Risky business for Australian miners
Mining News Pro - Climate change and natural disasters, as well as commodity price risks top the list of concerns for Australian miners, a new report by KPMG has found.
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KPMG partner and mining risk specialist Caron Sugars said on Tuesday that profound changes had occurred since KPMG conducted its 2020 global mining risk survey in January this year, with the onset of the Covid-19 pandemic, and that the challenges of the global pandemic have driven the mining sector’s immediate planning, decision-making and risk mitigation actions.

“The risks created by the global Covid-19 pandemic have been broad and varied. For Australia, our mining risk forecast shows that most obviously there has been the impact on the physical and mental health of the mining workforce and mining communities.

“There have also been challenges in mining sector supplier and liquidity risk,” Sugars said.

KPMG’s global and Australian mining sector leader Trevor Hart said that commodity prices would remain volatile for the foreseeable future as Covid and geopolitical impacts reverberate through commodity demand and supply.

“Covid-19 has demonstrated the value of operational agility and accurate, real-time information for leaders. This is also about addressing supply chain risk to ensure security of supply. We have seen that ability in the quick response of miners in managing potential choke points and building optionality across the chain.

Sugars noted that mining companies would look to increasingly insulate themselves from potential downside risk of price by focusing on the basics: operational efficiency, productivity and cost containment, in the coming year.

“Price and currency hedging, together with cash flow management practices, will be critical business risk management mechanisms to curb the downside risk of price volatility.

“Covid-19 rightly demanded immediate risk management priority. However, we emphasise that other risks will continue to persist and even amplify in the medium- to long-term,” Sugars said.

In addition to commodity price risk and climate change and natural disaster concerns, Australian miners also named global trade wars, economic downturn and regulatory and compliance charge burdens as areas of concern for the next year.

Community relations and social licence to operate, ability to access and replace reserves, access to capital, environmental risks, and health, safety and security risk rounded out the top ten areas of risk identified by miners in Australia.

Sugars suggested that addressing climate change risk was likely to see demand for some commodities, particularly copper and battery minerals, increase while others, like coal, would see demand decline. However, she noted that all miners needed to prepare for the uncertainty that climate change could present.


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