Challenges of operating in the mining industry, COVID and way forward
Kuno Kafka, Executive Director & Senior Counsel at Antofagasta Minerals Canada, is responsible for Antofagasta Minerals’ Canadian office and represents the company here in Canada.
Tête-à-tête with Kuno Kafka, Executive Director & Senior Counsel at Antofagasta Minerals Canada
What made you come to Canada?
My background is as an international corporate lawyer. As such, I have worked for major law firms in Lima, Vancouver, and New York working on securities, finance, mergers & acquisitions, and mining deals.
Antofagasta Minerals is a major London listed, Chilean copper producer. Back in 2010 Antofagasta had a very aggressive worldwide exploration and business development plan. At that time, I was working with a Vancouver law firm and I was involved in the structuring of Antofagasta’s international deals, such as joint ventures and strategic alliances.
Antofagasta was forming an international multidisciplinary team based in Toronto and they called me to form part of it in 2012. Since then, I have been working worldwide with the Company in its ventures, searching for the next exploration project and mine outside Chile.
How did you hear about PCCC, and what made you join us? How long has the association been?
Around 2014 is when I started to be involved with the Chamber. I met members of the PCCC through networking events and they encouraged me to get involved. The PCCC organized seminars and networking events that were a perfect environment for connecting with the Peruvian-Canadian business community.
I most recently joined the PCCC Advisory Team and I try to stay more involved every day.
Could you tell us more about your role at Antofagasta Minerals?
I am responsible for Antofagasta Minerals’ Canadian office and I represent the company here in Canada. From this office, I advise the company on its international exploration and business development ventures, also overseeing the legal and compliance aspects of our activities abroad.
The goal of our team is to identify and secure a valuable mining asset for the company. We search for and evaluate mining projects. Once our team identifies a project or asset that matches our investment criteria, we structure and negotiate a deal that will allow us to further explore and develop it.
We have negotiated deals and explored worldwide in the past, but at the moment we have a strategy that is focalized in the Americas, with special emphasis on Canada, USA, and Peru.
What’s the biggest challenge you have with your specific role right now and what are you doing or planning to do, to overcome it?
One big challenge is to structure your project in a way that addresses the local communities’ needs and expectations from a very early stage. Also, many of our projects are operated by joint venture partners and we need to ensure their operations are aligned with our standards. We aim to do mining for a better future and we are very serious about it. We put in a lot of effort into creating mechanisms that allow us to implement adequate work programs that will be aligned with this vision.
Another big challenge is to do sustainable deals. Searching for good quality mining projects and assets is not easy. Our team has to work with too many unknowns and often we have to negotiate with project owners who have unrealistic expectations on the value of their prospects.
A challenge in this context is to structure the best deal for the company while making sure you do not lose a good opportunity. To achieve this you need to ensure that you keep your head in what is important and keep track of your goals and limits during the process. You need to be adaptable and flexible, but at the same time, ensure that you deliver a sustainable asset for the company. You need to take risks, but you also need to keep perspective in the long term.
What are your thoughts on how COVID-19 will impact mining & operations?
It may be too soon to say. Many other mining companies had completely suspended their operations and they are just starting to resume. Antofagasta has been fortunate enough to continue with its core business even during this crisis, although we had temporarily suspended many non-core activities. This pandemic is not over yet, and we need to remain cautious.
With all the bad things COVID-19 has brought, this sudden and unexpected challenge has also shown us that we can be very adaptable and that there are many opportunities to be efficient through innovation. Remote working and automation are good examples.
Now that the economy is gradually opening up, what measures you believe are required to have employees safely return to work?
Firstly, not to rush. Secondly, you need to actively promote a sense of ownership in each person and make everyone understand that safety starts with them. As a company, we have continuously adjusted our health and safety protocols to ensure they are effective and match the highest standards, but these protocols are only one part of the picture; they are not useful if people do not understand that they need to be actively conscious. For example, wearing a mask will not solve your problem if the person wearing it scratches his or her nose without proper hand washing first. Similarly, procedures to ensure distancing in the workplace will never be enough if the people do not follow self-care and distancing in their own private space. Promoting awareness and creating a safe place for people to work in, should be the primary focus for any organization.
What advice would you give to someone wanting to enter the Peruvian mining market?
Do your due diligence, ensure you understand the regulatory environment and the red tape. Above all, from day one, you need to be proactively working together with the local communities and authorities. Your agreements must be in place and your work plans must take into consideration all of these aspects.
Many companies fail to have a proper plan at an early stage. In mining, you need to fully understand the area of your project and the expectations of the local communities, so that you can be a strong player while carrying on your business.
Especially when you are doing early-stage exploration, you need to understand that your sole presence may create unrealistic expectations, so you need to work closely with the communities to hear their concerns and explain your project, plans, and the challenges ahead.
Anything else that you would like to share with our readers, especially keeping in mind the current scenario?
I believe these are times to be resilient and adaptive. We do not know yet, what the new normal is or how long it will last. The challenges are there and this is an opportunity for everyone in the mining community, and outside, to find new ways to create value.
About Antofagasta PLC
Antofagasta PLC, an FTSE 100 company, is one of the largest international copper-producing companies in the industry, and one of the world's leading copper miners. The Company has three business divisions: Mining, Transport, and Water, with the first of those being the most important. It is also actively involved in exploration particularly in Chile, Canada, USA, Australia, Namibia, Pakistan, etc. In addition, the Group operates an extensive rail network servicing the important mining region of northern Chile, which is centered on the port of Antofagasta. It also operates a concession for the distribution of water in that region. Today its activities are mainly concentrated in Chile where it owns and operates four copper mines, Antucoya, Centinela, Zaldívar, and Los Pelambres.