-term risks of up to 10 or more years in the future.

According to the World Economic Forum, two of the most prominent risks in 2023 are supply chain disruptions and inflation rates. Being able to source adequate energy may also represent a problem.

Barrios explains that risks associated with environmental, social and governance (ESG) compliance represents are equally key to the mining industry because of their urgency and pressure to meet legal obligations.

“Although ESG issues may become more relevant in 5 to 10 years, when access to water or raw materials becomes more difficult to achieve or when key resources begin to run out, international demands surrounding ESG issues have already been established and require compliance. Therefore, they have a great impact on the mining industry, which cannot be understood without considering environmental and sustainability issues,” elaborates Barrios. Moreover, the increasing threat of climate change and the demands of communities close to mining sites necessitate more attention and care from the industry.

“Geopolitics also pose a threat. International tension reaches beyond the conflict with Russia, as other disputes could escalate. As we have seen, these conflicts can threaten the stability of supply chains that closely affect the mining industry. Upcoming elections in Mexico and the US will also be crucial factors,” Barrios explained.

Together with the global issue of inflation, increases in operational costs have and can continue to affect the industry. Similarly, access to capital and new business models are issues that need close attention to avoid future setbacks. “We have all been affected by higher operating costs. This is especially clear in the mining industry: the prices of steel, fuel, chemicals and other key inputs have risen. It is therefore important to implement appropriate operational efficiency measures. It is essential to do more with less and maintain good cost records,” said Barrios.

Barrios emphasized the need to pay close attention to talent training and retention. Since talented workers struggle with increases in living costs like everyone else, the need for competitive compensation stands out.

Subsequently, innovation and digitization represent an opportunity as well as a challenge. “The main challenge for mining companies to adopt innovative solutions and technologies is strongly linked to risk culture. In the absence of such a culture, investing in these solutions is not the main objective. We have to create awareness regarding the importance of implementing a risk culture and getting rid of resistance to change,” he said.

Barrios identifies other two risks for Mexico in particular. “The government’s actions pose a risk to mining operations.

At the beginning of the administration, the authorities declared that no more mining concessions would be granted and even existing concessions were going to be reviewed and possibly withdrawn. This remains a significant risk, so we must work to challenge the negative emotions toward our industry. We must work closely with authorities to foster the necessary tra nsitions.”

Finally, tackling insecurity in Mexico is paramount. “We must bear in mind that we cannot control this in the short term. Insecurity can even increase in the long term and have a major impact. For this reason, we must be attentive to the risks that surround the industry,” Barrios concluded.

INNOVATION: MINING’S NEED FOR WATER AND WASTE MANAGEMENT

The mining industry has gone through significant changes during its history, mainly propelled by new technologies that emerged and altered the operations of thousands of companies. To respond to pressure from governments, investors and NGOs alike, the mining sector is increasingly addressing environmental, social and governance (ESG) issues as a priority matter. As these objectives to reduce waste and increase water reuse grow in importance, technology will further cement the adoption of ESG factors in the mining industry.

“When we discuss sustainability, we are talking about improvement, which is equal to innovation,” said Cristina Rodriguez, Deputy Director of Sustainability, Compañía Minera Cuzcatlán. Companies are using innovative, modern methods throughout the mining process, as these solutions help mining companies to overcome ore-processing roadblocks and drive exploration efforts while fostering a better environmental and social track record.

One of these approaches is ore sorting, a process in which artificial intelligence (AI) and advanced instrumentation are used to isolate the best ore for further processing. This reduces the overall volume of ore sent to be processed by identifying a smaller amount of higher quality ore, which allows for smaller plants that are more energy efficient, produce fewer emissions and lower the barriers to gaining permits.

In addition, advanced technology is reducing water dependency and softening the environmental impact, for example by replacing chemicals with earth-friendly bio-based chemical agents. Many mines today are enforcing measures to capture rainwater that flows into reservoirs, too. For example, Draslovka invested US$100 million in 2022 to develop glycine leaching to help companies make their use of water more efficient, explained Claudia Marquez, Global Commercial Director, Draslovka.

Public-private projects to source water have also been proven to yield positive results, like the water treatment plant run by Minera Cuzcatlán in Oaxaca. This allows the company to source 80 percent of its water from the treatment plant while the remaining 20 percent goes to surrounding communities. The Mexican subsidiary of Fortuna Silver Mines reported that it has never used underground water for its operations at its San Jose mine in Oaxaca. Instead, the company recycles and reutilizes wastewater.

“Waste takes up a lot of real estate, which is limited in Mexico. Being creative with waste drains and tailings is essential, ideally creating a geofill,” said Jim Norine, Vice President of Minerals and Metals, Southwest USA, Ausenco transport dry tailings through a conventional conveyor belt system and stack them on a pad, similar to heap leaching. The traditional alternative of using a slurry dam and then waiting years or decades for that dam to dry up has proven to be much more complicated.

Although efforts are being made to improve water management, some decision-makers are still reluctant to invest in those solutions. “Since water is not a direct operational risk, it is often not well understood. However, water risks can shut down production or undercut a company’s social license to operate,” said Sarah MacKay, Water Services, ERM. Because the benefits of better water systems are only seen after many years, this adds to the lacking awareness of their value, added Rodríguez.

Furthermore, a key trend in the mining industry is to move from traditional slurry tailings storage toward dry tailings, as around 50 percent of the operators are moving to dry solutions. Tailings are a major issue for mines due to the problems linked to waste management and safety, explained Rodríguez. “Tailings dam failures are catastrophic, dangerous and can cost lives. Dry stack tailings are therefore driving the industry,” added Norine. Companies can

Adopting best ESG practices does not only benefit the environment and the communities involved, however, as companies stand to make solid financial gains. “ESG has become a standard investment requirement. I consider it good for companies, the industry and, more importantly, the environment,” said Norine.

Márquez recommended making ESG a priority for the operational strategy, adopting emerging technologies, understanding regulations, setting targets beyond compliance and involving supply chains to deliver better results. MacKay agreed and highlighted the relevance of having a clearly defined strategy and implementing it systematically.

TOREX GOLD: RECORD-BREAKING YEAR AMID A CHALLENGING E NVIRONMENT

Despite the strong inflationary pressure of 2022 in addition to a slew of challenges for Mexico’s mining companies, leading Mexican gold producer Torex Gold closed an outstanding year as it surpassed production expectations owing to its operational d iscipline.

According to Faysal Rodríguez, Senior Vice President Mexico, Torex Gold, “2022 was an extraordinary year for Torex Gold and our Mexican subsidiary Media Luna.” The company not only met the market expectations of producing between 430,000 and 470,000oz of gold in 2022 but exceeded it by producing 474,000oz of gold, breaking a record for the fourth consecutive year, he added.

Torex Gold is a prominent gold producer in Mexico, its primary assets comprising the El Limón Guajes (ELG) Mine Complex, comprised of the El Limón, Guajes and El Limón Sur open pits, the El Limón Guajes Underground Mine and a processing plant. In addition to ELG, Torex has grown its mining operations in Mexico through its Media Luna Project, an advanced-stage development project located 7km from ELG.

The Canadian company’s successful year was distinguished by world-class security levels, says Rodríguez, who highlighted an incident rate of 0.28. “We have a moral commitment to take care of ourselves, to be generous with security. Beyond the top-notch metric, we exhibit the safety culture that we built.”

While the underground mine had a record 1,600t/d production, the plant also had outstanding results, breaking grinding records. Rodríguez added that the company is focused to continue the good wor k in 2023.

Despite the inflation that raised the costs of key inputs, Torex Gold’s results were possible because of the company’s strong workforce, its financial management and discipline, contract renegotiations, the creation of alliances and operational discipline, says Rodríguez.

Torex Gold operates the Morelos district in the northern part of Guerrero. Media Luna is an underground deposit that primarily contains gold, copper and silver mineralization, located on the south side of the Balsas River. The deposit, hosted in a magnetic anomaly, was discovered in March 2012. The company’s board of directors approved the Media Luna Project in March 2022 and construction is underway, with anticipated commercial production in 1Q25. The life of mine may be extended through at least 2033 with a firm foundation in the local community and strong relationship with local, state and federal governments, Rodríguez explained.

Torex is committed to the community nearby, including the fully-Mexican local team, and the people of Guerrero, where 70% of the labor force is from. “We feel a double commitment in terms of the environmental legacy that we can leave and on which we will continue working. We will be here until 2033, so we are dedicated to the community, including the new generations of miners in the Morelos district,” Rodrí guez said.

Thanks to its operation, Torex can invest in the community and other priorities such as the environment and sustainability efforts, says Rodríguez. In 2022, Torex invested US$5 million in the construction of a solar plant, which will generate around 8.5NW of energy and contribute to reducing the company’s carbon footprint.

Torex Gold’s future in Mexico includes the development of the Media Luna project and continuing to foster the relationship with authorities. “We will continue to manage institutional relations with local and federal governments as well as individuals. Torex Gold contributes to the development of the country and the northern region of Guerrero. We will continue adding value with our responsible mining to maintain our accomplishments,” Rodrí guez said.

With continued investments in the decarbonization of operations, strong ties with the local community and over 10 years of production coming in addition to Torex Gold’s strong commitment to values and a dedicated workforce, the company “is poised for a sustained success story in the future,” Rodríguez concluded.