Mining Risk Review 2017

The future of mining is now

September 7, 2017
Driven by robust growth in emerging markets, the mining industry’s priority in the post-recession era leading up to 2011 was to grow volumes. This was achieved by applying capital, but perhaps without the cost discipline required. With the subsequent cooling of the commodities super-cycle, the emphasis shifted to bringing down cost and maintaining margin as prices dropped. Miners have risen to the challenge – rethinking their risk profiles, embracing technology and exploring innovative ways of working in pursuit of greater efficiency and productivity.

This has served the industry well. Amongst the wider spectrum of natural resources sectors, mining companies are seen as leading the charge towards digitalisation, automation and remote operations.

New frontiers produce new risks

But as mining turns to more exotic locations in volatile geopolitical environments, and pushes technical frontiers at depths of 3 km to access more complex ore bodies while relentlessly reducing costs, the industry risk landscape continues to evolve. Demand for commodities such as cobalt and lithium for batteries within consumer electronics, renewables and electric vehicles adds to this trend, with miners being driven to newer geographies and methods of production.

Societal outcomes critical to business success

Sitting above core operating risk is the renewed focus on linking societal outcomes to business success, such as workforce safety, community engagement and environmental sustainability. This is the new license to operate, and no longer optional.

The future of mining is now!

So what next? We think miners have done a great job at creating their future. But with it comes a new set of questions, and indeed, risks. For example, how will the environmental risk profile of the mining industry change as climate pressures increase over the course of the next decade? Or, what will the mining workforce of the future look like? While some of the fundamental questions will remain (for example: where will we find the mineral deposits of the future or what will fuel demand growth for the next decades?) it is clear that the future of mining is already here and the time to respond to new risks is now.

We at Willis Towers Watson strongly believe that human capital risk and asset risk are inextricably linked and should always be addressed together. Our mining experts would be delighted to discuss how you can better manage or transfer your risks.

We hope you find the 2017 Willis Towers Watson Mining Risk Review valuable and informative. Part one focuses on four key challenges the mining industry must address in new and innovative ways - geopolitics, stakeholder relations, digitisation and people; part two focuses on risk mitigation and transfer issues.

Table of contents

Part one - four challenges for the mining industry

Challenge one – operating within a volatile geopolitical landscape
  • The Trump “bump”: How it’s shaping the US mining industry’s future
    The long term impacts of President Trump’s administration won’t be known for some time, but it came at a crucial time for the mining industry which has taken a much needed deep breath. Anticipation of policy change that would have significant impacts to a mining company, whether positive or negative is vital to providing good advice.
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  • North American surety: protecting your reclamation liability
    Due in part to regulatory oversight, financial cycles and a growing awareness of environmental impacts, the call for third party financial assurances to assume the responsibility of remediation and reclamation has increased. As North American dependence on fossil fuels has decreased or fallen out of favor, regulatory authorities’ concern for final reclamation and the funding of the costs have intersected commodity prices near the bottom of the cycle.
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Challenge two – developing new stakeholder relationships
Challenge three – thriving in the new digital world
Challenge four – managing people risk in an age of turbulence
  • Mining their minds: optimizing the employee experience
    Managing talent in the mining industry has its challenges. When stagnant demand, diminishing budgets and cost orientation is the order of the day, how does one create an outstanding employee experience to help drive both organizational performance and financial results?
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  • Black lung and compliance: the great divide
    Black lung, or Coal Workers’ Pneumoconiosis (CWP) to use its formal name, is most often found in the coal mining industry or where graphite or man-made carbon products are manufactured. The disease is commonly known as “Black lung” because those diagnosed with it typically have lungs which look black instead of the pink associated with healthy individuals.
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  • Risk culture in the mining industry: why should it matter?
    In an increasingly complex corporate world, managing risks related to an organisation’s ‘human capital’ is critical. Given the new developments in the mining industry outlined elsewhere in this Review, this is especially the case for the mining industry.
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  • Total cost of lost time: a game-changing approach to managing employee absence
    The attempt to mitigate the causes and monetary impact of the total cost of lost time has historically been managed by two distinct and separate operations – the Risk Management and Human Resources departments. However, we believe that energy companies should now consider a more holistic approach that removes this historical divide to create an enterprise wide solution.
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Part two - mining risk mitigation and transfer issues

To read the full report, click the "download" button, above or below.