“There can be no sustained growth unless each of our companies is able to provide adequate management of ‘manageable risks'”.
Gerencia de Riesgos y Seguros(hereinafter GRyS): SIGDO KOPPERS S.A is one of the most dynamic and important business groups in Chile, a leading supplier of services and products for mining and industrial companies. Can you tell us briefly about the importance of risk management for the development of the group?
Alejandro Reyes (hereinafter AR): Risk management is viewed as a vitally important process throughout the Sigdo Koppers organization. On each of the Boards of our companies, we analyze, at least three times a year, major risks and their Key Performance Indicators (KPI) in the areas of labor, environment, finance, commerce, production and markets. If necessary, Capital Expenditures (CAPEX) investments in capital assets – are assigned. Each of these committees has one person in charge. Meetings are held at the corporate level with each of the leaders of our subsidiaries. And there is a particular and overall view of the risks that affect our companies.
Every four years, an external company is hired to reassess our risks map and conceptualize our progress and setbacks, if there are any.
GRyS : Sigdo Koppers is made up of different companies that are industry leaders – such as Ingeniería y Construcción, Enaex, SK Comercial, Magotteaux, Puerto Ventanas, Godelius and SK Bergé – and engages in a wide range of diverse activities. What position do these companies occupy within the group? What are the synergies among them?
AR: Each of the mentioned companies is a leader in its particular market. They embrace successful business models and social responsibility. We connect with, and are responsible for, the environments where we compete. With them, we develop joint projects through Corporación Sigdo Koppers such as educational initiatives for vulnerable youths, as well as supporting sports, cultural and medical activities.
Within the business sector, we share technological services through a single company, SK Converge S.A., which provides world-class services. Through Godelius, we channel technological innovation programs applicable to the mining industry that connect the processes of several companies, such as Enaex and Magotteaux, for example.
Sigdo Koppers is made up of different companies that are industry leaders
GRyS: Sigdo Koppers activities are organized around three business areas. The Services Area groups businesses devoted to construction and industrial assembly, transportation and logistics; the Industrial Area groups companies whose focus is rock fragmentation, with production and marketing of grinding balls and consumables for the mining industry, and companies in the petrochemical sector; and the Commercial and Automotive Area groups companies dealing with representation, distribution and leasing of machinery and automobile sales and distribution. In your opinion, which activity is most difficult in terms of risk management?
AR: That’s a hard question to answer. What’s clear, though, is that the health and lives of all our colleagues and the environments they work in is a priority, and so all of our efforts are therefore directed at safeguarding this. Several companies in the group have been recognized for these achievements.
An engineering job, which involves thousands of employees, or blasting work by Enaex that moves thousands of tons of rock, needs the necessary planning and protection, so our executives must do their jobs well. It is thanks to this kind of meticulous care that we’ve been able to prevent major incidents in terms of personal safety. This is because of the level of importance we give to each of our actions in these matters.
For example, a few days ago, a Daisy Plan (Comprehensive Plan for Evacuation and Safety in case of Fire, Earthquake, etc.) was executed in our building. Our associates, older people, were the first ones to follow evacuation procedures down the stairs, even though they were located on the upper floors. This is an example of who we must be and what we must do.
GRyS: What is the role of technology and innovation in Risk Management in your company?
AR: Technology is present in all our processes, from a moving locomotive to an Enaex robot exploring risk situations.
The group has devoted substantial financial and human resources to searching for innovative and technological solutions that help add value for our customers, suppliers and our employees, without overlooking the healthy balance that has to exist between technology and human processes. A customer must be satisfied with what we do and who we are, because of our values of always working in healthy and safe environments.
GRyS: According to recent studies, the disruption of business because of an incident appears at the top of risk managers’ list of concerns. At a company like Sigdo Koppers, which is present and actively participates in the key stages of the mining and industry value chain, how is this issue approached? And how important are Business Continuity Plans?
AR: For Sigdo companies, our customers’ business continuity is crucial, beyond financial results. For example, the collapse of the Tolten Bridge in southern Chile put the operational continuity of an important customer at risk. Our contingency plan was immediately activated and our customer was able to continue its activity in normal fashion.
In technology matters, our IT teams are outside Chile. They meet first-rate, world-class quality standards so that we can guarantee our customers the operational continuity of our facilities. After the 2010 earthquake, one of the largest on record, we didn’t experience a single day of stoppage at our companies. We’re quite proud of this.
In matters of prevention maintenance of our facilities, we have very strict plans in place to ensure operational safety. In short, our risk programs include such operational continuity as a high-impact KPI within our risk matrix.
GRyS: Can you tell us something about the importance of a culture of Risk Prevention and Safety and how is it encouraged within the Group?
AR: Prevention and safety is a standard of success central to SK companies. What else can I say? It’s part of our companies’ DNA. There are continuous training programs, from the plants to the main offices, from suppliers to customers. To work in conditions of safety, health and well-being is the cornerstone of our working processes.
“Prevention and safety is a standard of success central to SK companies”
GRyS: Sigdo subscribes to a cost-effective, continuous and sustainable growth strategy, as well as maintaining its commitment to the long-term growth of our companies and associates. From your point of view, how does Risk Management contribute to achieving these goals?
AR: It’s a value chain. There can be no sustained growth unless each of our companies is able to provide adequate management of “manageable risks”. Some of our companies are more than one hundred years old and are local and global leaders in their markets. This is part of an approach that understands there is no growth if you don’t take care of your environment and your partners
GRyS: Can you tell us when the relationship with MAPFRE began? What would you highlight about the partnership between the two companies?
AR: MAPFRE has been a strategic partner for more than two decades. In my opinion, there have been two stages to our relationship: first, where the insurance broker was responsible for explaining our history to the insurance market; and today’s reality, where MAPFRE and SK have closer contact and relationships at the executive and technical personnel levels. This gives us a deeper and more complete knowledge of our businesses, where we receive continuous advice and have been able to implement these recommendations and obtain better standards for our risk profile.
GRyS: Today, Sigdo Koppers’ mining businesses represent 75 percent of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Based on your experience, how will risks in the mining and industrial sectors evolve going forward? On the one hand, what are the major expectations and on the other, what are sector leaders’ concerns when looking to the future?
AR: Mining laws (quality of mined material) have been eroding considerably over time. It’s like the fishing business: it’s becoming harder and harder to find and catch Atlantic horse mackerel. What we’re facing here, is that in the next few years, minerals will be found in deeper places. This means digging more tunnels thousands of feet deep. It also means that slag, which was discarded in the past, is now highly valued.
Alejandro Reyes, Director of Corporate Control at SK SIGDO KOPPERS
“I’m a professional with 33 years of successful experience in financial management, management control, project assessment, tax planning, accounting, ERP implementation (SAP), costs, Human Resources and Risk Management.
I gained this experience working in national and multinational companies with a commercial and manufacturing presence in countries in Latin America, Europe, Asia and the United States.
I’ve been part of the Sigdo Koppers Group for more than 22 years, first, in manufacturing companies and, later, supporting the Group at corporate level. Currently, I’m the Corporate Comptroller Manager.
I’m a commercial engineer by training – I have three master’s degrees in tax, law and management control and have completed several postgraduate studies in different disciplines, among which I would highlight my art studies, particularly photography.
I love to travel. I always have a camera in my hand, and I really enjoy sharing these trips with my family and friends.”
Founded in 1960, Sigdo Koppers is one of the most dynamic and important business groups in Chile. With a proven record in credibility, innovation and competence, it has achieved sustained revenue growth in the businesses it manages, thanks to its ability to identify new opportunities, always within the sphere of its industrial, technological and business expertise.
With operations on five continents, Sigdo Koppers’ activities are organized across three business areas. The Services Area groups businesses devoted to construction and industrial assembly, transportation and logistics; the Industrial Area groups companies that focus on rock fragmentation, with production and marketing of grinding balls and consumables for the mining industry, and companies in the petrochemical sector; and the Commercial and Automotive Area groups companies dealing with representation, distribution and leasing of machinery and automobile sales and distribution.
As at the end of December 2016, Sigdo Koppers had consolidated revenue of US$2.2 billion and net earnings of US$85 million, with consolidated assets of US$3.5 billion.
[.2 billion and net earnings of US million, with consolidated assets of US.5 billion.