KPMG: Optimism, despite the challenges, in the mining industry worldwide

The global shift to coal emissions is leading to growth and optimism in the global mining industry, according to KPMG International’s “Global Mining Outlook 2022”.

The annual survey, published for the 12th consecutive year, is based on the findings and experience of KPMG professionals in member companies around the world, as well as the analysis of a survey involving more than 300 industry executives in 23 key markets. It is worth noting that for the first time Greek companies are included in the research sample.

In the most recent survey, 62% of respondents revealed that they are optimistic about their body’s growth prospects next year.

Although the percentage is slightly lower than last year’s survey (66%) and reaffirms the volatility of commodity prices, combined with broader uncertainty over geopolitical developments and the COVID-19 pandemic, market optimism does not seem to be limited. Despite significant fluctuations, commodity prices remain high, thanks to huge increases in demand for minerals, including lithium, nickel, cobalt and graphite – all key ingredients in freeing the world of carbon. .

While part of the impact of the COVID-19 pandemic has subsided, it is noted that the top risks facing the mining industry continue to be found outside the sector rather than within it. Commodity prices, licensing risks and access to inventories remain key issues for executives, but environmental and geopolitical factors are increasingly taking up time on board meetings. The risk rated higher by the respondents was related to the environmental risks, including the new regulations. Last year, the Environment, Society and Governance (ESG) factors ranked fifth among the top risks.

In the wake of the COP26 climate commitment commitments, it should come as no surprise, according to KPMG, that almost three-quarters (72%) of mining heads surveyed said they expected the wide range of ESG factors will cause disruption in the industry over the next three years.

The industry is facing increasing control and pressure from investors as people want to address the urgent issue of climate change, but for many executives, lack of clarity, inconsistencies in rules in different regions and ever-changing regulations could limit , otherwise optimistic, growth prospects. More than half (55%) of respondents said they did not think ESG issues were easy to understand and unified across the market.

An important way to reduce the carbon footprint is through the adoption of new technologies – with 87% of executives believing that technology plays a key role in addressing the challenges posed by ESG issues. Nearly half of executives (46%) believe that technological innovation will be a source of significant disruption to the industry over the next three years, and almost everyone is determined to use this as an opportunity rather than a threat.

An impressive note from this year’s survey was the complete absence of COVID-19 from the top 10 hazards named by executives. The industry, like most, has adapted to the “new regularity” of the pandemic, with some of the lasting effects still being problematic for the industry, including increased global demand and supply chain problems.

However, people now look forward to economic recovery and increasingly accept that many of the global issues that are lingering, including ESG, need to be addressed more actively.

Alexandros Veldekis, Partner, Auditor of KPMG in Greece on the occasion of the report states “Despite the constant threats, risks and challenges facing the mining industry, its future continues to look optimistic. This means that companies are constantly finding ways to deal with successful issues such as high commodity and energy prices, trade conflicts, political instability and world peace, achieved by constantly adapting their business models to new strategic alliances, raising new capital and integration of new technologies to optimize their production and minimize their costs.Also, in recent years companies have learned to adapt to faster and more efficiently manage the new external risks that arise.Undoubtedly the ESG agenda companies of e mining industry with priority given to protecting the environment and slowing down climate change. The viability of these companies in the future is no longer based solely on their economic growth, but on their “green” change. “This new challenge is now seen as an opportunity for companies, as they have the potential to improve all their areas of operation through their path to achieving the goals of sustainable development.”