Paul Mitchell is the EY Global Mining & Metals Leader. He recently toured Canada speaking to executives in the mining and metals sector. He is based in Sydney, Australia.
Canada’s mining and metals sector is going through an intense period of transformation. Digital advances aren’t the only factors redefining the sector’s future. Growing public conversation and focus on social responsibility are influencing decisions at the executive table. For the second year in a row, miners cited licence to operate as the number one risk and opportunity facing their business.
A number of key elections and resulting government changes or potential ones to come – particularly in Africa and Latin America – are heightening this risk. Future regulation around mining licences or royalties are unknown in certain parts of the world as governments face pressure to balance economic gains with the interests of their people. End consumers are increasing pressure on the sector, demanding ethical supply chains and a lower carbon footprint. But it’s not just the general public that’s increasing pressure. Shareholders, and not just ones we would traditionally describe as “activists,” are driving many miners to reshape their portfolios. A growing segment of ethical investors are demanding greater transparency around environmental, social and governance efforts.
What these trends all have in common is a particular perception of the sector. This “brand” problem isn’t new for miners. The sector needs to be able to show how it’s prioritizing sustainable and inclusive growth to redefine its image as a responsible source of the world’s minerals. Minerals that are critical not just to the digital age, but also the transformation under way to reduce carbon emissions and achieve the goals of the Paris Agreement. Many companies are already making strides toward a greener future for commodities, and there’s an immense opportunity for greater collaboration around these issues going forward. Creating long-term value through licence to operate will also set companies up for success in addressing the second greatest risk they face: the future of the work force.
The work force’s future moved up from seventh position in the risks-and-opportunities ranking last year, and executives are grappling with what their future workers will look like and how they can attract the right skills needed to support their businesses. An EY study commissioned by the Minerals Council of Australia found that 77 per cent of occupations in the sector will be enhanced or redesigned by 2030 because of the introduction of technological advancements. That’s an immense work-force shift, made all the more difficult by increased competition for in-demand skills from the STEM disciplines. Now, layer on the declining attractiveness of the sector among students and you have a serious problem. Miners need to convey their value to the next generation in the same way they are addressing investor concerns. The shaping of team culture, building trust and developing clear learning pathways need to be at the heart of every mining company’s vision of the future.
Addressing the future of work-force concerns is also a necessary step to tackling much-needed digital and data optimization – the third most pressing risk on mining executives’ agendas. The data landscape is complex to navigate and prioritize. Companies have yet to understand fully what data are important and how to extract value from them. These are the basics the sector needs to focus on. Digital transformation isn’t about pushing the boundaries of innovation. It’s about raising the visibility and performance of the business by embracing available technologies and maximizing the value they can generate. That’s where data become crucial.
Altogether, these top three risks (and opportunities) paint a strong picture of an industry already being disrupted and on the path to redefining its future. What’s known is the important role commodities will play in enabling the world of tomorrow. The greater question is how mining companies will stay relevant and ensure they’re building a better future for everyone. Those who answer this question will stick around to live it.