Identification of risks and the management thereof is an important role of management in a company.
On a yearly basis listed companies use their integrated report to communicate to stakeholders the risks they have identified to the business and the management thereof.
According to to industry-focused assurance, advisory and tax services provider PwC South Africa’s Mine Report 2017, the industry has not seen a significant change in the risks identified by mining companies, being broadly:
- volatile commodity prices and foreign exchange fluctuations;
- the regulatory, political and legal environment;
- socio economic environment around mines;
- sustainable business plans or budgets;
- labour relations;
- operating costs;
- reliance on third-party infrastructure: Water supply and power security
- employee safety and health;
- liquidity and capital management; and
- compliance with environmental standards.
PwC points out that in 2017, the risks have remained relatively consistent with three companies also including cybersecurity and its consequences as a risk.
PwC mentions that it is not surprising to see cybersecurity being recognised as a risk.
PwC’s Global state of the information security survey data shows that the compound annual growth rate (CAGR) of detected security incidents has increased 66% year on year across all industries since 2012.
In the metals and mining industry worldwide the cyberattack threats identified include:
- espionage (spying)—The highest cyber risk facing this sector;
- hacktivists—Pose a severe risk to the sector; and
- sabotage—Risk is low, but could evolve in the future
Safety remains a focus area for mining management
This is reflected in it being recognised as a significant risk for most mining companies and the continuous detailed reporting provided by the companies.
“Safety is probably one of the biggest success stories for the mining industry over the last 20 years.
In a country where the general safety culture is very weak, as for example reflected in road deaths, the mining industry has done extremely well to reduce fatalities from above a 1 000 a year less than 20 years ago to the current levels in the 70s.
“That said, everyone is in agreement that one fatality is one too many,” explains PwC.
Mining companies are investing in equipment, training and cultural changes to improve their safety outcomes.
Statistics provided by the Department of Mineral Resources (DMR) show a downward trend in fatalities for the industry as a whole over the past 10 years, indicating that investments made in safety initiatives by both companies and the DMR are delivering positive results.
Various market commentators have pointed out that lower levels of employment positively impact safety statistics.
Taking fatalities and injuries as a percentage of the number of people employed in the mining sector, then the recent improvement in fatalities is marginal with injuries remaining relative flat over the last few years (except for the 2014 platinum strike which impacted the statistics).
Other than perhaps for platinum that had an unfortunate year in 2016, other commodities are generally following an improvement trend.
In the first half of the 2017 calendar year there have been 38 fatalities—gold: 15, platinum group metals: 14, coal: four and other: five.
The focus on mine safety has become a high-profile public concern.
This was demonstrated most recently by the extensive media coverage of the deaths of five miners following a seismic event at the Kusasalethu mine in Carletonville in August 2017, and coverage of other fatalities that have occurred over the last number of years.
Safety will remain a priority of mining companies, unions and the DMR.
“Our findings are based on the financial results of mining companies with a primary listing on the Johannesburg Stock Exchange (JSE), as well as those with a secondary listing on the JSE whose main operations are in Africa.”
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