Ernst & Young: Licence to operate, the top risk for mining companies

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More than half (54%) mining companies worldwide consider the license to operate (LTO) as the greatest risk to their activity, according to EY’s 11th Annual Report “Top 10 business risks facing mining and metals in 2019-2020”, which presents the views of more than 250 mining executives worldwide. Licensing issues are today the leading business risk, rising six positions up among other hazards, in a context of growing nationalism, changing societies’ perceptions of mining activities, and a major impact of automation on the workforce.

As the industry seeks to redefine its image as a sustainable and responsible source for the planet’s minerals, the report mentions the growing social aspirations, the impact of technology developments on stakeholders and the need for closer cooperation with all stakeholders, as key factors shaping the escalating risks.

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Digital effectiveness remains a constant risk to the industry

The leading risk for the past year, digital effectiveness, is now ranked second in the 2019-2020 risk rating. The implementation of digital technology remains a key challenge for the industry. While mining companies are making important steps towards implementing digital solutions on individual issues, the findings show that they do not have the same success across the value chain. Indeed, 72% of respondents say they invest 5% or less of their budget in digital transformation. At the same time, a recent opinion poll of more than 600 mining and mining officials found that 37% of managers have little or no knowledge of the digital landscape.

The evolving transformation landscape remodels the mining industry

The risks associated with transformation appear for the first time in the risk rating for the industry, and it is in the eighth place. As automation has already begun to generate new data on human resources, and 31% of respondents state that technology companies have the potential to play a more important role in the industry, the concept of transformation is also present in the top 10 risks in the EY’s report.