Trevor Hart, KPMGs global chief of mining, said that this year is a significant moment.
These shifts in a very short time frame are remarkable for an industry that is built on long-term operations. These shifts highlight the extent to which ESG and climate change-related issues are redefining corporate priorities in mining as in nearly every other business sector.
However, there were divergent views regarding top risks by geography. Australian executives ranked commodity prices number one. They followed decarbonising value chain, including scope 3, and the talent crisis. The most bullish global leaders were Australians, with three quarters of them being very or very confident, significantly higher than the 62 per cent in Canada and the 58 percent in the USA.
The mining sector faces climate change as a challenge and opportunity. There is strong demand for minerals to transition to cleaner energy sources. However, significant investment is required to reduce carbon emissions and reach net zero targets. This includes emissions from the use of their commodities.
It’s also constantly changing. Last week, Macquarie analysts cited the growing corporate interest to avoid scope four emissions by using a comparatively lower-emission product/service, such as Rio Tintos ELYSIS, green aluminium.
Nick Harridge of KPMG Australia, the national mining leader, stated that the flow was through to the talent shortage. He cited separate research that found that technical skills to manage climate change, and carbon markets expertise, were most in demand.
Other ESG issues are also on the rise. MMG suspended operations at the Las Bambas copper mine, Peru, this month following community protests. Mexico is nationalizing its lithium industry, Chile is considering water rights and changes in royalties.
KPMG was told by nearly three quarters of executives that they believe or strongly agree that ESG will cause major disruption in the next three years. Analysts warn that it could prove more difficult to bring new supply to market for certain commodities than anticipated.
Phineas Glover from Credit Suisse ESG noted Tuesday’s developments in copper-rich Peru and Chile. He said that worries about supply disruptions would help support the metal’s prices in the near term, citing the recent developments in Peru and Chile.
Harridge stated that the industry needs a new generation of talent to fill a variety of specialized roles, including those of data analysts, computer scientists and environmental scientists, heritage specialists, water management specialists, and data analysts. He said that big mining companies are investing in their people programs, but that they need a strong pipeline to deliver specialized roles into mining as new business models emerge.
Hart said that it was remarkable that this years report revealed that the top threats were coming from outside and not within. He cited supply chain bottlenecks, which push up inflation, particularly in terms of energy costs, as well as wages.
He said that more than half of executives agree with the need for consolidation in the industry to manage rising inflation.