EXPERT OPINION
keep abreast of regulatory changes
and maintain open dialogue with
regulatory bodies.
6. Cash optimization
(1st in 2016)
A recovery in commodity prices and
successful cost-cutting initiatives
have resulted in higher margins
and improved cash generation. It
is therefore critical for companies
not only to prioritize effectively
their cash commitments, but also
to continuously improve their cost
structures to cushion themselves
from adverse price movements and
anticipated extra expenditure.
7. Social license to operate
(SLTO) (4th in 2016)
Occupational accidents and diseases,
as well as environmental issues may
have an adverse impact on the image
of industry players and the sector
as a whole. To retain their SLTO,
companies should closely monitor and
address the needs and expectations
of all stakeholders and shift from a
reactive communication model to a
proactive one.
8. Resource replacement
(new)
Exploration costs are as important
for mining and metals companies
as innovation costs for technology
companies. Exploration is the first
cost to be cut as commodity prices
decline but it is not the first to be
restored. It is, however, essential for
sustainable sector growth. To address
this risk, companies, in addition to
increasing exploration spending, may
form strategic partnerships and enter
joint ventures, as well as invest in
new projects or mines.
9. Access to and
optimization of energy
(7th in 2016)
Mining and minerals processing
requires a large amount of energy. To
secure such energy supply, companies
use a mix of energy resources, including
fossil fuels, hydroelectricity and
renewable energy. Following the global
trend towards reduced emissions and
water usage, industry players need to
develop an effective energy policy and
choose appropriate energy resources.
10. Managing joint
ventures (8th in 2016)
Finally, it should be noted that
only three business risks out of the
top 10 from 2008 are still critical
today. During the supercycle, such
risks as skills shortage and industry
consolidation topped the list. Today,
risks related to digital technology
and cybersecurity are most critical.
It is hard to predict which risks
the industry will face in 10 years.
To remain competitive and ensure
sustainability companies therefore
have to be highly flexible and adjust
quickly to new conditions.
The full version of the report in
English is available at:
bit.ly /ey - 1 0 - r isks- mms -17-18
Companies usually enter into joint
venture (JV) arrangements for risk
mitigation. However, when JVs are
managed badly, they can be extremely
disruptive, particularly to project
schedules and key decision points.
supported by EUROBAK
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