Following a challenging three years with the COVID-19 pandemic, 2022 is proving to be another challenging year for mining businesses.
This year the industry continues to see ongoing disruptions, with continued supply chain interruptions, changing geopolitical risk and the increasing social voice of communities and investors.
Mining businesses are assessing their operations to determine where they can make improvements, with financial and safety performance starting to be reviewed against level of resource use, commitment to social engagement, compliance with governance standards and progress in environmental sustainability.
Ernst and Young’s (EY) recently released report Top 10 Business Risks and Opportunities for Mining and Metals in 20221. Highlighted ‘environment and social issues is the number one risk facing mining companies globally’. KPMG’s report “Global Mining Outlook 2022” also stated ‘the ESG agenda looms large – with 2 of the top 3 risks relating to ESG’2..
This is a huge shift from the previous year, with environment and social issues now at the forefront of mining business leaders’ minds. KPMG’s report stated (the shifts in risks) the extent to which climate change-related issues and ESG more broadly are reframing corporate priorities in mining’2..
The first three items listed in EY’s report1. following a global mining industry survey, are all environment, social and governance (ESG) related:
- Environment and social
- Decarbonisation
- Licence to operate.
These top three ESG challenges demonstrate the significance that leading positive change in managing ESG factors is crucial to the future of any mining business.
With climate change on top on the world’s agenda, we have observed natural disaster events cause frequent and unplanned business disruptions across the globe, putting environment sustainability and decarbonisation efforts high on the list to progress.
Social issues, such as modern slavery and access to fair compensation, have been a driving factor for businesses to meet governance, compliance and investor expectations within their mining value chain. World social disruption, geopolitical issues, market uncertainty, increased stakeholder awareness have also impacted on social market drivers. With tightening of regulations, continued focus and recognition of ESG within the mining sector, investors and shareholders are demanding visibility into a company’s strategic road map and transparency in status of performance targets.
To ensure the security of their social license to operate, mining organisations are targeting to work beyond environmental and social compliance standards. Managing these aspects builds a viable future and ensures positive social change through provisions of beneficial social impacts to build long-term credibility.
We are seeing mining organisations take an increased interest in making changes within their business strategy and operations by specifically managing ESG, for a purposeful, value focussed, sustainable future. Business opportunities are balancing challenges and risks, the COVID-19 pandemic and disruptions has increased global attention and progress on sustainability measures, embedding ESG as a norm in business, not add-on’s as they were previously.
A KPMG report indicated that ‘ESG issues will drive significant business model change, and 84% of respondents believe the ability to achieve success in the long run will become increasingly dependent upon their ability to define success in a broader term than financial’2..
Therefore, turning ESG challenges into opportunities for your mining business can be undertaken by:
- Commit to ESG goals/targets by 2030 and 2050
- Measure, monitor and communicate your performance against ESG targets
- Integrate ESG and sustainability platforms for business-wide transparency with intelligence and analytics providing insights
- Assess performance throughout the mining value chain with data acquisition and insights, to turn it into positive impacts and efficiencies further down the mining value chain.
By measuring, monitoring and communicating your performance against your ESG targets, will deliver vast opportunities for your business operations. By achieving this, a business is able to determine where efficiency gains and improvements can be achieved across multiple sites and systems. This can include benchmarking performance at all levels and areas of your operation, identify where process and costs can be optimised and ensure governance and compliance. Also, with easier, better and standard reporting and real-time transparency, potential new business opportunities can be discovered.
The increased requirement of mining business reporting, transparency and accountability is being driven by stakeholder and investment market pressures and expectations. Including ESG into your business strategy and understanding how and what ESG measures are important for your stakeholders are key considerations.
Acquiring data and considering ESG challenges throughout the mining value chain, and not in isolation, provides insights into where efficiencies and improvements can be made that will provide positive impacts along the mining value chain.
With the ever-increasing quantities of data becoming available, it is important to maintain data fidelity and data integrity to drive confidence and continuous improvement. Mining organisations are embracing the opportunity to leverage this to make data-driven decisions to minimise and manage ESG risks. Optimising ESG through the mining value chain can turn risks into opportunities, and improve investor confidence, along with competitive advantage in the marketplace, leading to sustainable future.
- Ernst and Young, Top 10 business risks and opportunities for mining and metals in 2022, 2021 EYGM Limited, ey.com/miningmetals
- KPMG, Global Mining Outlook 2022, 2022 KPMG International.
About Datamine
Datamine delivers leading digital mining technology and business value through system-wide optimisation across the value chain, in addition to time saving automation and ease-of-use providing leading customer experience focussed on individual end users in each specialist area.
Serving mining operations located around the globe, Datamine possess an expansive service and customer scope, with a proven solid history, deep knowledge and expertise within the mining sector.
To learn more, visit www.dataminesoftware.com
