Mapfre backs away from mining firms with poor ESG records

Leading European insurer Mapfre said on the opening day of the Ferma Forum that it will not sell insurance to mining companies if their ESG actions are not up to scratch. What is more, the company wants concrete proof that mining clients are doing what it takes to improve their sustainability credentials. “ESG has now moved to the centre of the underwiring process,” said Ana Pedrouzo, a senior property underwriter at Mapfre Global Risks. “Many, or probably most, companies now have a tool that gives us an ESG rating, and we will not write the risk if the rating is not good enough.” Speaking during a panel on Latin American mining risks, Pedrouzos added that insurers aren’t the only financial sector keeping an eye on how sustainable miners’ operations are today. As a result, she believes the mining industry is moving in the right direction. “We see that mining companies are really working on their ESG commitments, and not only for reputational purposes but also for getting insurance and financing,” said Pedrouzo. “They are working on diverse representation, on giving back to the local communities, on water management, on restoring land after losses and, obviously, on reducing their carbon footprint and emissions.” The insurance industry’s emphasis on ESG comes at a moment when the mining industry faces significant challenges to address its insurance needs. One of them is the sheer cost of their covers, according to leaders of Latin American companies who participated in the panel debate. “Prices of insurance are getting too high,” said Juan Carlos Miljanovich, the CFO at Summa Gold Corporation, a Peruvian gold producer. Guilio Valz-Gen, the CEO of Howden Peru, noted that getting favourable insurance covers for mining operations requires the involvement of business leaders. “It is necessary that senior management gets involved in those decisions,” he said. “They need [to meet] insurance markets in a workshop or some other way. Information is power. One of the key factors is to present to the market the best submission you can.” Some mining risks are particularly difficult to insure. Tail dams have become an issue because of large losses in markets like Brazil and a realisation that business interruption claims can be enormous. “We have learned with losses in the past that, after an event regarding tailings reserve facilities, the mine does not go back into operation for several years,” said Pedrouzo. She added that the growing automation of mining operations has intensified cyber exposures. Meanwhile, strong demand for copper and other materials linked to the energy transition is putting pressure on mining firms. “The mining industry is at a crossroads,” Pedrouzo said. “Miners are being requested to provide the world with growing amounts of minerals and metals and to do it in a way that’s sustainable and affordable. So insurance markets must be conscious of clients’ needs, work with them and innovate products and services. It is the only way we can do our part in this sustainable development.”

Mapfre backs away from mining firms with poor ESG records

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