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Company resilience to be focus post COVID-19

Company resilience is likely to become a key investor focus post COVID-19, Daniel Litvin, founder and managing director of Critical Resource, said during a keynote presentation for the World Gold Conference 2020.
Company resilience to be focus post COVID-19 Company resilience to be focus post COVID-19 Company resilience to be focus post COVID-19 Company resilience to be focus post COVID-19 Company resilience to be focus post COVID-19

Daniel Litvin of Critical Resource

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Litvin, who outlined five hypotheses of how the world for gold miners will change, said investors will look for companies best suited to withstand future shocks.

"The issue of resilience is going to be taken up by investors and subsumed under the ESG banner. This is not just companies having a strong balance sheet but having supply chains and the ability to continue operating in future crises, with plans in place to mitigate a whole range of ESG topics," he said.

Litvin said the world is still very much in the respond phase of dealing with the COVID-19 virus pandemic, but that early and strong action by companies to protect their workers and host communities will pay dividends going forward. "Actions taken now by companies showing themselves to be active and responsible will pay dividends by helping to build trusting relationships for the future," he said.

The presentation focused on three big picture context shifts (health pandemic and responses, economic impacts and bailouts and political and social fallout) and the impacts these could have on companies.

With the potential for a major global recession and even a global depression, he reminded people of the huge political and social changes unleashed by the 1930s depression, which included the rise of government intervention and the New Deal in the US, and of facism and totalitarian regimes in Europe. The current crisis is likely to accentuate the trend of division in international relations

"The pre-COVID-19 global context with a focus on inequality and the growth of nationalism and election of populist leaders is a worrying context for an economic crisis, the prospect of mass unemployment and government finances being severely constrained to play into. If the economic crisis deepens populist movements may gain even more traction. There will be a temptation to erect trade barriers which temporarily safeguard national economics but at the expense of the global economy. This is clearly not good for the world but it is probably good for the gold price," Litvin said.

With governments around the world having to bailout their economies, government intervention in the economy is returning as is the need for governments to tap economic sectors for financial resources. This is likely to see existing operations face additional taxation and a resurgence of resource nationalism, but also governments seeking to attract new investment in mining.

"Governments will be even more strapped for cash as a result of the significant bailouts they are having to put in place and they will be looking for sectors to tax … particularly the gold sector given it is doing well at the moment as a result of the high gold price. It will be an obvious sector from which governments seek to try and balance their books again," Litvin said.

The expectations of companies by employees and communities, particularly in remote areas are also likely to increase."Once treatments and vaccines are in existence companies will feel the expectation to be at the forefront of rolling those out. The boundaries of company responsibilities will be extended ever more into the lives of employees, their families and to communities, which will trigger the thought that greater mechanisation of operations is needed," he said.