Mining can be highly mechanised and often occurs in remote locations with vulnerable supply chains. But these days, more elements in mining don’t need to ‘get their hands dirty’. Remote visualisation technology, deep spectral analysis of test sites, fully autonomous exploration and extraction of rare earth minerals are all part of the future of mining. However, according to FM Global’s 2024 Mining Loss Report, grand promises of profits come with more significant risks and barriers to overcome.
One must remember that the mining and processing of the ore is the source of the steel our industry forms and fabricates. It is our raw material to manufacture.
The complexity of the mining industry can lead to a significant risk of business disruption, costing companies millions or even billions of dollars due to lost market share, missed growth opportunities, and negative investor sentiment.
External factors, such as the increasing frequency of extreme weather events and skilled labour shortages, heighten the risk of disruption. Mining companies understand these risks and aggravating factors well. The comprehensive financial impacts due to the downstream effect of disruption on the entire business need to be better understood.
An operational disruption impacts an entire operation. Beyond the direct cost of repairs are the opportunity costs: lost time, business, and work hours. Corporate reputation can suffer. Market share can be lost. Stock prices can fall, reducing investor confidence and even capital flight.
A report by Pentland Analytics measured over 20 years showed that a reputational crisis's average share price impact is -5% across the post-event year, significantly reducing a company’s market capitalisation.
In this environment, you can’t afford not to be prepared. Only through a thorough evaluation of your operations can you develop a holistic view of how risks might impact your business. This will allow you to plan for and adequately mitigate the effects of a catastrophic event or disruption. Through risk mitigation, you can help your enterprise become resilient and prepare for future threats.
In the Canadian context, with labour disruptions, infrastructure interruptions, and extreme weather events becoming more common, this type of holistic analysis is more necessary than ever. By adopting robotics and AI and having workers operate machinery remotely, these risks can be prioritised, and investment in resiliency can be justified and secured. Operations and facilities in some areas of Canada were shuttered, and underground mining activities across the country were suspended during the major fires in northern Spring/Summer 2023. These wildfires are estimated to have cost Canada’s mining sector millions of dollars in direct costs and millions more in losses due to the disruption of value chains.
Mining companies may need help mitigating these risks using internal resources. Many companies try to control costs in a capital-intensive business, leaving few resources to invest in risk mitigation. For example, companies often keep very little excess inventory on hand and are reluctant to spend the money required to keep spare equipment in storage — meaning a disruption in operations can quickly snowball, leading to missed deliveries and lost market share.
The threat of disruption will only increase, with wildfires, floods and other extreme weather events on the rise. Investing in resilience is not just insuring against loss. It is about investing in the future and bolstering your competitive position for decades.
Paul Hellard
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