31 August What is concerning mining and metals industry executives today? August 31, 2020 By Sally Parker Environment, Industry, Mining Mining, Industry, ClimateChange, PriceRisk, GlobalRecession 0 Recent surveys conducted in the mining and metals industry sector indicate that climate change, price volatility and the risk of a global depression are the top concerns for executives. The KMPG Mining Risk Forecast 2020/21 Report nominates climate change and price risks as top-of-mind for executives while a mid-year survey by White & Case found that the fear of a global recession was the most common concern amongst those surveyed. It’s worth noting that the KMPG survey was conducted before the COVID-19 pandemic. However, the concerns raised have ongoing relevance both now and into the future. Climate change Climate change poses a number of risks to the mining industry. Cyclones can cause mine shutdowns while drought can have a deleterious effect on water supply and affect the granting of water licences. Bushfires may also threaten operations in some areas. As climate change becomes a bigger political issue, mining executives are also feeling the pressure from governments and consumers to be seen as part of the solution, not part of the problem. The larger players, like Rio Tinto and BHP, have all faced pressure at shareholders’ meetings to align with the Paris Agreement. Companies are also looking at ways to reduce emissions, divest from coal and work with customers to reduce domestic emissions. Historically, commodity prices were the primary influencer of capital investment. Now mining executives must factor in environmental, social and governance measures to attract investments. Price risk Commodity prices have been volatile for a while, with the COVID-19 pandemic amplifying executive concerns. Price and currency hedging has resulted in several currencies experiencing short-term volatility. This is affecting businesses with overseas operations and those with overseas customers and suppliers: in other words, the vast majority of the mining and energy sector. Different commodities are facing different market pressures. KMPG reports that while metallurgical coal is down 21% and thermal coal 23%, gold and iron ore are both up by a similar amount. The rally in gold prices is likely to be driven by economic uncertainty, suggesting it will continue for some time: in contrast, iron ore is up due to specific supply disruptions in Brazil. Since the long-term effects of the pandemic are still unknown, executives are struggling to know how to plan effectively. There are business continuity plans in place to address the logistical difficulties of COVID-19, but macroeconomic risk remains high. Global recession The third concern is the risk of global market weakness, with 39% of respondents in the White & Case survey nominating this as their top concern. As country after country has shuttered its businesses in an attempt to control COVID-19, the International Monetary Fund projects that global growth will be -4.9% in 2020. The slowdown in the growth of the Chinese economy is of particular concern to mining and energy executives. China consumes around half of the world’s commodities, so a dip in their economic growth will have a significant effect on demand. What can mining and metals industry executives do? While the global outlook has changed since the KPMG survey was conducted, many of the medium and long-term risks identified remain the same. The advent of the COVID-19 pandemic has underscored the need for business resilience in the mining and metals industry. Now more than ever, companies need to embrace operational agility. While nobody could have foreseen the effects of COVID-19, the companies who have been able to adjust quickly have weathered it better than most. This means embracing technology and processes that allow you to work remotely and creates efficiencies in the system. It may also mean addressing supply chain risk to reduce your vulnerability to crises overseas. Environment, social and corporate governance policies will help to address climate change risks, including reputational and regulatory risk. Executives who embrace innovation and are willing to be proactive about risk may find that they can turn concern into opportunity. Related Articles COMMUNITY LEGAL RIGHTS IN MINE CLOSURE PLANNING; A COMPARATIVE ANALYSIS OF THREE AUSTRALIAN STATES Professor Alex Gardner, University of Western Australia Law School, and Laura Hamblin, formerly research associate at the UWA Law School, 2021 Why does the Mining Act 1978 (WA) not provide secure legal rights for community consultation in relation to mining lease proposals and mine closure plans? Addressing this question presents an important theme for this comparative review of some core features of the regulatory frameworks for mine closure in three Australian States. It also raises important questions for future legal research. Western Australia, Queensland and Victoria have prominent but vastly different, and thus uniquely significant, mining industries. Western Australia’s mining industry has a long history of large and smaller scale mining of a diverse range of minerals by various methods that pose significant mine rehabilitation challenges.[i] Queensland’s mining industry is similarly large and diverse, dominated by export coal production, and planning future minerals development in a decarbonising world.[ii] Victoria has a smaller mining industry with a large historical legacy dominated by a coal mining industry for domestic electricity generation in the Latrobe Valley, which is closing as the State actively transitions to renewable power sources.[iii] These States also have significant differences in the regulation of their mining industries. What all three States do have in common is the significance of their mining industries to both the State economy and the communities who depend on or live near mining operations. Importantly, all three States are confronting large legal and regulatory challenges in managing mine rehabilitation and closure. The key to addressing these challenges is effective mine closure planning: the closure of a mine site has ripple effects that are not merely environmental and economic, but social and cultural too. The initial approval of a mine closure plan occurs before any mining has begun and, with the life cycle of a mine often spanning decades, regulatory bodies are approving hypothetical closure scenarios, potentially subject to vast changes. Regulatory bodies may then seek to enforce closure requirements enshrined in a plan that may wane in relevance as mining operations progress, the updating of which may depend on the miner. Yet remedying the regulatory system so that it creates adaptable but consistently effective mine closure outcomes for affected communities still begins at planning. Although that planning is an iterative process across the life of the mine, it is very important at the initial stage of approval. Recent legislative reforms in all three States are adding to the regulatory rigour and adaptability of mine closure planning, though there are very different legal requirements for community consultation. This article aims to explain and assess the regulatory reforms by undertaking a comparative analysis of mine closure planning across Western Australia, Queensland and Victoria, with a focus on the initial approval stage and how stakeholders and communities are brought into that process. The facilitation of continuous and comprehensive community engagement is critical to ensuring that mine closure planning accounts for environmental, economic, social, cultural and safety outcomes after mine closure, but it has not been possible to consider here the process of ongoing mine closure planning, especially for amending mine closure plans and determining satisfaction of mine closure plans leading to resource tenure relinquishment.[iv] The article begins by considering core concepts of mine closure planning and the regulatory goals that inform it. It then provides a comparative overview of each State’s mine closure planning requirements under the mineral resources, environmental and land use planning laws and draws out some of the different regulatory structures and processes for mine closure within each State. The third step in our analysis compares the ways in which those laws provide for local communities’ participation in mine closure planning, with specific attention to whether the regulatory provisions create legally enforceable rights for effective community engagement. The article concludes with a summary of the key points from the discussion of three themes in our analysis: (i) the importance of clear definitions of core concepts and key goals, (ii) mine closure planning as an essential part of a mining proposal, and (iii) the legal definition of community engagement and consultation rights. Mine closure planning and implementation is necessarily influenced by many other spheres of law including taxation law, investment law, water law, and the rights of traditional owners, to name a few. A potentially directly relevant Commonwealth law is the Environment Protection and Biodiversity Conservation Act 1999 (Cth), which may require environmental impact assessment of a mining proposal and closure plan and lead to approval conditions supplementing State requirements.[v] Whilst acknowledging the importance of these adjacent spheres of the regulatory frameworks for effective mine closure planning, this article does not attempt to address their impact. In particular, the rights of Traditional Custodians are a crucial part of mine closure planning that are only briefly noted here and that would benefit from future research. WA Department of Mines, Industry Regulation and Safety, Major Commodities Review 2022-23”. Qld Government, Department of Resources, Queensland Resources Industry Development Plan, June 022. Vic Government, Department of Jobs, Precincts and Regions, Latrobe Valley Regional Rehabilitation Strategy. See L Hamblin, A Gardner, Y Haigh, Mapping the Regulatory Framework of Mine Closure, May 2022, CRC TiME, for a broader exploration of the full life cycle of mine closure regulation. In Buzzacott v Minister for Sustainability, Environment, Water, Population and Communities  FCAFC 111; (2013) 214 FCR 301, , -, referring to the range of approval conditions, which included mine closure. In setting conditions under the EPBC Act, the Commonwealth Minister must consider any relevant conditions under State or Territory law: at  citing Lansen v Minister for Environment and Heritage (2008) 174 FCR 14. ARELJ Case Note - Guidance on the principles that apply to a decision of the Warden under S 122E of the Mining Act 1978 (WA) in respect of the removal of a caveat Richore Pty Ltd v Cougar Metals NL  WAWC 1 How COVID-19 could change mining for the better The mining industry was deemed an essential service by the Government, which has enabled it to continue to operate during the COVID-19 pandemic. However, this hasn’t been without its challenges. New processes and procedures were required to address safety and social distancing and issues of supply and worker mobility have impacted how the industry operates. But with adversity comes opportunity and the mining industry has thrived and realised the potential for new improvements amidst the pandemic. ARELJ Article- Golden Pig: The continuing effects of Forrest on the Western Australian Mining Industry Digital transformation in mining and energy As the global shift to remote work gathers pace, it is more important than ever that the mining and energy sector embraces technology. But a digital transformation offers more than flexible working arrangements. It has the potential to drastically cut down on industrial accidents, optimise operational processes and slash costs. Climate change action is being driven by business and industry While everyone’s focus in recent months has been on the COVID-19 pandemic, climate change was top of everyone’s mind when the year began with bushfires ravaging Australia. The pandemic has seen individuals and organisations assess their ideologies and perspectives on a range of topics, climate change being one of them. It now seems that climate change is back on everyone’s agenda and none more so than business and industry. Showing 0 Comment Comments are closed.