International mining executives are bracing for the negative impact the lack of a skilled workforce will have on their organisations, according to research published by the international accounting and consultancy firm of BDO.
Of the mining executives recently surveyed, results show that 79 per cent feel the lack of a skilled workforce will have a negative impact on their business this year. While environmental policy tops executives’ domestic regulatory concerns, with 34 per cent citing it as a potential issue in the year ahead, labour and employment issues are a close second, with 30 percent of executives noting it as a major concern.
The survey of 130 senior financial executives at mining companies in Canada, the United States, South Africa, United Kingdom and Australia sought their insights on regulatory affairs, employment and the environment.
While executives around the globe grapple with labour and employment issues, 63 per cent of South African executives note this is their primary concern - twice the survey average - due in large part to high regional unemployment rates and sustained labour unrest driven by working conditions related to wages and social issues.
Mining executives are facing labour shortages head-on with technology. The industry has an opportunity to be at the forefront of innovation, improving both production and prospecting with new technologies that will increase efficiency and produce greater returns. In fact, 50 percent of executives believe that substituting technology for labour will have a positive impact on their business in 2013, creating a new intersection in the industry of old and new techniques.
“We are in the midst of a transition in the mining industry from a blue collar to a white collar workforce,” said Charles Dewhurst, Global National Resources Leader, Natural Resources Industry Group at BDO.
“With advancements in technology – from new software that makes prospecting easier, to advancements in mineral transportation – the industry is at a critical juncture. Technology, and the individuals who are skilled in developing and utilitising these tools, is now more important than ever as demands for greater returns and increased productivity are forcing the industry to innovate.”
As commodity prices continue to rise, mining executives desire to increase production to maximize revenues. With 30 per cent of executives noting that new technology will improve profitability in 2013, many are reinvesting their profits into technology that will improve and sustain their business in the future.
Despite their broader concerns surrounding labour and employment, 42 per cent of mining executives believe that their total number of employees in 2013 will remain about the same, and 38 per cent feel the size of their workforce will increase throughout the year.
Mining executives split on environmental priorities
While 34 per cent of international mining executives are concerned about domestic environmental policies, where they will direct their resources to address these concerns varies.
Water pollution, including acid mine drainage and runoff, is the most-funded environmental initiative at 48 per cent. Australia bucks this trend, with only a quarter of its executives citing it as a major project (25 per cent). Instead, 38 per cent of Australian executives indicate that they are focused on ecosystem disruption, the second most prominent area of funding globally (23 per cent). CO2 emissions round out the top three environmental concerns for mining executives, with one in five citing it as a major issue.
In fact, South Africa recently began discussions on taxing carbon emissions, potentially making it one of the largest sources of tax revenue in the country.
Other key findings from the survey include:
Corporate Social Responsibility (CSR) programs focus on employees, local communities. Forty-six percent of mining executives surveyed say that their corporate social responsibility plans invest most heavily in employee health and safety programs. Community outreach (30 per cent) and environmental stewardship (18 per cent) rank second and third amongst investment areas for the industry.
The United Kingdom cites anti-bribery/corruption legislation as a top domestic regulatory concern. Of executives surveyed in the U.K., 23 per cent cite this legislation as a worry; triple the survey average of seven per cent. This reflects the fact that the U.K. implemented strict new anti-bribery laws with extra-territorial reach in late 2010. With much of the U.K.’s mining operations occurring beyond its borders, executives are closely monitoring regulatory developments that may impact the way they do business.
Resource nationalism impacting mining companies around the globe. Of executives surveyed, 61 per cent note that resource nationalism will have an impact on their businesses in 2013. Their concern also extends to tax imposition and increases: 67 per cent anticipate an impact on their business this year as Australia’s ‘super tax’ takes shape and countries like South Africa plan for similar tax burdens.