Teams trump technical in asset value reasoning, says Glencore leader

Richard Roberts

Editor in chief

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Glencore's industrial lead of zinc and lead, Aline Cote
‘Diversified thinking will end up de-risking your decision-making’

Diversity can help tone down the subjectivity that plagues decision-making around resource and asset values in mining, Glencore’s Aline Cote told her peers at the AusIMM Mineral Resource Estimation Conference in Perth, Western Australia. Language, she says, is also critical to getting more effective connection between resource estimators and corporate types.

“You can’t only talk technical, you have to talk cash,” she said.

“That’s how people will listen corporately.”

Cote heads the world’s biggest zinc production business.

She started her career “logging core, doing 2D interpretation – because I look young but I’m much older than you think”. She was an exploration geologist with Noranda, then chief geologist for Falconbridge before becoming head of zinc mining technical services for Glencore in 2014. She was appointed industrial lead for Glencore’s zinc and lead arm in 2019.

“I built my entire career with resource modelling and actually translating the impact of resource modelling [into] money,” Cote said.

“I’m a pure technical person.

“I have had the privilege of being able to move up the ranks and be in a position to be a decision maker for a tier one mining company.

“But I’m here to [tell] you, the present and the future of the industry … we have to be aware that all these hours spent slaving over analysing geostatistical data, geostatistical models, understanding AI, trying to figure out domaining, it’s unfortunately [often] lost in the decision-making process.

“Everything you’re doing has impact on money. But is it getting heard?

“I can assure you that 90% of the time the answer is, no.

“Far away from me telling you not to work to the level of workmanship that you are to generate these models, because you’re the beginning of the chain – everything that comes after you is compounding errors – you absolutely have to generate the best estimate you can.

“But the key is [making] sure that the estimate you’re generating is actually well positioned in the decision-making channel.”

The first Australasian Institute of Mining and Metallurgy Mineral Resource Estimation Conference, which drew more than 500 delegates from around the world, heard a lot about biases affecting resource estimation and classification (“rescat”), ranging from technical to personal and even cultural.

The world’s main resource and reserve classification reporting codes, such as JORC and NI 43-101, were rigid enough, Cote said, but estimation and categorisation processes and applied rigour still varied too widely. This was exacerbated by the fact that people further down the value chain, signing off on major capital allocation, mergers and acquisitions, and the like, often had financial or legal backgrounds and were not “technical people”.

“We are still as an industry with a conundrum … of having subjectivity in every step that we do.

“Yes, the codes are much better in regards to guidance as to how to make it more objective. But we need the next leap here.

“You need to manage hundreds of risks.

“I personally mine stuff that is worth less than a pound of bio-tomatoes, so we have to be pretty efficient in the mining that we do. It means that every risk that I can actually mitigate, I will try to.

“Probably your biggest risk, your biggest exposure to not making money, is not going to be your resource; it’s going to be your licence to operate. It’s going to be obtaining your licence to operate and keeping your licence to operate.

“But for you to want to pick the fight, to want to operate in a given country, in a given jurisdiction, to manage the ESG constraints in given countries with given cultures, you need to have enough knowledge and faith, for lack of a better term, in the value of your asset.

“You’ll be willing to pick the fight if the value of your asset dictates that you can go through all these hurdles.

“Which assumes that the person taking the decision will always think that the [resource] estimation is all right. Which is good for us as, I guess, as professionals. But I think it’s misplaced.

“I personally as a corporate decision maker will always revert to questioning the resource model from which stems the cash model that’s in front of me, because I can; because that’s the way I have learned to take decisions.

“But most corporate decision makers don’t have a technical background. They have a financial background, or a law degree: if it’s reserve, it’s reserve.”

New technology loomed increasingly as a subjectivity circuit-breaker, the conference heard.

Cote said, in the meantime, “diversity of thought” was essential to getting better balance, and even structure, in corporate decision-making.

“In the mining industry corporate decision makers will have a tendency to feel the same and look the same,” she said.

“What I’ve always done with the teams that I’ve had the privilege of managing is … make sure that I have people from every sphere. I also make sure I have people that are a lot more intelligent than me. You can’t be scared of that because obviously.

“Having diversified people around you that will contradict you, that come from different technical backgrounds, different financial backgrounds, just different backgrounds as a whole, will always mean that you will hear things that you might not have picked up.

“People will use gender as a proxy [but] diversity is diversity of thought [and] diversity of culture.

“Different people from different countries will learn to model differently.

“Implicit modelling, country dependent, is different because obviously their way of modelling will be affected by their own bias of how deposits are in those countries.

“If you bring diversified thinking around you, you’ll end up de-risking naturally your decision-making process.

“If you want your resource model to actually have the proper impact in the optimisation of an asset and therefore making and enabling the decision maker to take more structured and rigorous decisions, then make sure you’re heard and make sure you’re part of a team.”


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