MINERS are under increasing pressure from the challenges of meeting their environmental, social, and governance (ESG) mandates as governments all over the world set their sights on the industry to fill gaps in their tax revenue, according to an EY Global study cited by EY Philippine affiliate SGV & Co.
“Among the top risks and opportunities, the mining sector in the Philippines is greatly impacted by geopolitical uncertainty, maintaining a license to operate due to anti-mining sentiments, and rising costs and productivity challenges,” SGV Mining and Minerals Industry Sector Leader Eleanor A. Layug said in a statement.
“On the other hand, the increasing focus on ESG, the disruption brought about by digital transformation, and the advent of new business models provide mining players the opportunity to future-proof their businesses,” she added.
“The sector needs to do more to improve health, safety and wellbeing. A balanced approach to managing both critical risks and foundational workplace safety and well-being can help companies build a holistic, robust approach,” the study added.
According to the study, global conflict and ongoing disruption are also creating new urgency for miners to rethink traditional operating and business models.
“Geopolitics has risen to number two in the ranking and global volatility is likely to be ongoing, driven by changing governments in key markets, competition between key economies, and a growing tide of resource nationalism,” according to the study.
“We see evidence that governments are trying to fill revenue gaps created through the COVID-19 pandemic with new or increased mining royalties. For example, Chile plans to introduce copper royalties, and in Australia, the Queensland state government has already increased royalties on coal. For mining and metals companies, the ability to quickly assess the impact of these changes, as well as different alliances, trade flows and governments on business decisions will be critical,” it added.
Meanwhile, the survey also found that ESG has become a priority for key stakeholders.
“Managing ESG risk is becoming more complex. Miners who get it right can get an edge on competitors in many ways — from accessing capital, to securing a license to operate, attracting talent, and mitigating climate risk.”
Mining and metals companies have also become progressively better at managing climate risk, but there are still opportunities to improve.
“Not enough miners are taking action to minimize the physical risks of climate change, which may threaten operations,” the study read.
“Many mining and metals companies have committed to highly ambitious decarbonization targets and a sharper focus on reporting emissions, but 2023 will reveal whether the sector is on the trajectory to net zero,” it added.
Mining and metals executives surveyed say that data mining and automation, as well as the introduction of an ESG platform to track metrics and reporting, will be the focus of digital investment over the next one to two years.
“We still see some miners taking a siloed approach to implementing technology. An integrated, business-led approach to digital transformation can identify more opportunities to solve some of miners’ biggest challenges, including ESG, climate risk, productivity and costs,” the study also found. — Luisa Maria Jacinta C. Jocson