KPMG has released the Australian Mining Risk Forecast for FY2020, which provides commentary on the most significant risks identified as potentially impacting Australian miners in the next year and beyond.
Each year, KPMG engages the global mining community to gather fresh insight into issues affecting mining operators around the world. The feedback is incorporated into analysis by KPMG mining and risk experts to compile a risk and opportunity forecast for the coming year.
This year the survey was expanded to include Australia, Canada, Brazil and South Africa. KPMG stated that the survey was undertaken during a time of “growth uncertainty combined with strong growth potential” in the mining industry.
Globally speaking, the survey indicated three areas of focus for the mining industry – macro financial risk, permitting risk, and community relations & social licence to operate. Whilst in Australia the three areas of focus are stakeholder expectations & social licence to operate, controlling operating costs – productivity, and access to key talent.
Stakeholder expectations are driven by general societal expectations. Such expectations mandate organisations to operate ethically and with integrity. How an organization deals with societal expectations can have a profound impact on the organisation’s “social currency” and by default its reputation. The report cites the growing anti-coal sentiment in Australia, which has had a significant impact on regulations, approval, and construction processes of and for new coal mines. In a broader sense, however, an event such as a tailings dam failure or a long wall collapse on the other side of the world can also indirectly impact a particular society’s views of a mining company or the entire mining industry.
With regard to talent in the mining industry, one assumes this refers to the current situation of low enrolments in engineering courses at universities but also the ability of the industry to retain employees. However, given the extensive digital disruption to the mining industry one could be justified in saying that the shortage of talent is directly related to this digital disruption. Dump truck drivers are now retrained to drive their trucks using computer keyboards or drones from the comfort and safety of a control room. Underground miners are using tablets connected to satellites to communicate with their surface counterparts. Blasting can now also be operated from a control room! These innovations and technologies not only require companies to train their people but these technologies require new people to maintain/service the technology.
As to operating costs, KPMG said that “Like much of the global mining sector, macro economic instability along with regulatory and compliance changes/burden and commodity price risks, are presenting challenges in the Australian market. However, this is not a new challenge and the market has adapted to operating in this environment, which is why it no longer ranks as highly as other risks on a residual risk basis.”