Commodity Risk Key Concern For Aussie Miners: KPMG

Each year, KPMG International researchers survey a sample of global mining executives to uncover what risks are top of mind for them. The results, and KPMG’s analysis of them, form the basis of the firm’s annual Global Mining Risk Survey with Australian mining risk forecast 2020/2021.

“While the global economy has changed, the challenges identified at the beginning of 2020 remain relevant. Inevitably, the leading risks identified – such as climate change risk, commodity price risk, and trade/ geopolitical risk will continue to challenge Australian mining executives as we look to FY2020/2021 – and beyond,” Caron Sugars Australian Mining Risk Assurance Partner KPMG Australia, said in the report.

Key risk – price volatility

Managing critical risks – in particular commodity price risk and macroeconomic risks – was top of mind for global mining executives in 2020 according to KPMG Risks and Opportunities for Mining – Global Mining Risk Report 2020.

The top three concerns were commodity price risk, credit risk, and currency risk named by 55 percent of respondents as being the top concerns for their own mining company – whilst 66 percent named these same risks as the leading concern for the mining industry.

Commodity prices and permitting risk once again occupied the number 1 and number 2 risks, respectively. Along with access to capital, community relations and social license to operate these were the top four risks identified by respondents for the second year in a row. Despite this consistency, there is a clear message from 75 percent of respondents identifying the need for the industry to better measure and report on success factors beyond financial results, based on the recognition of a broader range of stakeholders.

Macroeconomic risk at a time of global uncertainty

Macroeconomic risk factors – including the risk of trade war, global recession and commodity price risk – are always a factor in the mining sector and this year’s survey underscores this.