With several risks mounting up in the mining industry, environmental risks came atop commodity price risk, which has in recent times, dominated KPMG’s mining survey during its 12-year history.
The consultancy, which ranks risks within the mining industry, said that community relations and social license to operate came third, hence ranking among the top ten list of concerns in KPMG’s annual survey.
KPMG’s global mining leader Trevor Hart said it was telling that ESG risks was one of the top three concerns.
“Commodity markets have lost their place at the top of the risk radar, overtaken by environmental risks and regulations. The environmental, social and governance (ESG) agenda looms large — the third top risk (community relations and social license to operate) is also related to ESG.”
Trevor Hart
Of those executives surveyed, 72% agreed or strongly agreed that ESG would be a cause of major disruption in the industry over the coming three years.
Similarly, 84% agreed or strongly agreed that success in the long run would become increasingly dependent on the following; by defining success in a broader scope than just financial terms, requiring the need to look more holistically at stakeholder returns including governments, communities, and employees.
According to the survey, more than half of respondents did not believe ESG expectations were clearly understood and consistent across the market. Political instability and nationalization was fourth, rising three places from that of the previous year. However, Hart noted the survey was conducted before Russia’s invasion of Ukraine. That is, between January and February 2022 among leaders from 23 markets.
“So perhaps if we were to run it today, there might be some slightly different outcomes,” he told reporters at a briefing in Perth. In addition, “geopolitical tension does continue to escalate in the top 10 and we’ve seen that even before Ukraine.”
Other Concerns in the Mining Industry
KPMG’s Global mining survey placed global trade conflict fifth; followed by the ability to access and replace reserves; permitting risk; while supply chain risk was eighth.
The survey indicated that the impact of the COVID-19 pandemic was receding: “Another dramatic difference this year is that the pandemic has disappeared from the top 10, after leaping in at number two last year.
“Now it seems like the industry regards COVID-19 as something it can incorporate into business as usual as global demand for commodities to power the economic recovery builds. It was previously a relatively benign, simple business issue as opposed to now something that needs to be actively managed.”
Trevor Hart
As part of the new trends in KPMG’s Global Mining Survey, talent crisis emerged as the new entry in 2022, which is not unique to mining.
“This talent crisis is everywhere from the rock face right through to the boardroom,” KPMG Australia national mining leader Nick Harridge said, adding that technical skills to manage climate change and carbon markets expertise were in high demand.
“There is an imperative right now for mining companies to consider the broader set of opportunities and challenges facing their companies including ensuring they have the right skills for ESG disruption and business change,” he said.
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