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1、Top 10 business risks and opportunities for mining and metals in 2024Top 10 business risks and opportunities for mining and metals in 20240223487 20232024Climate changeDigital and innovationCosts and productivityGeopoliticsCyberNew business modelsLicense to operateWorkforceCapitalESGUp fr
2、om 2023Same as 2023Down from 2023New for 20245109Executive summary This years ranking highlights the complex operating environment miners will face in 2024.Risks will be numerous but history proves the resilience and the inventiveness of the sector to turn these into opportunities.We expect to see m
3、ore innovation,collaboration and agility over the next 12 months as mining and metals companies embrace the upside of change.“Paul Mitchell,EY Global Mining&Metals LeaderWe see several key themes playing out:Expectations of investors and stakeholders have been underestimated and continue to increase
4、 According to our survey respondents,scrutiny from all stakeholder groups is increasing,particularly around ESG issues.With these expectations anticipated to continue,miners will need to balance ESG priorities with other business goals,including productivity.A number of miners are now focused on ach
5、ieving net-positive impact,with significant benefits for those that get it right,including improved access to capital,a healthier talent pipeline and stronger LTO.Risks today are highly complex,interlinked and impact each other Executives say that they have a better understanding of sustainability i
6、ssues but they cannot tackle all areas at once.With ESG becoming more complex and interlinked,addressing them requires an approach that thinks beyond meeting regulation and controlling costs.Leaders need assurance that investments will add genuine value rather than cause problems elsewhere or in the
7、 future.In-depth scenario planning can help guide prioritization,identify potential trade-offs and help miners create real,long-term value.The pace of change has accelerated Capital has moved up in the ranking as the sector competes for investment and incentives to accelerate exploration and develop
8、ment of minerals and metals vital to the energy transition.Were seeing a shift from a short-term focus on returns to a long-term view of value,encouraged by recognition that longer-term investment horizons are required to meet 2050 net-zero goals.Inflationary pressure has fast-tracked technology dev
9、elopment,as miners focus on digital tools that can accelerate productivity.The pace of digital transformation is highlighting the importance of cybersecurity,which is new to the ranking this year.And supply constraints are a catalyst for consideration of circular economy principles,with miners more
10、conscious of minimizing waste across the full value chain and lifecycle of metals.Building trust and articulating value can evolve the sectors brandWhen trust is an issue,transparency is key.Miners need to get better at articulating the financial and nonfinancial value they bring to communities and
11、investors,beyond merely meeting regulatory expectations.Creating and communicating a bigger bolder vision of legacy beyond life of mine can demonstrate a companys societal commitment.At first glance,the 2024 ranking of the top business risks and opportunities in mining and metals doesnt differ too m
12、uch from the last couple of years.Responses to these risks are now clearly embedded into the strategies of the best operators particularly environmental,social and governance(ESG)and license to operate(LTO)and will remain priorities for a number of years to come.Top 10 business risks and opportuniti
13、es for mining and metals in 202403It is clear that our industry has a unique role to play in supporting a nature-positive agenda.Hayley Zipp,Director of Environment,ICMM1“Environmental,social and governance(ESG)1Top 10 business risks and opportunities for mining and metals in 202404432234
14、87 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109For the third year in a row,ESG is the biggest risk for miners,as well as their biggest opportunity to drive differentiation and improvements that will creat
15、e long-term value for all stakeholders.Which are the ESG factors facing the most scrutiny from investors in 2024?*Respondents could choose more than one optionSource:EY mining&metals Business risks and opportunities survey data 2024.Water stewardship51%Attaining net-zero emissions46%Diversity,equity
16、 and inclusion31%Climatic events27%Ethical supply chains26%Health,safety and wellbeing26%Human rights25%Green production25%Biodiversity24%Circular economy23%Mine closure22%Indigenous trust and reconciliation20%Fraud and corruption16%Social inequity15%Anti-money laundering9%Local community impact64%T
17、ailings and waste management55%Miners are seeking innovative solutions to tailings and waste managementThe past 10 years have seen more tailings dams built than in any previous decade.Today,safe storage of tailings is a key focus for stakeholders who are demanding miners do more to eliminate the fai
18、lures that can devastate local communities and the environment,and cost billions to fix.With over 200 billion tonnes of existing tailings under management and an additional 40 billion to 50 billion tonnes expected in the next five years,this is a critical risk to manage.Fifty-five percent of survey
19、respondents expected“Everyone is seeking alternatives to tailings dams,aiming for greater safety and control.Senior mining executive tailings to receive investor attention,compared with less than 5%last year.In August 2023,International Council on Mining and Metals(ICMM)members released tailings dis
20、closures to demonstrate ongoing commitment and provide transparency on the Global Industry Standard on Tailings Management(GITSM).2But miners need more innovative solutions to monitor and manage tailings,and also to extract value from waste.The Mining Microbiome Analytics Platform project3 is an exa
21、mple of progress.This collaboration between UBC,Teck Resources,Rio Tinto and other partners identifies microbes that bind to minerals,to enable nonchemical-based extraction and remediation strategies.For example,microbes can bind to selenium to prevent toxic levels in mining waste from leaching into
22、 water.Remediating slag containing residual copper could be made profitable by introducing microbes that bind with the copper and enable extraction.Top 10 business risks and opportunities for mining and metals in 202405“We face a challenge as legislation comes in to reduce water usage to see whether
23、 mines can remain sustainable.This is a large transitional risk.Senior mining executive Investors and governments scrutinize water stewardshipOver half of our survey respondents said water stewardship was one of the top risks with significant increased scrutiny from investors.Its an issue top of min
24、d for Top 10 business risks and opportunities for mining and metals in 202406Diversity,equity and inclusion(DE&I)many governments too.The Chilean National Mining Policy 2050 mandates that continental water makes up no more than 10%of total water used in all copper production.Other drought-affected r
25、egions are likely to adopt similar restrictions.Its critical that hydrology is managed end-to-end given water impacts soil composition and,therefore,the ability to regenerate land.Many mining companies have set targets around their commitment to drive good water stewardship and improve disclosure to
26、 stakeholders.Rio Tinto was the first mining company to publish water usage through an interactive map on its website.4“We are slow to the dance of automation but,from a talent perspective,this needs to be dealt with carefully,as it could wipe out inclusion.Senior mining executive All companies we s
27、poke to have DE&I targets and improvement initiatives but few are making a meaningful difference.The participation of women remains low,though some progress has been made at the C-suite level,where female participation now sits at about 12%.5 A lack of diversity may hinder miners ability to drive in
28、novation and improve financial performance,both of which are positively impacted by having more women on boards.6 Industry associations are pushing for faster progress through tougher protocols,including Canadas Towards Sustainable Mining:Equitable,Diverse,and Inclusive Workplaces Protocol.7 Some of
29、 our respondents raised concerns about the use of demographic quotas to increase gender diversity,worried they could limit the capabilities and volume of candidate pools at a time when attracting talent is difficult enough.Others suggested that building KPIs around employment of local people into ag
30、reements and removing symbols of exclusion could help boost diversity.How miners can accelerate gender diversity talks about this in more detail.8 Some miners raised concerns about the potential negative impact of automation on DE&I,if not considered carefully.If automation reduces the need for admi
31、nistrators,truck drivers and operators more broadly,this could seriously diminish gender and Indigenous inclusion.“We are always adapting psychological wellbeing is now part of our safety share.Senior mining executive Health and wellbeing initiatives must expand in scopeMaintaining mental health and
32、 wellbeing is an increasing challenge in mining,particularly for fly-in fly-out(FIFO)workers,with more companies noting its impact on absenteeism,especially among First Nations communities.Some miners are responding by including psychological wellbeing in safety shares,offering more mental health su
33、pport within employee assistance programs,reviewing rosters and investing in downtime activities that aim to reduce mental health struggles.Miners also acknowledge a need to broaden the concept of wellbeing to consider other significant issues,including domestic violence.Suicide rates in mining also
34、 continue to increase,and are the highest across all sectors 54 per 10,000 workers.9 Bullying and harassment claims are on the rise in mining workplaces,and the cost(in many forms)to employers is increasingly not tolerated.However,some miners are still approaching the issue from a legal perspective,
35、rather than a cultural one.This is a missed opportunity.Companies that create a safe,inclusive workplace will gain a competitive advantage in recruiting and retaining staff.Miners need to assess the impact of their systems,processes and work environment on workers psychological health and safety.It
36、is important to integrate the management of psychological health and safety into all aspects of the employee experience.Increasing scrutiny on human rightsTwenty-five percent of our survey respondents said that human rights is attracting investor scrutiny,up from only 4%last year.Miners are now more
37、 accountable for their actions,including ensuring safe working conditions and protecting“Corporations have a responsibility to respect human rights they must not only ensure compliance with national laws but also manage risks of human rights harms with a view to avoiding them.John Ruggie,former UN S
38、pecial Representative on Business and Human Rights,Harvard University10the rights of workers and Indigenous peoples.This means it is more important than ever for the mining sector to incorporate human rights into their business practices to manage risk and create opportunities.However,progress in th
39、is area has been slow.The Responsible Mining Index(RMI)2022 report shows that overall performance around human rights in the sector has an average score of only 22%.11 The report highlighted an inconsistent approach across human rights issues and the lack of attention given to the topic by the major
40、ity of miners assessed.Failure to address human rights issues can lead to public opposition and legal consequences.Some mining companies are taking steps to integrate human rights into their operations by developing policies,addressing human rights in their annual reports,providing training and cons
41、idering human rights in assessments.However,challenges remain in embedding human rights principles into day-to-day activities.Top 10 business risks and opportunities for mining and metals in 202407A quarter of respondents said the issue of biodiversity is attracting investor scrutiny,with this atten
42、tion driving good progress toward positive biodiversity.Generative ecosystems are acknowledged as the ultimate goal,with miners taking a range of actions,including partnering with researchers,making greater use of data,and actively conserving and protecting ecosystems.For example,in Ghana,Gold Field
43、s Progress toward net-positive biodiversity is encouraginghas rehabilitated the ecosystem around its Damang Mine Tailings Storage Facility,developing an agroforestry system and self-sustaining wetland fishing area.But few companies are setting real targets in this area.12 As of November 2022,only 8.
44、7%of miners had targets in place to achieve a positive impact and just 7.8%had a target to prevent net loss.13 Top 10 business risks and opportunities for mining and metals in 202408Percentage of companies making nature-related commitments by industryGas utilities10.3413.79Mining and metals8.77.83Mu
45、lti and water utilities7.417.41Oil and gas upstream and integrated4.414.41Steel1.564.69Electric utilities3.1315.63Net positive impactNo net lossSource:S&P global biodiversity is still a blind spot for most companies around the world.Mine closure is extremely complex,impacting a wide range of stakeho
46、lders with different,and increasingly high,expectations.A poor closure creates a negative legacy that is extremely difficult and costly to remediate.Many miners are Mine closure is an opportunity to create a legacy of value“Closure must create future value for our host communities;we mustnt leave gh
47、ost towns.Senior mining executivestrengthening their focus on the issue,aiming to repurpose sites,establish secondary businesses and create long-term value for communities.Partnerships and ecosystems can help miners ensure land reaps benefits long after mines have closed.For example,EY is currently
48、developing a Leadership in Sustainable Mine Closure Program with Curtin University,Rio Tinto and the Bradshaw Research Institute for Minerals and Mining at the University of British Columbia.It demonstrates what good mine closure looks like and how to achieve it,and gives participants the skills and
49、 knowledge needed to inform closure-related decision-making across the entire mine value chain.Top 10 business risks and opportunities for mining and metals in 202409For most companies,one of the biggest challenges remains how to measure and monitor progress.Many ESG issues are now covered by regula
50、tion and frameworks but,while these can help drive action,they also create what respondents call an“alphabet soup”of regulations.As one miner said,“It is a challenge to keep ahead of myriad changes in the regulatory environment and the magnitude of issues that need to be managed,with an expectation
51、to address these in the short term.”Determining a baseline by which to measure positive achievements is a particular issue.This is critical to establish credibility,ensure integrity of these measurements and What gets measured gets done the ESG data dilemma“Environmental and social issues are the mo
52、st challenging to measure,monitor and report,as there are no defined or widely agreed upon frameworks for measuring the impact,and the societal expectation for the desired or acceptable impact.Senior mining executiveintegrate these considerations through the mine lifecycle.Ultimately,something like
53、natural capital accounting will be needed to support companies in comprehensive assessments against global ESG sustainability standards.The Natural Capital Accounting for the Mining Sector:Beenup Site Pilot Case Study,based on a case study at BHPs closed and rehabilitated Beenup mineral sands mine s
54、ite in southern Western Australia,is the first attempt at trialing natural capital accounting within the mining industry.14 The corporate governance oversight of any net-positive program is critically important and requires board-level oversight of“how”the net-positive story is told to ensure it doe
55、snt have unintended consequences.As the sector moves to mandatory reporting,companies are focusing on how to disclose and report in conjunction with financials.Many mid-tier miners told us resource constraints mean they will have to simplify processes.One of the biggest issues for miners around ESG
56、remains data integrity.As one respondent told us,“There are significant challenges in getting the platforms,people and processes we need to harness the data required to track and measure ESG goals.”Avoiding disclosure missteps requires a clear view of the high-quality data needed to inform decisions
57、,with strong governance and controls in place to ensure appropriate sign-offs and processes.Next steps:Identify where you can achieve a net-positive impact from exploration to reclamation taking care to ensure there is a defensible baseline.Determine your strategies to use technology and data to imp
58、rove ESG monitoring and measurement across the value chain particularly areas subject to greater investor scrutiny,including water stewardship and tailings management.Consider how changes in the construction and operation of mines can help improve safety and wellbeing for workers and communities.Str
59、engthen your focus on closure to create long-term value for communities.Assess the human rights impacts of your organization,consult broadly and integrate considerations into environmental,social and health impact assessments.Top 10 business risks and opportunities for mining and metals in 202410Gro
60、wth capital to support the energy transition and business transformation is back on the agenda.Senior mining executive“Capital243223487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Top 10 busine
61、ss risks and opportunities for mining and metals in 202411As the energy transition accelerates,future shortfalls in several key commodities(including copper,lithium and nickel)are becoming apparent.Investment in mining and metals is increasing to meet the need for more exploration and development,bu
62、t the sector will need access to significantly more capital if we have any chance of meeting these shortfalls.This issue is attracting more attention,with capital markets recognizing the key role critical minerals will play in the energy transition.But capital raised through debt and equity in the f
63、irst seven months of 2023 has remained steady(US$196b compared with US$192b in the same period of 2022),with this trend expected to continue into 2024.Source:EY analysis of refinitiv data.Iron and steel,gold,and coal companies have attracted the most capital since 2022,but investment is increasing i
64、n nickel and lithium.In 2023,large nickel miners have raised US$2.76b through IPOs and follow-on equity issues.Junior lithium miners raised US$560m through follow-on equity issues,mostly in Australia and Canada.Capital raising by sector/commodity,JanJul 20231,157%Nickel182%Diversified mining163%Lith
65、ium55%Gold36%Uranium-2%Iron and steel-6%Molybdenum-17%Coal-23%Aluminium-28%Copper-49%Specialty mining and metals-83%Cobalt-94%Non-gold precious metals and mineralsy-o-y%change/Source:EY analysis of S&P global capital IQ pro data.As more lithium and nickel junior miners progress early stage projects
66、through to the final investment decision,consolidation should increase.The recently announced Initial capital cost announcements for greenfield projects over US$1b for top five commoditiesJanuary 2020August 2023(US$b)16.457.216.2143.544.11Copper NickelLithium GoldPlatinumUS$10.6b merger of Livent an
67、d Allkem created the worlds largest integrated lithium producer.Lithium projects by country/region and development stageNo.of projects/minesAustraliaNorth AmericaSouth AmericaChinaEU27+UKAfricaEarly stage5985491811Prefeasibility/feasibility36191 7610Expansion24 2Operating64381Construction252 2 211So
68、urce:EY analysis of S&P Capital IQ pro data.Top 10 business risks and opportunities for mining and metals in 202412The surge in early-stage development projects is expected to drive an unprecedented increase in the development of new operations.Analysis of S&P Global capital cost announcements of ov
69、er US$1b from 2020 to 2023 reveals the prospect of significant capital investment in greenfield Significant capital being invested in developing new projectscopper,gold,lithium and nickel project development over the next decade.Three-quarters of these projects are at the pre-feasibility or feasibil
70、ity stage,with final investment decisions yet to be made.Top 10 business risks and opportunities for mining and metals in 202413The copper market outlook forecasts continued deficits from the late 2020s.This will push companies to consider several strategies:Acquiring copper assets:Some companies wi
71、ll consider stakes in high-margin,long-life copper mines.For example,Miners take action to meet future copper demand“You can no longer develop brownfields if there is no green power supply.Senior mining executive“Strategy for capital for traditional builds will be very different and will include joi
72、nt ventures for offtake,etc.Senior mining executive Cross-sector investment aims to secure supplyso far in 2023,weve seen BHPs acquisition of OZ Minerals and Glencores acquisition of the remaining 56%of Argentinas MARA copper project.Expanding brownfield copper projects:Expanding supply through brow
73、nfield expansion is far quicker and less costly or risky than greenfield projects.But companies should be mindful of the need for older projects to meet newer ESG requirements,which may include electrification,green energy and low water usage,to win financing.Spin-off of energy transition metals:Som
74、e companies are spinning off energy transition metals into a separate entity to attract a broader investor base.For example,Vale is considering spinning off its base metals business.investing in mining companies:General Motors invested US$650m of equity into Lithium Americas,and Tesla is constructin
75、g a lithium refinery in Texas and has offtake agreements with mining companies and Chinese lithium hydroxide producers.15 The impact of the US Inflation Reduction Act(IRA)is expected to attract more such deals,with an anticipated US$63b+investment into US battery factories to produce almost 1TWh of
76、cells by 2030(about 15%of expected global capacity).16 A broad range of commodities,including battery minerals,have attracted some interest from private equity,as well as pension funds seeking ESG-friendly investments.With looming deficits of critical minerals,companies across sectors are integratin
77、g value chains in a bid to shore up supply.Automotive and battery manufacturers are“Ring-fenced green finance could be useful.Senior mining executive ESG bonds are supporting net-positive ambitionsIn the first seven months of 2023,mining and metals companies issued US$1b of green bonds,down from nea
78、rly US$4b in the same period of the prior year.Some large miners,including Anglo American and Hydro,are issuing sustainability-linked bonds to demonstrate tangible targets.17 Other companies are refinancing credit facilities to strengthen ESG ambitions.Gold Fields,for example,has refinanced its US$1
79、.2b 2019 revolving credit facility,linking it to further gender diversity,water stewardship and decarbonization targets.18 This linkage of ESG bonds to specific projects(e.g.,renewable energy,biodiversity and investing in local communities),rather than large overall targets,is a trend we expect to c
80、ontinue.Top 10 business risks and opportunities for mining and metals in 202414The focus on minerals and metals for the energy transition has seen an increase in exploration,particularly in nickel and lithium.The US,Canada and Australia continue to be preferred destinations for exploration,as compan
81、ies seek Exploration budgets rise,particularly in the US,Canada and Australianew deposits in countries considered low risk.These three countries attracted more than half of all exploration capital invested in 2022.Exploration budgets by destination 2018 vs.2022(US$m)20182022Canada1,4422,684Australia
82、1,3292,317US8521,596Chile576713Mexico609633Peru610533Argentina385Brazil286340Source:EY analysis of S&P global market intelligence data.Top 10 business risks and opportunities for mining and metals in 202415Mining companies are keeping a firm focus on existing industrial markets.The biggest deals of
83、the sector remain in copper,gold and steel.The deal value of completed copper deals in the first half of 2023 increased to US$11.1b as BHP acquired OZ Minerals.Consolidation in the gold sector continues,with Pan American Silver acquiring Yamana Gold for US$4.6b,and half of all annual exploration bud
84、gets are allocated to finding new gold deposits.In May,Newmont made a revised offer for Newcrest of US$21b,including debt.The deal is expected to complete in the fourth quarter of 2023,pending shareholder and regulatory approval.19 And Cleveland-Cliffs has expressed interest in acquiring U.S.Steel.2
85、0 The challenge of balancing returns with responsibilities“New mines need to be carbon-neutral from the outset.Senior mining executiveBut companies must balance growth and economic returns with the need to invest in decarbonization,sustainability and broader ESG issues.Linking ESG to financial value
86、 and reporting it as a value driver could significantly drive progress.One executive told us:“For it to make sense,it has to be linked to financial value,but this isnt easy its a work in progress for us.”Making the financial business case for ESG investment remains a struggle.Major miners are also r
87、eassessing business models to better address capital risks and opportunities.Across the sector,companies continued capital discipline is reaping rewards for both shareholders and broader stakeholders.Average shareholder returns by the top 30 miners have increased by CAGR of 22%from 2019 to 2022.Howe
88、ver,as miners adapt models and make more difficult investment decisions,they will need to make sure they bring investors along on the journey.With interest rates unlikely to decline soon,companies may need to work harder to balance sustainable alternatives with economic returns.Next steps:Conduct sc
89、enario planning to build agility and ensure readiness for possible alternative futures.Design the optimal portfolio to cater to future demand.Building a portfolio fit for the future requires miners to consider a mix of strategies:Building out reserves and replacing production Investing in minerals a
90、nd metals with strong demand prospects Considering the impact of supply chain regionalization Review your portfolio through a broader lens of changing talent and societal expectations.Prepare to divest or reshape for a different environment.Determine appropriate investment opportunities in decarboni
91、zation,tools,technology and innovation.Ensure balance sheet agility when considering optimum levels of gearing and dividend policy.Review funding and capital models,including funding sources,the role of government and internal allocation,and how to make best use of tax breaks and incentives.Conduct
92、a full stakeholder risk analysis to drive more informed investment decisions that incorporate financial,technical and ESG considerations.Top 10 business risks and opportunities for mining and metals in 202416The reality is that industry has failed to earn the broad-based trust of society.Changing th
93、at is,first and foremost,the industrys responsibility,but it is in everyones interest to see that happen,for never before has the world needed so much from an industry that is trusted so little.Rohitesh Dhawan,President and CEO,ICMM21“License to operate(LTO)343223487 20232024 Climatechang
94、e DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Top 10 business risks and opportunities for mining and metals in 202417Expectations of companies are growing,with people demanding they do more for the communities in which they ope
95、rate.According to the 2023 Edelman Trust Barometer,50%of people think businesses arent doing enough around societal issues,such as climate change,economic inequity or energy shortages.22Mining and metals companies face higher expectations than many other sectors.Miners typically operate on land that
96、 is licensed,not owned,and navigate a range of formal and informal conditions around how minerals are extracted.Building trust is critical to managing expectations and to attaining and retaining LTO.In the past,we have focused LTO on Indigenous trust and reconciliation,but we believe its scope has e
97、xpanded to encompass trust at a societal level.The mining and metals sector ranked lowest in the 2021 GlobeScan report of attitudes toward all major sectors in 31 countries.23 Some UK universities have banned mining companies from recruiting on campus,and the number of geology and mining engineering
98、 graduates continues to slide.24Sector brand needs to evolve building trust and articulating value is key“Investors tend to be quite boxed in,so just ask about human rights and very basic DE&I terms.There is no discussion about what social sustainability really means.Senior mining executiveMuch of t
99、he issue stems from poor historical performance,including the sectors impact on land,air,water and biodiversity,as well as a perceived inability to prepare communities to thrive after operations close.Awareness of minings vital role in the energy transition remains limited,despite many miners workin
100、g closely with countries to develop critical minerals strategies.ICMM CEO Rohitesh Dhawan describes the two“deficits”undermining the sector a deficit of understanding and of trust:“Many in society do not understand what we do and why it matters,and this,combined with the legacy of accidents and disa
101、sters means that society does not trust our industry.”Companies also still face challenges achieving net-positive social impact,particularly in developing markets where expectations around the extent of a mines social impact can be high.Managing these expectations requires careful program planning a
102、nd ongoing stakeholder engagement.“We need to work really closely with local communities for mutual success.Senior mining executive Building trust through greater community engagementcritical minerals projects currently under development are on or near Indigenous lands.25 Building trust with these c
103、ommunities is critical if the projects are to obtain approval,let alone meet required timescales many executives we interviewed spoke of ongoing delays in obtaining project approvals.Trust could be enhanced by doing more to meet increased expectations around greater stakeholder collaboration for mut
104、ual benefit.This requires transparency,listening to concerns and desires,and involving stakeholders in finding solutions.According to a report by the University of Queenslands Sustainable Minerals Institute,more than half of the 5,000+Creating a legacy with long-term value“What other opportunities c
105、an we create for the community that reduce dependency on mining but still allow the community to thrive?Senior mining executiveIn Australia,for example,South32 is working with the Illawarra Local Aboriginal Land Council and University of Wollongong to co-design an environmental management approach b
106、ased on Aboriginal knowledge systems.26 As the concept of“nature-positive mining”gains ground,Indigenous knowledge has a core role to play.As Hayley Zipp,Director of Environment at ICMM,27 explains,“Indigenous peoples often have profound connections to land and water,which can also be tied to their
107、physical,spiritual,cultural and economic wellbeing.Their valuable traditional knowledge and experience in managing the environment in a sustainable manner makes them critical partners in the design and implementation of solutions for halting the loss of nature,and supporting the protection and regen
108、eration of ecosystems.”Top 10 business risks and opportunities for mining and metals in 202418communities to thrive and improve energy security.As well as responsible mine closure(discussed in the“ESG”section),progressive miners focus on community health and challenge themselves to do more to create
109、 a positive long-term impact on communities.Addressing issues such as noise,dust,vibration and air quality should be minimum requirements,with miners also considering the long-term health impacts on communities and ensuring services are available to support people with health issues.In some regions,
110、consultation with local governments can help manage stakeholder expectations.Regulators and standard setters,including ICMM,OECD and The Copper Mark,have strengthened expectations around community engagement and development.Miners need to think about the legacy they want to leave behind to create jo
111、bs,care for the environment,enable Top 10 business risks and opportunities for mining and metals in 202419“Its about value,not just costs.And this perspective is gaining space.Senior mining executive Take a long-term view of sustainability across different dimensionsExecutives say their understandin
112、g of sustainability-related matters has increased significantly over the years but now they realize they cannot tackle all matters at once.The big question is what to prioritize to create real and lasting impact,a challenge made harder by the difficulty of monitoring and measuring social impact.Acti
113、vely engaging with communities to first understand,and then deliver,the value they need can also help prioritize actions.Anecdotally,there is a correlation between the level of maturity and depth of engagement with communities and benefits realized.Miners with open,close communication with community
114、 leaders appear to have more highly engaged employees and fewer strikes,perhaps because communities see the value of miners contribution to local education,infrastructure and health care.When trust is an issue,transparency is key.And in mining,expectations around transparency come not only from the
115、community,but from the other stakeholders as well,especially investors and regulators.Never before have mining senior executives been so scrutinized and held accountable for incorporating all different aspects of the ESG agenda into their own.To date,miners demonstrated their responsibility through
116、a vision statement and adherence to voluntary disclosure standards.Now,new standards,such as IFRS S1 and S2,impose an unprecedented level of responsibility on the executive agenda.28 And the European Sustainability Reporting Standards impact global mining companies if they meet certain criteria,and
117、these standards are based on double materiality(both impact and financial).As leaders consider the implications of new responsibilities and expectations,they should consider that a survey by GlobeScan found that“sustainable business models and evidence of impact and action are the strongest drivers
118、of recognized corporate leadership.”29 Responsible,trustworthy governance is more important than ever if miners are to retain their LTO and succeed in the long term.Next steps:Align around a wider,stakeholder-driven agenda.Moving away from a narrow focus on shareholders allows miners to consider how
119、 to create longer-term value for communities,including First Nations people,and the workforce.Focus on articulating your purpose and use this to build the brand.Strengthening brands through effectively measuring,articulating and reporting on the value delivered to stakeholders can help miners secure
120、 LTO and,ultimately,gain competitive advantage.Consider the legacy you want to leave that will provide the greatest value to stakeholders.Develop a stakeholder engagement plan that articulates the value proposition for each stakeholder group,designs appropriate engagement programs and ensures long-t
121、erm value is delivered in line with expectations.Top 10 business risks and opportunities for mining and metals in 202420Climate change has caused widespread adverse impacts and related losses and damages to nature and people that are unequally distributed across systems,regions and sectors.IPCC clim
122、ate change 2023 synthesis report30“Climate change443223487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Climate change and climatic events are the top global risks the world will face over the n
123、ext decade,according to the World Economic Forums Global Risks Report 2023.31 Climate change is incredibly complex,with broad impacts.Miners are expected to provide minerals for the energy transition,while also reducing greenhouse gas(GHG)emissions.Scientists agree that if global warming exceeds 1.5
124、 Celsius,this will trigger several tipping points for our climate systems that may lead to abrupt and irreversible impacts on ecosystems and societies.Without significant policy change and investment,climate change impacts could threaten availability of water and food in climate-vulnerable communiti
125、es,many of which are key mining regions.Climatic events continue to be a priority for mining companies as they increase in number and have a greater impact on day-to-day operations.Recent bushfires in Canada forced many miners to suspend operations and evacuate staff.32 Climatic events on the rise“T
126、hese events are getting closer and more frequent.Its about how we prepare for these events.Senior mining executiveOne affected miner told us they are considering better preparations for future events:“We are asking:Do we allocate two-day stoppages per annum to cater for climate change?It might not b
127、e a bad idea going forward.”The impact of climatic events on productivity and health and safety means miners must begin to plan and prepare now.The World Gold Council has identified a range of adaptation strategies in its Gold and climate change:Adaptation and resilience report,33 with its Climate C
128、hange Lead John Mulligan explaining:“Without consistent,systematic and widespread planning,the increased complexity,frequency and severity of climate impacts will have a negative impact on the supply chain.”Global risks ranked by severity over the short and long term“Please estimate the likely impac
129、t(severity)of the following risks over a two-year and 10-year period”Two years10 years Cost-of-living crisis Failure to mitigate climate change Erosion of social cohesion and societal polarization Large-scale involuntary migration Geoeconomic confrontation Natural disasters and extreme weather event
130、sNatural disasters and extreme weather eventsFailure of climate-change adaptation Failure to mitigate climate change Biodiversity loss and ecosystem collapse1155332244Risk categories Geopolitical Environmental Societal Top 10 business risks and opportunities for mining and metals in 202421Source:Wor
131、ld Economic Forum.CFOs are under pressure as they allocate funds to decarbonization projects that are costly,with long time frames and returns that are hard to quantify.As one mining executive said,“Weve realized how expensive it is with a number of trade-offs we can go the easy route and make suppl
132、y chain changes,or we can redesign our operating model.”Many mining companies admit they are struggling to meet interim net-zero targets(Scope 1 and 2)and are revisiting strategies,though none told us they were extending targets.Government support in many regions is driving growth in renewable energ
133、y contracts and investment in solar or wind generation.For example,in 2022,Anglo American sourced 52%of its electricity from renewable sources,reducing Scope 1 and 2 emissions by 7%and 11%year-on-year to 8.3MtCO2e and 5.0MtCO2e,respectively.35 The falling cost of renewables has seen an uptick in inv
134、estment;however,finding the amount of land needed and negotiating land deals with traditional owners will take time.Many miners are sourcing green electricity to decarbonize Scope 2 but find it hard to get green energy at scale.Vehicle electrification remains expensive,and miners have been consideri
135、ng other diesel transition options,including battery technologies,hydrogen and biofuels.For example,Different options explored on the journey to net zero“Were committed to climate change,but you need to be realistic about what it takes.I continue to stick to the targets set but,in hindsight,I probab
136、ly regret that I set a target for 2025 and 2030.Jakob Stausholm,Chief Executive Officer,Rio Tinto34Fortescue Metals Group announced it would invest US$6.2b in capital by 2030 to eliminate fossil fuel risk and reduce operating costs.36 The investment includes renewable energy generation and battery s
137、torage,as well as a green mining fleet and locomotives.Carbon capture and storage is difficult and represents a significant proportion of GHG emissions.For underground mines,particularly coal mines,fugitive methane is an additional issue to deal with that will require innovation.While ICMM members h
138、ave collectively pledged to achieve net zero across Scope 1 and 2,few have set net-zero targets for their Scope 3 emissions.ICMM is currently collaborating with the Science Based Targets initiative(SBTi)to develop a Scope 3 emissions accounting framework for the sector,to enable its members to set d
139、etailed,transparent targets.Companies also continue to explore their options to improve performance on Scope 3 through sustainable supply chains,circular economy incentives and partnership opportunities.The path to Scope 1 and 2 abatement Scope 1 and 2 emissions Renewable energy Dieseltransition Eff
140、icient equipment Carbon capture and storageMethane capture and storage Offsets/credits Top 10 business risks and opportunities for mining and metals in 202422Many diversified miners have either divested their coal assets or set a date for phased closure(e.g.,BHPs Mt Arthur coal mine).Those that have
141、nt are beginning to face investor backlash.Thirty percent of Glencores shareholders,37 challenged the companys climate strategy due to its coal assets.38 In January,Teck Resources announced a spin-off of its steelmaking coal business to create two independent companies,Teck Metals and Elk Valley Res
142、ources.39 In June,Glencore offered to buy the metallurgical coal business of Teck Resources.40Coal asset divestment continuesThe war in Russia-Ukraine slowed progress on phasing out fossil fuels.That said,Standard Chartered has recently pledged to stop providing financial services to mining and powe
143、r generation companies deriving 100%of their revenue from thermal coal,and HSBC has declared exclusion of coal assets by 2030 in the EU and OECD,and globally by 2040.Top 10 business risks and opportunities for mining and metals in 202423Concerns about potential greenwashing and emissions underreport
144、ing have led to mandatory proposed emissions disclosures in many countries.In March 2022,the US Securities and Exchange Commission(SEC)announced plans to standardize climate-related ESG disclosures for investors.The SEC proposal mandates publicly listed companies to disclose Scope 1,Scope 2 and Scop
145、e 3 emissions.Final rules will likely be adopted in some form under the current administration.41In February 2023,the International Sustainability Standards Board(ISSB)also agreed to rules requiring companies to Miners grapple with increasing demands for disclosurereport emissions from direct operat
146、ions,energy purchases and value chains(Scope 3 emissions).While the mining sector rates well for the high quantity of TCFD recommendations addressed,according to the EY Global Climate Risk Barometer 2022,42 the quality of disclosure reporting rates poorly.Still,we see year-on-year increases in discl
147、osure coverage and improved quality,probably because climate risks and opportunities are increasingly integrated into organizational strategy,rather than treated as a separate initiative.Miners coverage of emissions reporting is improving,but quality is still lacking38%42%68%85%QualityCoverage202120
148、2220212022Source:EY global climate risk barometer 2022.Many miners are focused on R&D to solve their decarbonization challenges.The bad news is that sometimes the right technology doesnt yet exist.The good news is that this is driving miners to form ecosystems and partnerships,including with startup
149、s,to develop innovation.Partnering for innovation“All nations must progressively pursue an economy-wide transition to net-zero emissions Actively positioning policies that encourage industry to produce the critical minerals needed for renewable energy,batteries,and electric vehicles and appliances.M
150、ike Henry,Chief Executive Officer,BHP44Next steps:Building a flexible transition strategy with practical pathways requires miners to consider a range of actions:Scenario plan different pathways to net zero to create a flexible,agile decarbonization strategy.Determine which tools,technology and innov
151、ation to invest in,and whom to collaborate with to get there.Determine how high-value offsets and other financial instruments can be used to help achieve net zero while avoiding accusations of greenwashing.Consider projected future climatic events when designing,planning and provisioning mines.Top 1
152、0 business risks and opportunities for mining and metals in 202424Anglo Americans Pathways to Steel Decarbonization45 challenges startups and small and medium-sized enterprises(SMEs)to create technologies that reduce carbon emissions in steel manufacturing.The company is partnering with the European
153、 Institute of Innovation&Technology,an EU institution that seeks to create platforms where advanced research and business can collaborate to support innovation.ICMMs Innovation for Cleaner,Safer Vehicles initiative46 sees it working alongside OEMs to promote operational and technological innovation
154、that will enable mining operations to adopt GHG-free surface mining vehicles by 2040.Pilots will roll out over the next few years.47Nickel Creek Platinum,along with CarbMinLab,University of British Columbia,has demonstrated substantial carbon absorption from the Wellgreen tailings.48 President and C
155、EO Stuart Harshaw said,“Having a low-carbon nickel product will be beneficial to the downstream processers of our nickel,especially the EV market,where reducing the carbon footprint is a critical part of the green economy.”“There is a clear need to consider carbon offsets in conjunction with other E
156、SG factors.If we are buying land,it needs to tick other boxes as well.Senior mining executive Offsetting the cost of carbonTo avoid accusations of greenwashing,miners should ensure they source high-quality carbon credits and provide transparency around activities to actively reduce direct emissions.
157、Land-based carbon credits via nature are being considered as a priority,as they also can provide a positive biodiversity benefit.For example,Rio Tinto is exploring the role that nature-based solutions and offsets can play in the decarbonization journey.The scale of the first round of projects is sig
158、nificant,with the potential to generate up to one million tonnes of offsets per year by 2030.43Top 10 business risks and opportunities for mining and metals in 202425Transformation is happening around us,and we are trying to catch up with it.Senior mining executive“Digital and innovationTop 10 busin
159、ess risks and opportunities for mining and metals in 202426543223487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Economic pressures are forcing mining companies to elevate the way they innovate
160、 with data and technology.Leaders anticipate a surge in investment in data and technology for the year ahead,driven by demand across the business for digital solutions to reduce costs and improve productivity and ESG outcomes.The complexity of digital investments requires miners to proceed with caut
161、ion.What are your digital priorities over the next one-two years?*Process intelligence(data mining)and automation(RPA)56%44%Business and operations intelligence41%ESG platform to track metrics and reporting36%Decision intelligence(AI,machine learning,AI for ESG)27%Remote/integrated operating centers
162、27%Digital asset management17%Process mining for ESG16%Digital twinsCloud adoption12%Digital trust(blockchain)12%New product and platform development(customer portals,agile factories)11%Greenhouse gas inventory tool11%16%HSE digital platform2024*Respondents could choose more than one option.Source:E
163、Y mining and metals business risks and opportunities survey data 2024.Top 10 business risks and opportunities for mining and metals in 202427“AI has the potential to transform the industry at a multitude of levels.However,there is a large hesitation to move forward,as people are concerned about how
164、effective it might be and the impacts should it go wrong.Joe Carr,Innovation Director for Mining,Axora49Miners excited by potential of GenAIGenerative AI(GenAI)is the most exciting new technology for our respondents this year,with leaders intrigued by its potential.Artificial intelligence(AI)could e
165、nhance how miners manage large data sets,but it will also expose underlying data quality issues and highlights the importance of getting the fundamentals of data management right.Miners will need to carefully consider new AI technologies and how they apply to specific use cases.Language-specific Gen
166、AI can help streamline administrative tasks burdened by inefficiencies.General approaches for these kinds of use cases are being proven in other sectors and can be tailored for mining-specific concerns that are similar in nature.However,many applications currently fall outside the purview of the muc
167、h-hyped language models,such as geostatistical applications,as well as supply chain simulation and optimization use cases.While the nonlanguage branches of GenAI,such as diffusion models,are being considered by research groups for their application in geosciences,they are not yet widely accessible.R
168、ecent developments in AI present promising opportunities for the sector but bring with them additional complexity and operational management requirements.Identifying and executing on these opportunities requires the support of a robust AI strategy that underpins the essential components of a technol
169、ogy trial and aligns decision-makers with company objectives.Modern AI platforms make it easy to build a demo,but the challenge is operationalizing and establishing the business value of these efforts.Areas where GenAl can uplift capability in mining and metals Contract data extraction for Supplier
170、management Accelerate RFP drafting and review Context-aware search for legal can uplift capability in mining and metals Multilanguage support and transparency Helping to standardize supply contract lifecycle by identifying policy exceptions Perform initial media scan to assess supplier labor practic
171、e Assistance on“greenwashing”screening Assist identification of stakeholder concerns and sentiment analysis from public consultation data Automate the generation of context-aware safety and risk management strategies tailored to specific facility conditions Assist maintenance activities with summary
172、 and search of in-house technical documentation Accelerate capex project planning With human-machine chain-of-thought collaboration Assisted policy drafting and review to ensure compliance across regions and languages Automated compliance monitoring across sensitive business processes Monitoring reg
173、ulatory and guideline updates to highlight existing practices that need review Contractor managementESGAsset management Compliance Streamline greenfield projects by drafting submissions and planning scenarios Generate risk profiles for extreme weather events and natural disasters(resilience)Energy m
174、anagement Consolidate anonymous workplace safety incident reporting and suggestions Assist with creation and delivery of site-specific training materials Identify breaches of procedure from debrief transcripts and other logs SafetyTop 10 business risks and opportunities for mining and metals in 2024
175、28Digital twins still underusedDigital twin technology is still underutilized despite its proven ability to add huge value,most likely due to lack of awareness of the capability and the upfront cost of on site sensor implementation.Through remote sensing capabilities,digital twins enable miners to c
176、ollect more real-time data and gain a richer understanding of all sites under management.Miners have an opportunity to capitalize on this readily available technology.Rio Tintos digital twin at the Gudai-Darri mine is creating virtual mine models that enable the company to test in-the-field decision
177、s ahead of execution,improving both productivity and safety,as well as optimizing return on investment by identifying approaches to maximize production.50“Digital twin is the solution everyone wants but doesnt understand.Senior mining executiveDigital solutions can help miners address increasing pre
178、ssure to improve the availability and reliability of ESG data.Digital innovation can transform how miners gather,Providing an upside to ESG initiatives“Bringing digital technologies to scale could reduce emissions by up to 20%by 2050 in the three highest carbon-emitting sectors:energy,materials and
179、mobility.World Economic Forum51store and analyze large amounts of data from individual operational systems,enterprise systems and third-party sources,enabling miners to add value beyond compliance.It allows them to achieve and execute sustainability roadmaps,provide greater visibility across asset p
180、erformance and operations,and demonstrate activities exposure to potential adverse environmental and social impacts.The EY-Parthenon 2022 Digital Investment Index found that 26%of senior executives reported a positive impact from digital investments in addressing ESG challenges,and 23%said sustainab
181、ility was the top operational goal for the companys digital investment over the next two years.52Companies are making greater use of data analytics to accelerate their net-zero journey,tracking their carbon footprint and using smart sensors and blockchain to better track,monitor and manage Scope 3 e
182、missions.Top 10 business risks and opportunities for mining and metals in 202429“Its not just about collecting data,but how to manage data to extract maximum value.Senior mining executive“Would mining companies be more successful in digital transformation if you push data out to the operations?Senio
183、r mining executive How do you manage data to extract maximum value?Finding the right model to deliver digital transformation Miners are usually data rich but struggle to capture insights from this data,despite huge investments in technology.Critical business data is locked in silos and difficult to
184、access,and IT is disconnected from business teams.Technology projects move too slowly,with project-driven technologies almost obsolete by the time they go live.Despite the growing focus on digital,many miners still lack an integrated approach to its implementation.This limits the value technology ca
185、n bring to the business,and wastes money and time.As one CIO remarked,“The real challenge isnt the absence of technology but changing the organizational culture to be more integrated and focused on long-term goals rather than short-term results.”If miners are to unlock more value from data,they must
186、 first identify what data is important,when it is needed and how to extract it from business processes.This requires a deeper understanding of the intersection between organizational data and business process landscapes,and the difference between data that is genuinely valuable versus transactional
187、information.And data must be trusted:key decision-makers must have confidence in the source of data and its accuracy,completeness and reliability.Organizations that are more mature in their digital journey have strong data governance across people,process,data and technology,and have invested in und
188、erstanding data lineage.This is critical to creating a feedback symbiosis between decision-makers and those preparing the data.It also enables the embedding of a consumer-driven approach into their data-driven innovation culture.Much of the challenge lies in developing the right model to deliver tra
189、nsformation.Within many mining companies,IT is siloed.Our conversations with mining executives revealed differing views on the functions rightful place and role.Should IT be in the business or centralized?Could it provide data as a service to operations,giving engineers access to valuable insights f
190、rom operational data?Finding the right talent remains a problem for mid-tier miners who are turning to service providers to help deliver digital transformation.And across the sector,miners are questioning whether they need a specialized digital team or transversal skills in engineers.We are seeing b
191、oth approaches.Bigger companies tend to have a digital team and digital leaders,while mid-tiers tend to take the transversal skills approach teaching people what they need to know to get the work done.Top 10 business risks and opportunities for mining and metals in 202430Miners continue to invest in
192、 technology stacks,but architecture is evolving at pace.Solutions that can be connected and added to,irrespective of their foundation architecture,give miners the ability to adapt for the future.Generic,“one-stop shop”solutions that promise the earth but have no clear scope or value profile waste ti
193、me and money,and negatively impact the businesss belief in data as an innovator.We have begun to see a few players target tech-based investments and anticipate this trend to continue.Tech-agnostic solutions enable future agility“Its so easy to jump to the bright shiny toy,and in the absence of a str
194、ategy,it just becomes a distraction.Senior mining executiveTop 10 business risks and opportunities for mining and metals in 202431Rather than adopting new off-the-shelf solutions,mining companies need to increase collaboration with partners,to influence what and how products are designed.As one CIO
195、remarked,“No one understands our business better than us,so how can we use that knowledge to partner to develop the technology together?”Technology adoption,and its success,differs between miners,with our research revealing that organizations that champion new technology at an operational level do b
196、est.People must be at the center of any digital transformation,Greater collaboration and partnerships could speed up transformationChange management is critical for effective technology adoption“As CIOs,we need to fall in love with the problem,not the solution.We need to put ourselves in the operato
197、rs shoes,to truly understand their real situation,and be able to transform various aspects of their routine.“What is the ecosystem we actually need to help us accelerate the building of capability?Senior mining executivewith the impact on employees and other stakeholders,as well as processes,well un
198、derstood and communicated.As one mining executive explained,“When we talk about the digital transformation journey,its not just about digital We need to transform individuals so they can use the technology,which should always be a means and never an end.Thats our challenge:How do we marry these conc
199、epts?How do we prepare our employees?”Miners need to assemble the right teams with subject-matter experts across strategic change,data science and mining disciplines who can ask the right questions and make the right changes.Successful organizations deliver results and insights fast and have a clear
200、 plan for industrialization.They also use analytics sprints to iterate through business questions,starting simply and becoming more complex.This allows new innovations to be embedded at scale into daily business operations.Next steps:Put the right structure and processes in place to enable true busi
201、ness transformation.Investing in change management to support technology adoption is key.Extract more insights from data.Better decisions start with data.Miners that make smarter use of data and technology to improve scenario planning can build the agility needed to respond to ongoing volatility.Col
202、laborate and partner.Companies that havent already should act now to form collaborations and alliances with technology and data management companies to develop and implement new digital solutions.Take a strategic approach to innovation.The supply of innovative ideas is not the constraining factor fo
203、r mining companies.Rather,the challenge is to ensure these innovations are focused on delivering the companys strategy and driving a competitive advantage.Senior mining executiveTop 10 business risks and opportunities for mining and metals in 202432Inflation has impacted costs across the board its s
204、tronger and higher than we all anticipated.Senior mining executive“Costs and productivity643223487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Top 10 business risks and opportunities for mining
205、 and metals in 202433Inflationary pressures are now easing sharply around the world,and policy rates in the major advanced economies are probably at,or very close to,their peak.In other countries,such as Chile,rate cuts have begun.53 Oxford Economics thinks policy rate cuts next year will be gradual
206、.54Despite inflation easing,mining companies noted that the positive impact on realized costs will take time to feed through.Energy and labor costs rose higher than official inflation numbers and are remaining higher.Increased energy costs,as a fallout of the war in Ukraine,are persisting.Labor cost
207、s have also risen due to a tight talent pipeline and a growing shortage of skilled staff in many mining regions,including Australia.As the talent shortage increases,we expect to see more wage inflation.In Australia,mining companies are also raising concerns about the impact of the proposed industria
208、l relations reforms on costs;for example,the reforms will require employers to pay labor hire workers the same rate as direct employees performing the same job.55Other rising costs include:Royalties:Amid higher commodity prices,some jurisdictions have increased royalty rates to ensure sufficient ret
209、urns.For example,Chile introduced a new Mining Royalty Law in August 2023 that subjects mining operators to an ad valorem component and a mining margin according to their level of sales and the type of minerals exploited.Coming into effect on 1 January 2024,the law has the potential to increase the
210、total cash costs of copper and lithium producers.Decarbonization:Decarbonizing operations is costly.For example,Fortescues decarbonization plan will require US$6.2b of capital investment.56Inflation is down,but higher costs are impacting margins406080022Index 100=2019CopperCoba
211、ltGoldSilverNickelZinc2Index 100=2002020212022Index 100=2019CopperCobaltGoldSilverNickelZincEnergy costs Index 100=2019Labor costs Index 100=2019Source:EY analysis of S&P global capital IQ pro data.Top 10 business risks and opportunities for mining and metals in 202434Despite t
212、hese increased costs,higher commodity prices have supported margins,but these are on the decline,according to analysis of EBITDA margins of major mining companies.Margins are now closer to 2019 figures,even as commodity prices stay high.Commodity prices remain higher than in 2019%change 1H 2023 vs.1
213、H 2019Lead9%Cobalt7%Palladium7%Zinc4%China HRC export21%Platinum21%Aluminium28%Iron ore30%Met coal(Aus)32%Copper41%Gold48%US HRC domestic48%Silver54%Nickel97%Newcastle thermal coal137%Lithium carbonate336%Source:EY analysis of S&P capital IQ pro and refinitiv eikon data.Capital productivity has long
214、 been a concern for the mining and metals sector,with recent volatility and uncertainty exacerbating the problem.As well as increased input costs,higher interest rates are pushing up the cost of capital.Capital projects face overrunsA review of 132 development projects requiring over US$1b of capita
215、l investment showed that nearly one in five faced cost overruns,with an average blowout of US$500m.57Top 10 business risks and opportunities for mining and metals in 202435As of 2022,46 national or regional and 36 subnational jurisdictions have set a price on carbon.Perhaps most notable of these is
216、the EUs Carbon Border Adjustment Mechanism(CBAM),which targets carbon-intensive sectors,including mining,to address carbon leakage and reduce emissions.Miners belonging to low-middle income countries may face greater exposure to CBAM-like taxes.For example,current EU carbon futures prices of US$87 p
217、er tonne would add around US$420m to the price of Mozambiques exports to the EU.If more countries adopt similar carbon taxes on imports,the impact will be felt in countries where energy is still largely provided by fossil fuels.In the US,the federal government is yet to address carbon pricing,but a
218、few states have introduced carbon pricing schemes.In Canada,inconsistent applicability of carbon some cases,training does not adequately prepare workers for the job,hampering both productivity and safety.We are also observing an overreliance on point technology solutions to compensate for diminishin
219、g operational experience.ESG priorities are overshadowing the productivity agenda.Some interviewees commented that they believe the focus on productivity has diminished in the wake of ESG strategy development.A broader problem is the sectors lack of a systemic end-to-end approach to productivity.Thi
220、s has been a challenge for over a decade,and it remains a weakness.Operations are managed for locally optimized solutions in the value chain,but this can diminish productivity across the entire value chain.Managing the ever-increasing cost of carbonProductivity challenges require a systemic approach
221、 pricing is causing major discrepancies in impact.A study by the Mining Association of British Columbia indicates that,due to variances in carbon pricing structure,a mine in British Columbia will incur the highest functional carbon tax of any major mining jurisdiction in the world.58The price of Aus
222、tralian carbon credit units could double before 2035,according to modeling from the EY Net Zero Centre,increasing from around AU$40/tonne today to around AU$80/tonne.59And even with increased carbon pricing,current coverage of existing schemes sits at 12gt of CO2 emissions,which accounts for only 23
223、%of global GHG and less than 50%of reductions required to reach the 1.5C target.This indicates that miners can expect coverage for carbon pricing to increase.“The approach to improving productivity is still defined by point solutions.We need to get physical and financial data to accurately forecast
224、whats happening in operations.Senior mining executive Our discussions reveal new challenges to productivity:The lack of experienced operators and managers is becoming acute,negatively impacting productivity.In Improving productivity will depend upon a combination of data,information,knowledge and wi
225、sdom that is centered around people and powered by technology.Build an integrated operating model.Many miners still have a siloed operating model,with little integration between operations and maintenance and a lack of inventory optimization strategies and plans.Aligning a mining companys business m
226、odel,how it creates and protects value,with its operating model is key to ensuring productivity improvement.Typically,value erodes from the resource base through to market.The role of each planning horizon is to ensure that erosion is both transparent and managed.Integrating all planning horizons,fr
227、om life of asset to closure,enhances decision-making and operational stability,unlocking value across the value chain,and provides a foundation for operational excellence and discipline.Transition from time-based to condition-based and,eventually,predictive maintenance.This helps to improve the reli
228、ability and availability of physical assets,and to minimize risks and operating costs.Next steps:Focus on building a long-term sustainable cost base.Ensure new measures add,rather than erode,value.Improving asset productivity can have a significant impact on cost reduction,given high maintenance spe
229、nd,and an impact on productivity if asset performance is not optimized.Options to consider include:Switching to lower-cost renewable sources of energy Encouraging innovation and partnerships that will reduce costs in the longer term Reviewing capital tied up in high levels of pre-stripping,advance d
230、evelopment and stockpiles Considering the use of contract mining versus sale or leaseback Reviewing supplier and service contracts Creating strategic joint ventures to optimize economies of scale Reducing back-office costs through automation or outsourcing Top 10 business risks and opportunities for
231、 mining and metals in 202436Top 10 business risks and opportunities for mining and metals in 202437Top 10 business risks and opportunities for mining and metals in 202438Resource-rich countries are likely to impose more control on the supply of minerals,while for importing countries,ensuring resilie
232、nt supply chains of green minerals will be an increasingly important geostrategic imperative.Courtney McCaffrey,EY Global Geostrategic Business Group Insights Leader“Geopolitics743223487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models L
233、icensetooperateWorkforceCapitalESG5109Top 10 business risks and opportunities for mining and metals in 202439Geopolitics has moved to seventh place on the risks index,down from second last year.The change in ranking likely indicates the lack of new geopolitical risks on the agenda this year.However,
234、ongoing issues including tensions with China,the war in Ukraine and the introduction of new laws in key countries mean mining and metals companies must remain vigilant to geopolitical risks and opportunities.We now live in a multipolar world,according to the EY 2023 Geostrategic Outlook,driven in la
235、rge part by US-China tensions and the rising assertiveness of middle powers.60 Rising populism and nationalism have also contributed to a weakening of multilateral institutions as governments have exerted more control over their economies.These trends were accelerated by the COVID-19 pandemic and su
236、percharged by the war in Ukraine.Within this volatile environment,the race for minerals and metals required for the energy transition is accelerating,and so,too,are a range of government incentives and restrictions.The US IRA is a notable example,attracting investment into the US and allied countrie
237、s,but also raising the specter of further global trade tensions due to its onshoring and friendshoring provisions.Mining companies will need to be agile ready to manage the risk of government intervention in the sector,while also being open to capturing new investment opportunities.What actions do y
238、ou expect governments to take over the next 12 months?*Respondents could choose more than one option.Source:EY mining and metals business risks and opportunities survey data 2024.Increased taxes and royalties67%Enhanced regulation relative to ESG54%A price on carbon26%Increased requirements for stak
239、eholder consultation25%Amended mining laws to speed up the granting of licenses24%Increased tax transparency requirements22%Incentives21%Increased export duties8%Policies to attract foreign investment20%Nationalization16%Mandated beneficiation13%New or announced government actions since December 202
240、0With demand for critical minerals high,countries with these valuable resources are moving to optimize their economic returns.Expect to see an increase in government participation in mining,as well as more taxes,royalties and restrictions.In some countries,critical minerals may be nationalized.Navig
241、ating resource nationalism,political change and carbon taxesThis means that mining,extracting and exporting is going to become harder for miners.More countries are building their own processing facilities and expecting materials mined to be domestically processed.61 Indonesia has generated significa
242、nt revenue by ensuring nickel is processed domestically,for example.62Nov 22Canada new limits on foreign state-owned companies investing in critical mineralsDec 22Zimbabwe export ban on unprocessed lithiumAug 23China restricted exports of gallium and germaniumJan 23Philippines considering export ban
243、 or tax on nickel oreJun 23Namibia export ban on unprocessed lithium and critical mineralsAug 22US updated regulations to further reduce dependency on ChinaAug 22Mexico nationalized lithium assetsTop 10 business risks and opportunities for mining and metals in 202440The implementation of the EU CBAM
244、 is likely to push more countries to impose similar restrictions,to ensure equity for domestic producers and limit the import of embedded emissions.CBAM began its transitional period on 1 October 2023 and covers steel,iron ore,aluminium and some downstream products.Some companies are worried about h
245、ow it will affect tax rates,while concerns have also been raised about the impact on developing countries competitiveness.CBAM may still be challenged under the International Trade Law India,for instance,has openly opposed it.63 Ongoing regulatory and political changes reinforce the importance of mi
246、ning companies maintaining vigilance and strong relationships with government.For example,the lead-up to Ecuadors national elections in August 2023 saw some calls to ban all mining in the Choco Andino region.Dundee Precious Metals took preventative action,signing an investment protection agreement w
247、ith the Ecuadorian government to ensure regulatory and tax stability and ongoing access to tax incentives.64 Top 10 business risks and opportunities for mining and metals in 202441As governments double down on energy transition goals,many are introducing initiatives aimed at fast-tracking renewables
248、 while also reducing reliance on other countries,particularly strategic rivals and in critical sectors.The pursuit of self-sufficiency is creating a plethora of green incentives and subsidies,including the European Critical Raw Materials Act and the US IRA.These are influencing investment,with count
249、ries reshoring technology and energy,as well as the mining and processing of minerals and metals.65 According to the American Clean Power Association,private companies have invested US$271b in domestic utility-scale clean energy investments in the US since August 2022.66 Mining companies are seeing
250、some benefits and flow-on investments from these schemes,either through offtake agreements or even direct investment,but it seems downstream sectors will likely receive the bulk of stimulus for decarbonizing technology.Subsidies tend to stimulate In January 2023,the EY CEO Outlook Pulse Survey found
251、 all energy and resources CEOs have altered strategies in response to geopolitical challenges.68 Forty-one percent have reconfigured supply chains,39%are exiting businesses in Mining companies face strong competition for green incentivesProactive strategies can mitigate geopolitical riskdemand more
252、than supply,but dont always eliminate the hurdles for miners,including around environmental permits and social licensing.Some fear this may result in widening the gap between supply and demand of critical minerals in the near to medium term.67There are also concerns that climate change-related regul
253、ations and subsidies in developed countries will exacerbate the global wealth divide,particularly for those countries without resource wealth.Resource-rich countries in Africa and elsewhere,on the other hand,have an opportunity to play the big powers off each other as countries scramble for influenc
254、e in,and access to,mineral resources in emerging markets.In Africa,investment from China means governments have increased debts to the country.But Chinas dominance could be challenged,with both the EU and US eyeing Africas role in the battery metal value chain,offering indirect support through incen
255、tives and grants.certain markets and 32%have halted a planned investment.More companies are also creating roles with the specific remit of managing geopolitical risk.Mitigating geopolitical risk requires mining and metals companies to take a proactive,diversified approach.Now is the time to:Integrat
256、e political risk into broader strategic planning.Consider the impact of geopolitical trends when making strategic decisions,and ensure there is clear ownership of political risk within the organization.Engage with stakeholders.Companies should proactively seek opportunities for closer engagement wit
257、h stakeholders,including governments,to demonstrate how mining creates long-term value for communities.Next steps:Collaborate with trade and industry groups.Working together with these groups can help miners better advocate around future taxation schemes.Influencetaxesandpolicies through articulatin
258、g the impact of changes on mining and metals companies,and recommending improvements.Investigate government incentives.Mining and metals companies that make the most of government incentives or co-investment opportunities can fast-track innovation and decarbonization while reducing costs.Top 10 busi
259、ness risks and opportunities for mining and metals in 202442Mining companies are under attack.The sector wasnt a prime target before,but theres been a rise in mining companies suffering attacks.Chief information security officer(CISO)“Cyber843223487 20232024 Climatechange Digitalandinnova
260、tionCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Top 10 business risks and opportunities for mining and metals in 202443Cyber is back on the ranking for the first time since 2020 as mining and metals companies face increased attacks from cyber crim
261、inals.A more complex threat landscape spans IT and OTToday,all mining organizations are digital by default,operating in a vast,connected digital landscape where every asset represents another node in the network and increases the attack surface.The EY 2023 Global Cybersecurity Leadership Insights St
262、udy70 found 74%of mining and metals executives say integrating technology is a key challenge,compared with 37%for all sectors.Some of our clients are seeing a rapid increase in the number of attacks on operational systems,including attacks specifically designed to target these environments.“OT isnt
263、as mature as IT it becomes a weak point in the system.CISOTop five internal challenges to cybersecurity approachIntegrating emerging tech isnt prioritizedToo many potential attack surfacesDifficulty balancing security and innovationNon-IT workforce not following best practicesInadequate cybersecurit
264、y budget48%52%35%22%37%50%61%74%38%36%Source:EY 2023 Global cybersecurity leadership insights study.Many CISOs we interviewed said they were responsible for the OT environment,but the experience on-site is somewhat different.They are often blocked by operations or OEM providers,who fear cyber tests
265、and improvement initiatives will cause shutdowns and impact productivity.The“human factor”is a major issue in cybersecurity,and a huge gap in mining and metals.The sector needs a step change in cyber culture and awareness to build cyber resilience and preparedness.Every company should accept that,wh
266、en it comes to cyber attacks,its not a case of“if,”but“when.”Growing IT and operational technology(OT)convergence,digital transformation and remote working,as well as the war in Ukraine,have seen cyber incidents skyrocket.The World Economic Forum has highlighted cybersecurity as both a short-and lon
267、g-term risk that must be tackled now.69Mining and metalsGlobalNew focus on IP cyber risks Our survey highlights a growing concern from miners around intellectual property cyber risks.This may be driven by a need to protect event-sensitive information(such as during M&A or negotiations for land right
268、s)and growing investment in R&D around ESG initiatives(such as decarbonization projects).Its a sign the sector is shifting its cyber focus from a narrow view of protecting“availability”to also securing“confidentiality.”Concern about cybersecurity-related risks to the organization%very concernedMinin
269、g and metalsGlobalTechnology infrastructure risks48%47%Financial risks39%48%Reputation risks30%33%Supply chain risks30%28%Physical risks22%25%Employee risks17%18%Intellectual property protection risks43%30%Source:EY 2023 global cybersecurity leadership insights study.Top 10 business risks and opport
270、unities for mining and metals in 202444Top 10 business risks and opportunities for mining and metals in 202445Cyber threats require greater board attention Mixed feelings about the impact of regulatory changesOnly 40%of boards in the EY Global Board Risk Survey 2023 are confident they understand the
271、 biggest cyber risks facing the organization.72 Cyber reports to the board infrequently,with CISOs often seen as cyber tool operators rather than business risk managers.As miners expand into more businesses requiring a greater level of IP and insight(such as hydrogen power and green steel),financial
272、 risks of cyber attacks could increase significantly.If boards are to make effective decisions around cyber risk,they need a cybersecurity reporting and risk framework,and a risk-focused mindset that enables them to ask better questions of management.“Cybersecurity threats are very much seen as a te
273、chnology problem in the industry,where really it needs to be looked at as a business risk.Rob Labb,CISO,Mining and Metals Information Sharing and Analysis Center(MM-ISAC)71New cyber-related regulation will elevate cyber to the boards agenda.For example,new rules proposed by the SEC will require publ
274、ic companies to disclose how boards oversee cyber risk.73We asked CISOs whether they thought extra regulation would help or hinder cybersecurity programs.Ninety percent of CISOs we interviewed felt it would help,but many raised concerns around additional stress placed on already underresourced teams
275、.This highlights the need for regulators to get the balance right and for business to increase investment in cyber capability.Our research suggests that cybersecurity funding has not kept up with the growing risk,with 22%of survey respondents saying budgets are lower than required to address cyber-r
276、elated challenges.Building cyber resilience requires miners to consider key questions:Have we aligned our cybersecurity strategy to enable business objectives?If yes,how is the organization structured to bring the diverse skill sets to advise and influence key stakeholder groups across IT and OT?If
277、no,do we need to review the accountabilities framework and appoint a senior executive to champion the change?How effective are our cyber controls to manage our top five enterprise-wide cyber risk scenarios?Are these cyber risk scenarios known and assessed periodically by the right teams?Has the appr
278、oach incorporated“bottom up”analysis(e.g.,identifying and assessing the multiple cyber Next steps:risk scenarios that are business unit specific(10 to 15 scenarios)and common group-level scenarios)and leveraged“risk bow-tie”principles(i.e.,critical preventative and detective/recovery controls that a
279、re well defined with clear metrics to continually assess control effectiveness)?When did we last conduct cyber testing or a deep dive into OT cybersecurity?A dedicated industry framework,called the MITRE ATT&CK Matrix for ICS,outlines the tactics and techniques used to gain unauthorized access and e
280、xecute malicious commands in an OT network.If an exercise was recently performed,how effective were controls to prevent,detect and respond to unauthorized activities.More importantly,is there sufficient transparency and visibility to monitor the completion of short-and medium-term improvements?To wh
281、at extent in your organization prioritizing the following talent strategies to prepare for future cybersecurity threats?%Top or significant priority Standardizing and automating processes to reduce staffing needsDiverse workforce retention and recruitmentOutsourcing more functions and capabilities t
282、o third-party specialists35%35%30%28%30%32%Top 10 business risks and opportunities for mining and metals in 202446Source:EY 2023 Global cybersecurity leadership insights study.New strategies to fill the cybersecurity skills gapUpskilling the current cyber workforce is the biggest talent strategy to
283、prepare for future threats,with 78%of survey respondents saying this is a significant or top priority.Many companies have built internal capabilities,but changing business demands see some opting to outsource critical processes.The gap between demand for cybersecurity skills and workers is widening,
284、with cyber OT professionals even harder to find.Mining and metals companies that co-source these skills can gain the capacity they need while upskilling their own cybersecurity teams.Mining and metalsGlobalTop 10 business risks and opportunities for mining and metals in 202447Top 10 business risks a
285、nd opportunities for mining and metals in 202448New business models Our business model is being challenged-led by changes in digital,ESG and access to capital.We are reassessing our portfolio,considering vertical integration as well as how to invest in renewable energy.Senior mining executive“913211
286、09876543223487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Top 10 business risks and opportunities for mining and metals in 202449Mining and metal companies are ramping up progress on new business models,
287、both vertically and horizontally across the value chain,to maximize value.Focus on improving mine to market flowWe see a greater focus on exploration,beneficiation and materials production,to help improve mine to market flow,generate incremental demand for commodities and allowing companies to lever
288、age margins while reducing volatility.Advanced processing is attracting investment,as countries seek an alternative to China.For example,companies in Indonesia have implemented high-pressure acid leach(HPAL)technology to process nickel ore,and,around the world,lithium miners are integrating mining i
289、nto processing and battery manufacturing.Collaboration across the value chain is also increasing as OEMs seek to secure raw material supply,and mining companies secure capital to build new mines.More innovation in green productsMining company executives told us they see green minerals and metals as
290、the future of the business but not all are seeing a premium.One said,“They might become available,and the objective to achieve net-positive impact will serve the need.”However,some producers are already receiving a premium for green metals,particularly copper and,as demand increases,it is expected t
291、hat premiums may increase,especially if supply does not keep pace.74Demand for green products,and the associated transparency required,is expected to ramp up in line with a growing focus“Premiums are not yet available for all commodities.Senior mining executiveon embedded emissions.Initiatives such
292、as the EUs CBAM will increase scrutiny of how metals are produced and how much carbon is emitted in each process.Some examples of green products include:Green aluminium technology to produce lower-carbon products.For example,Norsk Hydros REDUXA technology produces aluminium products with less than 4
293、kg CO2/kg of aluminium,compared with the industry average of 16.7kg CO2/kg of aluminium.75 Green steel raw materials,including higher-grade iron ores or direct reduced iron(DRI).For example,Vale is using concentration technology to raise ferrous content to around 67%at its Carajs complex76 and is ex
294、ploring how to produce carbon-neutral steel.77 Green steel,ssuch as that produced by BHP and Hatchs trial of the electric steel furnace,can produce steel from DRI using renewable electricity and hydrogen.78Investment in adjacencies helps mitigate riskCompanies are also investing in adjacencies,parti
295、cularly those that support or de-risk other investments,including infrastructure,energy and technology.Horizontal integration allows miners to increase scale and investment by decreasing risk in a nonfamiliar geography or commodity,driving a value model change to gain competitive advantage.It is als
296、o an option for investing,rather than returning,a greater proportion of capital.For example,Anglo American partnered with EDF Renewables to form Envusa Energy,which will develop a renewable energy ecosystem in South Africa.The project is expected to generate 3GW to 5GW of clean energy by 2030,boosti
297、ng the resilience of South Africas electricity network.Top 10 business risks and opportunities for mining and metals in 202450Balancing new business models with core activitiesThe challenge for miners is addressing the need to invest in new business models while maintaining discipline and returns.EY
298、 analysis shows most companies are focusing investment in traditional or core activities such as exploration,mining and processing to ensure returns remain strong and can fund investments in sustainability,technology and new business models.“Reshaping business models is a challenge.While we internal
299、ly see the need,shareholders are less willing to enter that conversation because of the impact to returns.Senior mining executiveThe question of where to invest for growth is not easy to answer.Scenario planning is vital to ensure agility.It helps underpin medium-and long-term business plans,prepare
300、 for alternative futures and forecast the impact of potential scenarios on demand.Our survey reveals miners are considering a range of investment options.Digital is a growing focus,possibly because increasing costs and inflation have highlighted the role of technology in improving productivity.The r
301、ising impact of AI is also a factor.Change in importance of options chosen by respondents(%change 2024 vs.2023)Source:EY mining and metals business risks and opportunities survey data 2023 and 2024.Spin-off assets0%Digital11%M&A3%Community investment-1%Integrate recycling-1%Divest-11%Transform mater
302、ial sourcing11%Build-7%Horizontal integration-2%Vertical integration3%Transform0%EY analysis of investments of 12 major mining companies 201822Mining and explorationMetal processingDecarbonization/green solutionsTechnologyOil and gas/power*42%27%11%5%15%Source:EY strategy edge,march 2023.*power does
303、 not include renewablesTop 10 business risks and opportunities for mining and metals in 202451Sustainability is also a big driver of innovation.Beyond renewable energy,companies are investing in startups,including in energy storage,batteries and hydrogen.For example,Fortescue is expecting a prelimin
304、ary license to install a green hydrogen plant in Brazil and recently announced the acquisition of a hydrogen hub in Phoenix,Arizona.79Green investments largely in energy storage and hydrogenNo.of investments by top 12 mining and metals companies(201822)Source:EY analysis of company reports and publi
305、c information.Private placementM&AEnergy storage363Hydrogen262Renewables94Waste management/recycling65CCUS31We are also seeing significant progress in the circular economy.Mining companies are considering how to use circular economy principles to better manage waste across the value chain,integrate
306、recycling,and improve collaboration and transparency with manufacturers and customers.Capitalizing on a circular economy will require mining companies to make a holistic analysis of all material flows and consider lifecycle benefits and impacts.“Ignoring the circular economy as a source of supply wo
307、uld be foolish but to be transformational,it needs to be a significant investment.However,this would change a companys risk profile and may impact investors.Senior mining executiveTop 10 business risks and opportunities for mining and metals in 202452Estimated%of cumulative 2050 demand that can be m
308、et through recycling AluminiumCopperNickelCobaltLithium5958473961Source:IEA 2022 and world bank 2020Top 10 business risks and opportunities for mining and metals in 202453More miners are investing in recycling,which,while never able to fully overcome structural deficits in the market,will become a s
309、ignificant source of supply,particularly as battery recycling increases.For example,Glencore has been advancing battery recycling alongside base metals such as copper,zinc,nickel and lead.We expect this trend to expand as mining companies and others in the value chain move into a true circular econo
310、my with closed material loops.Circular design for longer product life New business models and revenue streams Reverse cycles Eco-system Channel strategyImplementing circular design into the mining and metals value chainTransformationValue chainExtractionRemove inefficiencies,re-use resources (e.g.,w
311、ater)and design waste out of processesImproved resource efficiency,and better waste managementReprocess wastes,tailings and scrapCreate by products and keep materials and products in useData analytics to optimize freightReduce costs Remove carbon emissionsSainsburrys is switching from using plastict
312、o creating its signature coffee pods out of aluminium,which is infinitely recyclableCollaborate with customers to develop new products that can be re-used in the futureReduce costs Minimize wasteImproved resource efficiencyData and technology to enable transparency of source of materialsIncreased in
313、vestment Greater accountability Reduction in illegal practicesProcessingLogisticsManufacturingConsumer useActionBenefitStrategy Enabler Conduct scenario planning to build agility and ensure readiness for possible alternative futures.Consider investment in adjacencies to help mitigate risk.Next steps
314、:Prepare to divest or reshape for a different environment.Use circular economy principles to better manage waste across the value chain,integrate recycling,and improve collaboration and transparency with customers.Top 10 business risks and opportunities for mining and metals in 202454Workforce101321
315、3487 20232024 Climatechange DigitalandinnovationCosts and productivityGeopoliticsCyberNew business models LicensetooperateWorkforceCapitalESG5109Top 10 business risks and opportunities for mining and metals in 202455Finding talent continues to be a major challenge for mining and metals co
316、mpanies.In an increasingly competitive labor market,the sectors poor brand and perceptions around LTO are deterring workers,especially younger ones,with some attracted to energy transition projects instead.At the same time,existing workforces are aging,and the potential of automation and technology
317、to relieve talent pressures has not been realized,according to human resources officers(HROs)we surveyed.Most are now rapidly rethinking recruitment and retention strategies.Recruitment strategies adapt to increased competition for scarce talent“We are reviewing our recruitment process to eliminate
318、end-to-end structural barriers.Senior HR executiveRecruitment for on-site roles is particularly challenging,given the lack of desire to work remotely and local community talent being exhausted.As miners struggle to fill specialist positions,including IT roles and mid-senior level engineers,they are
319、rolling out initiatives including:Upskilling or filling roles with internal candidates,where possible Considering talent with transferable skills,rather than purely direct experience Recruiting global talent however,logistics and immigration processes can be lengthy and expensive Recruiting younger
320、talent,leveraging university and experiential programs,and participating in school career fairs(creative approaches will be required a recent survey of young people by the Canadian Mining Industry Human Resources Council found 70%said they“definitely”or“probably would not”work in the mining sector)8
321、0Inspiring and developing talent to improve retention“We need to look at sustainability for tomorrow we need to retain existing staff or face a major issue.Senior HR executiveOne HRO told us that the number one question posed by younger workers in interviews is:“How will my career develop?”Developin
322、g attractive career pathways can help inspire workers to see their future in mining,and improve retention rates.The issue is heightened for mid-tier miners,which face annual labor turnover rates of 30%to 35%,according to Tom Reid of the Australian Resources&Energy Employer Association.81Skills maps
323、can help articulate growth opportunities within roles and support upskilling for role changes,rotations and certifications.Rotating early career engineers through disciplines can help avoid pigeonholing and may improve retention.Miners may also need to re-evaluate their broader employee value propos
324、ition.Workers,particularly Gen Z,want to be in a company with values and a purpose that reflect their own.Many HROs are focused on creating a more attractive work culture,highlighting minings role in the energy transition and support for local communities.Upskilling and re-skilling are priorities“Up
325、skilling is the No.1 priority it needs to be embedded into our DNA.Senior HR executive“We need people to have access to the learning and development wherever they are,which is a massive cultural change.Senior HR executiveSector leaders we spoke to agreed that upskilling and re-skilling must be core
326、to every HR strategy.Miners need to define the skills and capabilities to succeed over the next 18 months and beyond,considering:Overlooked onboarding should sound alarm bellsMiners have achieved near zero harm on site,but near misses are increasing.Some mining unions are calling for increased repor
327、ting to identify trends and prevent serious injuries in the future.82Top 10 business risks and opportunities for mining and metals in 202456 A whole-of-organization approach The long-term view,compared with traditional quarter-to-quarter thinking Mobility across all functions and sites(to break down
328、 silos)Broader ESG capabilities beyond the operational perspective Just-in-time training for operators and maintainers Re-skilling opportunities(one HRO said,“Weve got diesel engineers,but we need those engineers to be electrical engineers.Weve got the base skills,we just need to move them to the ad
329、jacency.”)Current onboarding processes often lack governance and rely too heavily on supervisors,many of whom are new to the sector themselves and lack experience.This elevates safety risks and has a negative impact on morale and productivity.In some cases,training does not adequately prepare worker
330、s for the job skills needed on-site may be very different from those given in a two-day office-based training course.AI or virtual reality simulations could help fill training gaps,offer real-time opportunities to improve skills and,ultimately,improve safety on-site.There is a clear need to uplift b
331、asic digital and data skills for all in the workforce,to help everyone use new technologies in frontline roles.Organizations should invest in their systems,making them more“app-like”to create an easy user experience.Top 10 business risks and opportunities for mining and metals in 202457HR seeking gr
332、eater data to drive decision-making“What can I anticipate will happen via business intelligence?Senior HR executiveHR is making greater use of more robust data to track trends and make informed decisions,particularly around retention,gender balance,absenteeism,on-site occupancy,and health and safety
333、.Data offers enormous value in helping track and understand employment trends and make more informed decisions.We see more HR leaders seeking robust data around retention,gender balance,absenteeism,on-site occupancy,and health and safety.Data can also help deepen understanding around the complex levers driving productivity.In 2022,mining labor productivity fell 7%in the US83 and 5%in Australia,wit