The winners of the 8th edition of the Excellence Index were announced this Monday, February 26, at the ISCTE Executive Education Auditorium in Lisbon, recognizing the organizations...
“A transparent and responsible mining sector can contribute to the sustainable development of a country"
Patricia Kosa Muñoz, legal and compliance manager at Gold Fields, Las Americas Region - Peru, tells us about the biggest challenges during her 12 years at the company, the main compliance issues in the mining sector and the best risk-mitigation strategies.
Patricia Kosa Muñoz
Tell us briefly about your role at Gold Fields.
I am currently the legal and compliance manager at Gold Fields, a mining company with operations in Cajamarca, a subsidiary of Gold Fields Limited, a company listed on the New York and Johannesburg stock exchanges.
At a time when mining in Peru faces complex social, political and regulatory challenges and risks, I have the task of facilitating legal and strategic decisions to achieve the long-term purpose of the company, which is to create value beyond mining.
In this sense, I prep the legal and compliance area to anticipate these risks and ensure the company’s compliance and sustainability measures are robust, aligning all its activities with the highest standards of integrity, governance and ethics, thus facilitating the growth and development of Gold Fields in the region.
What was your most challenging experience during your years with the company?
In my more than a dozen years with Gold Fields, I have participated and led financings, company sales, corporate reorganizations, obtaining critical permits and land acquisitions for operations. This, among other projects that have necessitated complex legal and technical work, with the involvement of several countries, areas of the company and stakeholders. However, if I had to pick one challenge, it would be maintaining the proper operation of the Cerro Corona mine in the early days of the Covid-19 pandemic.
At the time, regulations were changing on an almost daily basis, so we had to establish legal, labor and compliance strategies to ensure the continuity of operations. Difficult decisions were unavoidable, not only legal, but also strategic ones, but we always put the safety and integrity of our personnel, external collaborators, and stakeholders first.
During this period, the challenge consisted of adding value by sourcing and applying creative legal solutions. For example, we were able to rework our permit strategy, which prevented delays in obtaining the necessary licenses to continue with our operation without stoppages; in addition to a labor, contractual, and operational strategy that guaranteed the legal viability of Cerro Corona. Furthermore, we updated our compliance procedures and associated training to take this new reality into account, and were able to obtain, among other things, donations and contributions urgently needed in our region for the fight against Covid-19.
What recent changes in regulation have most impacted the company?
In this sector, obtaining permits and licenses has become increasingly complex over the past few years. For example, the number of entities that must pronounce themselves to obtain an environmental license or permit has increased significantly, making procedures cumbersome, sometimes even redundant, which has led to an increase in the legal deadlines associated with the execution of a project.
But, undoubtedly, the most recent critical changes have been in the area of labor regulations, which have made labor - and even union - relations more rigid. Many of the proposed changes were put forward in a resolution issued by a Supreme Decree, which sought to limit outsourcing within the activities that were ambiguously defined as nuclear (which to date have not been applicable, due to INDECOPI competition regulations, that have given us a perspective regarding its illegality). Although this rule is not currently being applied, the impact of latest attempts to tighten labor regulations have nevertheless reduced Peru’s competitiveness.
Our country needs to have conditions favorable to attracting more investment, and reforms that help promote greater development and welfare. We must ensure that our regulatory and institutional framework allows the natural resource potential we have to be explored and exploited in a safe manner and for the benefit of all Peruvians, protecting the environment and caring for people, but at the same time, ensuring we can operate in a competitive and efficient manner. In this scenario, legal security and predictability are indispensable.
What are the main compliance challenges in the mining sector?
Change is a constant in the mining industry, due to both internal and external factors. In this sense, the main challenge is to try to anticipate these changes by designing strategies, policies and procedures that effectively address these new requirements, ensuring the reliability and sustainability of the business.
The sector has particularities that must be taken into account when establishing a compliance system, such as the administrative over-regulation framework, environmental and social risk-management, the level of investment involved in the development of projects, the importance of suppliers to the supply chain, as well as the impact of tax and royalty payments in the areas of influence of operations. All of these are fundamental aspects for the business, which must be managed with a long-term vision, not least from a compliance perspective.
To this end, compliance management in the mining sector has become an indispensable tool for maintaining a good relationship with local authorities and the industry’s governing bodies, for the best way to execute social commitments and make donations and the correct management with communities, as well as to identify and manage conflicts of interest -linked to politically exposed persons and suppliers-, among others.
Compliance protects the company, our workers and our investors, generating a competitive advantage; but it also has a positive effect on the reputation of our industry in Peru, since a transparent and responsible mining sector can greatly contribute to the sustainable development of a country. Therefore, we have taken on the challenge of extending the best practices we implement at the company to the sector and to our stakeholders (including those in the supply chain), thus generating a virtuous circle for the society in which we operate.
What is your strategy in terms of risk management and implementation of compliance programs?
We see compliance in a holistic way, encompassing compliance with the regulations that apply to us, especially in anti-corruption, prevention of money laundering, environmental, labor, personal data protection, among others; oriented primarily to prevention.
To help facilitate this, we have implemented a crime-prevention model, called the Integrity Management System (SGI), which is based on periodic risk-assessment and also assessment when relevant changes occur (e.g. Covid-19, reorganizations, etc.), limited to the reality and specific characteristics of our company. For the latter, it is critical to involve all stakeholders, not only in identifying risks, but also when designing of checks and processes to mitigate them, as well as in the evaluation of their effectiveness. In this endeavor we have been successful, securing a commitment from all the parties involved in the SGI and the active participation of each of the areas, to work together and in an aligned manner.
What’s more, in recent years we have worked to develop and strengthen the company’s culture of integrity, with a focus based on values and ethical leadership. This helps us internalize rules and checks, foster a commitment to results, and a natural intolerance for deception and inappropriate behavior. Thus, we are no longer talking about a challenge exclusive to the compliance area, but rather that each member of Gold Fields takes responsibility for compliance on their own, making it part of their daily lives and takes pride in working in a company with high standards of integrity.
What aspects do you usually refer to external legal advisors and what do you value most in their services?
I usually refer issues that are highly specialized to external firms; for example, those that require specific knowledge and experience in the interpretation that regulatory or judicial authorities may have in cases similar to ours.
One of the aspects I value most in an external advisor is that they have a business vision, that they take the time to understand and get to know our company and what concerns us; and that, as a consequence of this, they are able to propose practical solutions beyond what the text of the law says, but within the framework of the law.
Finally, it is important that they also share our values, ethics and the purpose of delivering value beyond the business; we value, for example, concrete steps taken to promote diversity, as well as their level of development and commitment to their own compliance policies.
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