Declining productivity is #1 risk to mining in 2014-15

EY-risk-radarTo reverse a decade-long decline in productivity, mining and metals companies need to implement whole-of-business solutions to recover lost ground. Increasing profits will be achieved by finding and retaining the best talent to build relationships with communities and stakeholders, and to see these sweeping changes through.

A risky business

Declining productivity, allocation of capital and social licence to operate have been identified as the top three risks to mining and metal businesses by Ernst and Young (EY) in their Business risks facing mining and metals 2014-2015 report released this week.

In their annual report, EY Global identified the top 10 strategic business risks faced by the global mining and metals sector in 2014 as:

  1. Productivity
  2. Capital dilemmas – allocation and access
  3. Social license to operate
  4. Resource nationalism
  5. Capital projects
  6. Price and currency volatility
  7. Infrastructure access
  8. Sharing the benefits
  9. Balancing talent needs
  10. Access to water and energy

Seven years ago, in 2008, the skills shortage, industry consolidation and access to infrastructure were the top three risks.

Productivity has been creeping higher on the list in recent years, with social licence to operate also moving up in the risk ranking from previous years to third place. Access to water and energy appeared in the top 10 for the first time this year.

Community acceptance paramount

“Social license to operate has consistently been near the top of the risk rankings and this year is no different. The number and size of projects being delayed or stopped due to community and environmental activists continues to rise,” says EY’s Global Mining and Metals Leader Mike Elliott.

“Organizations cannot assume that acceptance from the community and its stakeholders will always be maintained. Organizations should be integrating the activities required to obtain and maintain a social license into the broader strategic plan of a more sustainable business.”

Under the radar

Check out the ‘under the radar’ risks, like cyber attacks, fraud and climate change concerns in this interactive risk radar or watch EY’s Mike Elliot discuss how stakeholder expectations for higher performance standards from mining and metals companies have influenced the top 10 risks for 2014-15.

[youtube https://www.youtube.com/watch?v=SGwMqoxTsNQ&w=560&h=315]

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