The greatest risk facing miners is commodity price volatility. (Image: iStock)
TORONTO – The annual survey of Canadian mining executives conducted by KPMG indicates that commodity prices are the top risks for the sector this year. The choice was made in light of the re-emergence of volatility in commodities markets.
Previously the top risk was access to resources, but that subject has dropped to No.8 in the new survey.
“Commodity price risk is once again the leading challenge facing mining executives as they consider the downside of the recent upswing in prices,” says Heather Cheeseman, GTA mining leader and partner, Audit and Risk Consulting, KPMG in Canada. “With volatility making a comeback, mining businesses must plan for the future as they optimize scarce resources, flatten the cost curve, sharpen their focus on corporate social responsibility and mitigate political risk in key jurisdictions.”
KPMG’s latest issue of Insights into Mining shows the risk landscape to be relatively consistent compared to previous years. Or perhaps it is Canadian and global mining businesses have learned to navigate uncertainty in a highly competitive industry. Permitting risk and capital allocation returned to the Top 10 this year, while access to capital and liquidity, controlling capital and operating costs, maintaining a social license to operate and managing geopolitical instability also figure high on the list of top risks.
Below are the Top 10 risks facing Canadian mining and metals companies in 2018:
1 Commodity price risk
2 Permitting risk
3 Access to capital, including liquidity
4 Community relations and social license to operate
5 Controlling capital costs
6 Environmental risk
7 Political risk
8 Ability to access and replace reserves
9 Controlling operating costs
10 Capital allocation
Download the survey results as a PDF file by clicking here.