2022-10-30-安永_中国_-Top_10_business_risks_and_opportunities_for_mining_and_metals_in_2023_56页_5mb

Mining and Metals Industry: Top 10 Business Risks and Opportunities (2023)

Executive Summary

• The mining and metals sector is facing transformative pressures driven by climate change, ESG, and geopolitical shifts, requiring fundamental changes in business models.
• EY's 15th annual report highlights a cycle of boom, bust, and digital transformation after analyzing sector trends since 2007.

Crisis and Transformation

Key Trends and Analysis

• The sector has evolved from price volatility to social and environmental disruptions as top risks.
• Post-crisis transformations include digital adoption (AI, blockchain) and circular economy strategies.
• 76% of survey respondents identified water stewardship as a top ESG risk amid climate change and water scarcity.

Optimization Through Resilience

• Companies focusing on ethical supply chains, community legacy building, and circular economies are differentiating themselves.
• License to operate (LTO) is growing more complex as ESG and governance expectations rise, with cultural reconciliation being critical.

ESG (Environmental, Social and Governance)

Core Challenges and Opportunities

• ESG Remains No. 1 Priority: Companies must go beyond compliance to demonstrate net-positive environmental and social impact.
• Focus on water scarcity, biodiversity, and Scope 3 emissions as major scrutiny areas for investors.
• New frameworks like TNFD (Nature-Related Disclosures) are accelerating biodiversity risk integration.

Critical Stakes

• Pressure for gender diversity and DE&I initiatives continues to grow with 90% of respondents citing it as a significant challenge.
• Digital tools are increasingly vital for transparent ESG reporting and data governance. Globally recognized frameworks are emerging to enforce sustainability disclosures.

Geopolitics and Climate Change

Global Uncertainty

• War in Ukraine, resource nationalism (tax hikes, royalties), and U.S.-China rivalry dominate geopolitics.
• Redistribution of power in key regions like Australia, U.S., Chile, and Peru requires adapting business strategies.

Climate Risks and Implications

• Climate change accelerates energy transitions; decarbonization remains a major front despite cost challenges.
• Scope 1, 2, and 3 emissions are critical focus areas, with supply chain emissions being a major pressure point.
• Physical risks from extreme weather, flooding, and water scarcity continue to threaten operations.

Operations and Workforce

Operational Efficiency Gap

• Cost pressures from energy inflation, input costs, and talent shortages complicate operational viability.
• Productivity challenges are being addressed through data analytics and AI, but worker retention in FIFO roles and balancing safety remains complex.

Workforce Transformation

• Labor crisis: 36k unfilled jobs in U.S. mining in 2022; upfront attention needed to retrain workers and address skill gaps.
• Attracting young talent requires reframing the sector's image and technology adoption.

Capital and Process Innovation

Capital Allocation Shifts

• ESG-linked financing and green bonds are becoming central to capital discipline.
• Copper, lithium, and nickel investments are increasing amid energy transition demands.
• Horizontal integration and value-chain extensions remain strategic options.

Digital and Data Integration

• Increasingly, AI, blockchain, and IoT are deploying across operations to track emissions, streamline logistics, and minimize costs.
• Digital transformation is integral to future operations, but cybersecurity threats require dedicated attention.

New Business Models

Strategic Pathways to Value

• Rationalize, grow, or transform based on demand patterns, energy transition readiness, and geographies.
• Circular economy initiatives and mining-as-a-service models support sustainability goals.
• Bundling mineral products and enhancing commercial models through treasury and hedging strategies provide flexibility.

Next Steps and Recommendations

- Strengthen scenario planning, integrate ESG into core strategy, and focus on digital innovation.  
- Build resilient supply chains through visibility and collaborative partnerships.  
- Align talent strategies with long-term workforce needs, including better onboarding and forward-looking skill development.
- Secure capital through ESG-linked financing and strategic asset allocation.  

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