Press release

30 Sep. 2020 Toronto, CA

Short-term license to operate response not enough to quell risk within mining and metals

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Victoria McQueen

EY Canada Team Lead, Public Relations

Leading the development and distribution of external communications and social media across Canada. Can be found by the lake in the summer and on the slopes in the winter.

Related topics Mining and metals
  • 63% of mining and metals executives identify license to operate as top risk to their business
  • ESG imperatives at the forefront of industry executives’ agendas
  • Impacts from COVID-19 have heightened the interdependence of top risks and opportunities

Survey results confirm license to operate as the top risk facing the mining and metals sector for the third consecutive year despite heightened efforts amid COVID-19 to address safety, environment and corporate responsibility matters.

The annual EY Top 10 business risks and opportunities — 2021 shows 63% of executives view license to operate as the biggest risk facing their business as stakeholder expectations evolve.

“In general, mining companies managed the immediate health and business impacts of COVID-19 well by safeguarding employees and communities, but the lessons learned now need to be applied to other aspects of license to operate — including water management, decarbonization and scope three emissions,” says Jeff Swinoga, EY Canada Mining and Metals Co-Leader. “By developing a clear strategy that addresses a broader spectrum of environmental, social and governance factors across local and national communities, companies can better access the capital they need to seize growth opportunities, diversify and increase their investor base and obtain debt at a lower cost.”

Joining license to operate at the top of the list are high-impact risks (2) and productivity and rising costs (3). Industry executives share that the pandemic has clearly demonstrated the importance of understanding and reviewing potential high-impact risks, especially given the significant link between a company’s ability to identify and manage them well, and its license to operate.

EY business risks

“Productivity and rising costs continue to be on the radar for mining and metals companies, and their importance has been amplified in these times of volatility,” says Theo Yameogo, EY Canada Mining and Metals Co-Leader. “While all mines are affected by declining ore grades, increasing complexities across the value chain and pressure on commodity prices, there’s a silver lining. COVID-19 restrictions have triggered compelling reasons to rethink cost structures, remove silos and anchor performance around relevant productivity metrics.”

New to the list this year are geopolitics (5) and volatility (8). The shifting geopolitical landscape in large economies is changing sector dynamics and driving a trend towards economic protectionism, including tariffs and export bans. Moreover, fluctuations in both supply and demand are expected to drive increased volatility and larger swings in commodity prices. 

“The mining industry will need to make sustainable, long-term decisions as they deal with the return of severe commodity price volatility, the threat of geopolitics and evolving stakeholder priorities,” says Yameogo. “Moving forward, many companies will look to do things differently — to remove complexity, overcome historical barriers and accelerate a transformation agenda that focuses on long-term resilience for the business, symbiotic relationships with communities and the renaissance of the entire sector.”

Access the EY mining and metals Top 10 business risks and opportunities — 2021 survey here.

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