Dan Bronstein: “The Group is focused on strengthening the quality of our relations in every region in which we operate”

The metals and mining industry faces a growing number of challenges today. The battle to reduce carbon emissions, the increasing importance of social factors in metals and mining operations: all demanding a reassessment of previous approaches to operations and changes to business owners’ world views. Multinational companies feel these pressures even more. There are multicultural influences on the processes taking place within the companies.  

Our correspondent asks how industry leaders solve these new problems in his discussion with Dan Bronstein, Chairman of the Board of Solway Investment Group, 100% shareholder of Pobuzhsky Ferronickel Plant (PFP). 

- How did the global pandemic impact Solway Group’s operations?

Despite the serious challenges the pandemic presented, the Group was able not only to avoid the stoppage of production and the potential negative social and economic consequences of such a move in its regions of operation, but we were also able to ensure uninterrupted operations across all enterprises, and, in most cases, to even produce in excess of our planned production targets.

Solway Group has assets and operations spanning the globe, from Latin America to Europe to Asia Pacific. During the pandemic, we experienced our biggest challenges in Guatemala.  The small country experienced a large-scale national epidemic, which in the context of a poorly developed healthcare system, led to difficulties transporting energy supplies.  We had to move to short shift operations.

The company worked intensely to ensure safe working conditions on site, helped local municipalities by supplying medicines, water and food, and provided support to local communities and medical facilities. During that truly difficult period, Pronico management successfully rose to the challenge, significantly strengthening the social cohesion between the company and the local communities. 

At our other companies, where there were only a handful of Covid cases, operations, on the whole, continued within the framework of our normal production processes. 

- What changes to the Group’s strategy and operating activities arose from thepandemic? 

The business of multinational groups depends highly on open borders and reliable, established transport and logistics channels. The breakdown of these channels and border closures lead to inefficient operations. 

We strive to optimise our transport and logistics routes so that if such events were to occur again, each of our businesses would have substantial reserves and could operate autonomously. 

For example, we are transitioning towards working with local suppliers and contractors. We are creating reserves of critical materials we must have in stock. Within our engineering team, we are moving away from hiring large numbers of foreign specialists, and are creating conditions that encourage our employees to work more efficiently.

Recent events have also proven that many regions in which we operate have limited sanitary and medical infrastructure. Together with local authorities, we are developing a program to provide more wide-ranging and faster help to the local population in the event of emergency. 

At the same time, I would like to point out that thanks to having successfully survived this most recent public health crisis, trust in the company amongst local residents and municipal leaders has significantly risen across all levels as a result.

- The company is continuously increasing its presence in the global markets. I have two questions related to this: please describe the strategy for the companies’ development over the next few years, and what will be the fate of the Group’s existing assets, particularly those in Ukraine?

Despite the increased focus of industry players on the nickel sector, we see a large number of promising assets which are still inefficiently managed. If we speak in general terms, the Group continues to consider assets in the steel production sector.  

In addition to the metallurgical sector, we are carefully following the rapidly growing industry for rechargeable battery inputs. This includes nickel which we produce (we are considering projects to produce nickel sulfate on the basis of our existing assets), and also business areas which would be new for us, such as lithium and graphite. We have already invested in Canada and are looking closely at other countries, including Ukraine.

- Several years ago, the Group announced the acquisition of a major project in Indonesia. Which stage is that project currently at? 

The Group’s Indonesian assets were comprised of two elements: the major Maba project and a cluster of mid-sized producing assets on the island of Sulawesi. We made a strategic decision to sell the former and concentrate on the latter. The Maba project requires the construction of costly infrastructure, most importantly, its own coal-fired power plant. In the context of a general shift towards reducing greenhouse gas emissions, we determined it would not be appropriate to invest billions of dollars in a project which would burn coal to produce energy. Therefore, last month, we completed the transaction for the sale of the Maba project to an Indonesian energy group.

With regard to the cluster of assets on Sulawesi, the situation there is fundamentally different: the island has a developed power sector, and we are in talks with local operators for a contract to supply us with energy from renewable sources. In parallel, we are completing our feasibility study for the ferronickel production plant and are also considering the possibility of building a complex for the production of nickel sulfate for use in batteries. Next year, we plan to begin the execution of the project, which should be comparable to PFP in its size.

- What is driving the Group’s interest in so-called “technical mines” of minerals? 

Technologies for mining metals have changed massively over the past fifty years. In the past, 20% of precious metal content in tailings (mining companies’ repositories of processed raw materials – editor’s note) was considered the norm.

Often, the precious metal content in tailings was higher than in one’s own mines. In addition, tailings are almost entirely void of geological risk, as the structure and content of the dumps is reliably documented. There is also no conflict of interest between local residents, because such sites do not have value in terms of the land itself or for agricultural purposes.

By developing such tailings dumps, we are not only treating valuable resources with respect, creating jobs and paying taxes, but we also take on responsibility for reconstruction of abandoned dumps in accordance with new standards and best practices. As experience has taught us, government leaders understand this very well, as do the residents. Local hearings have demonstrated unified support for our projects.

- Please describe “green mining”. How is the Group adopting this principle in its projects? 

In my understanding, “green mining” means the sum of best practices for efficient production (from the point of view of minimum changes to the landscape and also the smallest amount of loss of the valuable component) with practices for conserving energy during production, as well as maximal protection of water, the surrounding environment, and complete recultivation of developed mines.

Such practices are formulated in the relevant standards, such as  outlined in the Equatorial principles, the World Bank’s and ISO standards. Our company has already voluntarily adhered to these principles for many years. We are regularly audited for compliance with these certifications and are externally audited by international consultants.

We welcome the practice of formalizing the requirements for mining companies seeking to enter our sector. We regularly discuss new standards, including the possibility of incorporating them at our mines and across our production facilities  in addition to those described above. All of our recent projects include “inherent” adherence to the latest industry norms, and we incentivize our management to undergo these related audits and receive ratings soon as our enterprises reach their planned production capacities.

- Does the Group plan to expand its presence in the Ukrainian market, where there is a huge number of “technical mines”? 

Technical mines are a deceptive good, and their existence still does not mean that on the basis of every single mine it is possible to build an economically rewarding project for re-cultivation. We are studying a range of objects in the region, but we will only make an investment decision after evaluating the performance of our first such project in this area. 

- How do you expect the Group's social policy to evolve over the coming years?

In line with our strategy of increasing efficiency, we will focus our ESG (environmental, social and governance) polices on expanding the range of stakeholders affected by the company's performance. This process will grow both in breadth, by engaging in dialogues with more stakeholders, and in depth, by responding to a broader set of our communities’ needs, particularly in areas like health care, education, safety, and security.