Speaking during a webinar interview this week, Cynthia Carroll, who led Anglo American from 2007 until 2013, said this is in stark contrast to the way the sector got back to business in the aftermath of the 2008-09 global financial crisis.
“We did not drastically change the way we did business after 2008; we thought about preparing ourselves in a much more diligent way, but returning to work today [after Covid-19] will be very different,” she said.
“We need extreme and additional controls in terms of screening, testing, increased sanitation, social distancing - this is a fundamental change that is not going to go away,” she added.
At the same time, the billions of dollars being pumped into the global economy in the form of government and central bank stimuli will not have a significant impact until a vaccine to alleviate the virus is developed and distributed, she noted.
“The economic recovery period I think in this case will take years and years,” she said. “Covid-19 is threatening human lives, whereas in the financial crisis that wasn’t the case at all. You can rebuild an economy, but you cannot replace human beings."
Along with anticipated changes in social, health and working practices, Carroll said that countries will become focused on being more self-sufficient.
“This could lead to a lot more nationalization, countries focusing on growth within their boundaries and borders. Companies will have to consider supply chain much more carefully and thoughtfully than ever before, and there’s a real question of how reliant people will be on China,” she told Fastmarkets.
While there are lessons to be learned from the 2008-09 financial crisis in terms of productivity, costs and how to communicate internally, Carroll said there are also differences.
“History does repeat itself, so we should all be reminded regularly of what happened in 2008, how we responded and consider that as we go forward today. But the cycle is more frequent, no question about it - we have to be much more adaptable and responsive, we need to be more agile and think about different operating models, scenarios, optionality, all the time,” she said.
“Cost must be mostly variable so that it’s adjusted in line with the market context as opposed to disruptive restructuring, [meaning] every time we have a setback, we have to rethink where we are and how we’re going to do business,” she noted.
“We have to align stakeholders accordingly - we have to work really closely with them to get them onboard and to understand what the challenges are,” Carroll added.
The metals and mining industry will need to make permanent, fundamental changes to the way it operates as a result of the Covid-19 pandemic, the former chief executive of Anglo American told Fastmarkets.