That would be a 'heat sheild'. It keeps the heat from the exhaust away from the starter.
Yes, it can be a problem. Just like the old Chevys, too much heat and the starter may not operate.
How old is your machine?? The engine looks clean. It should be a warranty issue. If not, weld it up. Or if a bodyshop is nearby they should be able to do it for you. Just make sure to paint it so it does not rust.