Companies in the mining industry are predominately from Europe. However, in recent years, there has been a trend of these companies expanding their operations to the APAC region through joint ventures and acquisitions. The expansion brings about the need for localization and especially so due to the limitations posed by the COVID-19 situation.
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This article is written by Alexis Chaing – Principal Consultant (Chemical, Industrial, Logistic, Supply Chain). Alexis has over 6 years of experience in the recruitment industry and currently specializes in Supply Chain, Chemicals, Building Materials, Minerals Mining industries in Malaysia & SEA market covering roles in Operations, Engineering, Supply Chain, Technical R&D, Sustainability (QSHE) and Commercial and Market Development.
Why is localization becoming increasingly important?
Limitations to Travel due to COVID-19
Before COVID-19 happened, the management team situated in Europe will frequently travel to the region to oversee operations. This is necessary as the time difference between APAC and Europe can be rather different and there might be a lag in terms of decision making and dissemination of information. However, with travel restrictions in place and time zone differences, there is a need for a local team moving forward.
Differences in Culture, Governance, and Operations
According to a survey done by KPMG, the following are the top risks faced by mining companies.
- Commodity price risk
- Permitting Risk
- Access to capital, including liquidity
- Community Relations & Social Licence to operate
- Political Instability
- Economic Downturn/uncertainty
- Environmental Risk (New Regulations, Regulatory & compliance changes)
- Global Trade War
- Ability to access & replace reserves
- Tailings Management
As every country and region are different, localization is important for swift decision making and risk management. For example, the understanding of natural resources, local authority liaison, laws as well as corporate social responsibility.
Larger Presence in the Region
With a growing team and presence in the region, it is essential to centralize certain roles in APAC. These talents will be representative of their region and will serve as a control tower for the HQ in Europe and the US. Not only that, but all the representatives and HQ can also work hand in hand to share market trends and knowledge with each other to see if any strategies can be adopted to improve processes and efficiencies within their own region.
What’s next?
Business leaders in the mining industry can consider reviewing their existing strategies in terms of localization and hiring local talents to maximize existing opportunities in the region. Not only that, but also to enhance sustainability and resilience through revisiting ESG strategies, risk, and reporting disciplines as well.
