Frozen permits – an important step forward for exploration companies
Corona. The consequences of the corona pandemic have hit hard on all exploration activities. In order to mitigate the effects, 2020 should be seen as a lost year and all exploration permits should therefore temporarily be frozen.
75% of all exploration companies in Sweden believe the financing situation is currently problematic or very problematic. This is shown by Svemin’s recent membership survey *. Sweden as an investment country for exploration activities has long been criticized, mainly because of the insecure and inefficient permitting processes. Against this background, it’s even more important how society now handles the new, deteriorating, situation; primarily for the industry’s opportunities to survive the crisis but also as a signal for the outside world in the future.
Exploration companies are often small and specialized in just exploration and thus without income from their own mining production, which makes them completely dependent on external capital to be able to conduct their operations. When the investment climate is strained, exploration companies risk being quickly eroded financially. This makes the future highly uncertain for an entire industry, an industry that is absolutely crucial to long-growing value chains.
The search for mineral deposits requires exploration permits according to the Mineral Act (minerallagen). An exploration permit is valid for three years and can then be renewed – but only under special circumstances. In order to maintain and extend investigation permits, investigative work must be actively pursued. Thus, the business cannot pause. Unless exploration work has been carried out, the exploration company loses its permit and the investments made are in vain.
To alleviate the emergency situation, Svemin’s work is now focused primarily on the possibility of freezing existing permits and that 2020 will thus be counted as a lost year **. This is a well-defined political intervention, but the effect of this would not only save time and money in new applications, but also save both jobs and companies. And not least send a much needed signal that Sweden as an investment country for exploration has a future. Exploration needs to be moved up the political map as the start of long growing value chains in society.
Svemin’s survey also shows that despite the corona crisis in large parts of society, the Swedish mining and mineral companies have so far performed well and remain strong with a production rate that in most cases is not particularly affected. However, some problems with deliveries and relocation of key competencies are reported due to closed boarders. Svemin’s third member category, the technology and service companies, testifies to some major problems with logistics and transport, declining order status and perhaps most important key competences that cannot be transferred. But the technology and service companies also seem to do well overall.
* Member survey. During March and April, Svemin, through surveys, asked the member companies about how the corona crisis affects the business.
** Frozen conditions. Two concrete measures would be of great help in this difficult situation:
1. All valid investigative permits should be renewed as soon as possible automatically and free of charge for the companies concerned for one year (from April 1st, 2020).
2. All subsequent applications for extension of the exploration permit should be assessed without any requirement that the companies need to have carried out exploration work during the past year (from March 1st, 2020 and one year onwards).
In other words, because of the Corona outbreak, 2020 should be seen as a lost year in the exploration context.
The Corona pandemic is getting more serious in society, locally as well as globally. So far, the Swedish industry has a somewhat more stable situation than many other industries, but preparedness is high for dealing with a long-term crisis.
First of all, a big thank you to all of Svemin’s members who have contributed with valuable input in the recent past on how the ongoing crisis is affecting you and also come up with suggestions for measures that could help. Current information is crucial for us to continue to represent the industry with a strong and clear voice.
At the overall level, the numbers are currently speaking their clear language: more than half of the Swedish Confederation’s member companies experience financing and liquidity problems, eight out of ten experience problems in their foreign trade, four out of ten companies have notified or will notify staff and 20 percent of all companies have lost more than half of its sales. Jan-Olov Jacke, CEO of the Confederation of Swedish Enterprise, raised this at DN Debatt last Saturday.
However, the industry as a whole, like the mining and minerals industry, has a somewhat better situation. Therefore, it is very important that companies are given the opportunity to continue running businesses, those who can. Continued operation means that employees can go to work and that payments of taxes are made and that export earnings continue to benefit Sweden.
Svemin is intensively pushing this issue right now to ensure that both companies and Sweden are better equipped when the acute spread of infection is over.
At the industry level, we also work with impact work on the importance of:
- Logistics flows of goods must continue to function. As well as the flow of people both in terms of key competences and staff. It is both about ensuring that central infrastructure is kept up to date with, among other things, continued air traffic to northern Sweden and the crossing of land borders for commuting continues to work.
- The importance of closing schools and preschools only if absolutely necessary – and in that case doing regional differentiation. An important part of this is the definition of what is a socially critical activity where there is considerable scope for interpretation for the municipalities, which will ultimately make the assessments. Therefore, an invitation is to have an early dialogue with the municipality and the county administrative board on the issue.
- Introduce a temporary exemption with respect to exploration permits to mitigate the effects on exploration companies. 2020 needs to be regarded as a lost year, and as a result, all existing exploration permits should be extended by 1 year as an extraordinary measure.
- The need for effective permit testing is as current as before and it is very important that the courts and authorities’ processing of applications for environmental permits and processing licenses does not stop during the Corona crisis, as there is a risk of production stoppages or other serious restrictions on ongoing operations.
- We also see how a number of political processes continue to roll, not least within the framework of the Green Deal in the EU. At the same time, many actors affected by these legislation find it difficult to monitor and provide input, which we also put forward.
- Form a forward-looking plan for how industrial production will get started – that demand and global value chains must be restored. This is something we do within the framework of cooperation with other industries.
Community action, termination concerns and delays – progress report 3 April
Based on the survey carried out by Svemin, it can be concluded that the common uncertainty for all Svemin’s member companies is the great uncertainty going forward as the prevailing world situation changes almost daily.
However, among the mining and mineral companies, the general situation is still stable in terms of deliveries, transport systems and the transfer of key competencies that appear to function, however, with some delays and disruptions. The technology and service companies experience marginal disruptions and delays, but in general the situation seems to be manageable at the moment. Worse, it is for the exploration companies that testify to problems in getting goods into the country.
The order situation at the mining and mineral companies is slightly different, but there does not seem to be any major impact either. On the other hand, there is concern ahead with the uncertain world situation and major losses are feared during the second half of the year and even further ahead. The technology and service companies are divided there – some notice a major downturn while others do not know of any downturn yet. But here too there is a concern ahead.
For most companies, no notice or layoffs are currently planned, but preparations are underway and many have very high readiness. This is also very much related to whether schools and kindergartens would close, which many say would be problematic; even if production could be kept up, one would have to go down in production.
It is gratifying that almost all companies take the initiative and help social functions by donating respiratory protection and other safety equipment to health care, for example. It also supports nearby businesses such as restaurants and cafes with extra orders. (The information is based on questions to Svemin’s member companies, March 30-April 3)
Due to the outbreak of the new corona virus in Sweden, Svemin is closely following the development and has intensified our cooperation within the basic industry group as well as within the industry as a whole. Together, we are a strong voice of influence against politicians and other decision-makers. We also work closely within the Confederation of Swedish Enterprise to find functioning ways back to a functioning business again.
The mining and mineral industry is the start of long-growing value chains. Disruptions in the commodity industry have major consequences downstream in society.
Our main messages to the politicians and decision-makers:
• Logistics flows of goods must continue to operate, both in the internal market and in the world market. This is absolutely crucial both to ensure access to important inputs and components, and to be able to get products to customers.
• Key competences must be able to travel freely. Experts who are only in one country cannot travel at present – this can be problematic. Mining operations are characterized by extensive security work and key safety competencies often cover operations in several countries. Here, the EU should act to ensure that not only goods can flow across borders but also key competences needed for continued operation of industries.
• Regional management is needed for anti-contamination measures. The mines, with a relatively large proportion of staff aged 25-40, would risk being severely affected by the closure of preschools and schools, and have a very difficult time keeping up normal production. It is important with regional / local management if such a scenario becomes a reality and that advance planning is given so that a planned reduction of operations can take place so as not to damage equipment or cause environmental problems. This also applies to the equipment suppliers.
• Introduce a temporary exemption for exploration permits to mitigate the effects on exploration companies.
• Develop a forward-looking plan for how industrial production will get started – restoration of demand and global value chains is crucial to mitigate the economic consequences for Sweden, the EU and the world. Sweden should do this for themselves, and also be the driving force for this in the EU.
How the mining and minerals industry is affected – progress report March 27, 2020
The mines seem to go well with production as normal. The logistics chains – both with input goods for the business and for products to be transported out – are still working with some re-planning. Own staff are on site, despite increased sick leave. Planning to go down in production in a controlled way is ongoing. There is also no dramatic decline in demand right now, but the decline in world market prices for metals indicates a decline in demand globally. The fact that the producing industry – like car manufacturing – is now at a standstill within the EU will affect the mines indirectly, not least the steel mills in the EU, and reduced demand is expected. Globally, some mines are already closed – for example, in Peru, Chile, India, Canada and South Africa. Partly due to government intervention and restrictions on citizens’ mobility.
On the other hand, for our exploration and junior companies, the situation becomes more urgent as there is a risk of financing difficulties in the current situation. It was found that even before the Corona crisis, the exploration activities conducted globally were not sufficient for a future growing need for metals and minerals, which can now become even more significant. There is a risk that exploration activities will stop in many parts of the world and even in Sweden. Svemin is working on a proposal for temporary handling of exploration permits in Sweden. For example, a temporary extension without the requirement for completed work on site to ensure that already made investments and work done are not lost.
From our equipment suppliers we receive signals that production is still running, but there is – as in other manufacturing industries – an increasing concern that component shortages may force the business to slow down, as the companies depend on global supply chains to get those parts needed in production. Preparations are made to be able to reduce production if needed.