Mining Risks 2018 | KPMG | BE
Mining Risks 2018

Mining Risks 2018

Mining Risks 2018

Emergence of fast evolving digital technologies, increased regulatory pressure and global economic uncertainty are key factors in the current risks landscape. KPMG Risk Consulting assists clients to develop robust risk mitigation methods by interpreting the underlying drivers of global risks.

Growth

Challenges with the productivity of invested capital due to ongoing market volatility, falling commodity prices and a rising supply surplus

  • Risks arising due to inflationary cost pressures and foreign exchange rate fluctuations
  • Failure to complete or integrate acquisitions and JV’s into existing operations of to complete or manage divestures
  • Difficult project management conditions and return on investment pressure associated with green field expansion projects in remote locations
  • Exposure to fraud and corruption with operations in various jurisdictions and expansion in politically volatile regions
  • Theft of product and precious metals by syndicates
  • Ineffective asset management strategies and uncertainty in the estimates of proven and probable reserves resulting in business interruptions and inefficiencies
  • Violent and increasingly prolonged strikes in key mining sectors

Strategy

A slow-down in Chinese economic growth combined with a threat of China becoming self-sufficient in key commodities

  • Increased geopolitical risks in Middle East, North Africa and Eastern Europe, disrupting operations and impacting strategies of the global players
  • Challenges associated with capital allocation and management of risk arising from changes in company's strategies of moving from growth and expansion to shareholder value
  • Strong market competition between players and stakeholders due to scarcity of natural resources
  • Increasing compliance from the growth in transparency initiatives as countries improve governance to attract investors and international financial institutions
  • Complicated control over regulatory compliance and ineffective tax compliance strategy, as operations are extended across various jurisdictions
  • Increasing taxes, mining royalties, license fees and other regulations due to resource nationalism activity in many geographies is posing a threat to global players

Health, Safety, Environment

Difficulty in obtaining the social license, to operate amid stringent, and ever-changing, sustainability and environmental laws

  • Increasing cost of rehabilitation responsibility
  • Safety, health and environmental incidents with associated reputational, operational and legal exposure

Technology

Risk associated with significant investment in research and development to develop advanced mining technologies using robotics and artificial intelligence

  • Convergence of IT and Operational Technology platforms, protocols and techniques leading to increasing cyber risk exposure such as disruption of the systems, or cyber-security breaches

Profitability and Liquidity

Production disruptions and damage due to natural disasters, water and power supply disruptions and extreme weather conditions

  • Credit risk, liquidity constraints and refinancing risks

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