Choosing the right solution for mitigating risk

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Overall, business risks and operating risks in the mining industry remained low in 2021, according to the latest World Risk Report courtesy of the Mining Journal. The report found fiscal and technology risks were low on the business side, while geological and infrastructure risks were low on the operational side.

Despite the overall ratings from the report, a deeper dive reveals some areas within business and operations where concerns are still very much present, and which mining companies will have to address in 2022. Tackling these issues effectively in the new year will require not only the right mindset but the right comprehensive solution.

COVID-19, Community Stakeholders Cause Concerns

Within the report, Resource Nationalism was one subsection in which industry stakeholders determined business risk to be high. Per the data, stakeholder feelings on the risk’s severity were based on the location in which the mining company operated. For example, more than 50 percent of respondents in Asia determined the risk of securing tenure “high” or “very high,” compared with 37 percent in the United States and North America.

Verisk Maplecroft, a risk analysis firm, cited the impact of COVID-19 as a major factor in resource nationalism risk. As the pandemic progressed, the firm noticed a higher tendency for governments to intervene in the sector and take control of resources as avenues to national revenue generation became necessary. According to a separate report from Verisk Maplecroft released earlier this year, 34 countries noticed an increase in resource nationalism in 2020.

Government stakeholders were not the only stakeholder demographic that showed risk factors. When looking at operational risks, community stakeholders also presented noticeable concerns for miners. Respondents rated three ESG related risks — securing social license, maintaining social license, and water management — were higher in 2021 than in 2018. (The report noted that since 2019 these ratings have improved slightly.) Additionally, respondents described managing Social Licenses risks as "very difficult.”

Taking the Lead With ESG

Given the nature of mining operations, sustainability has always been a key focus for companies in the industry. As ESG stakes become higher than ever, investors are placing a spotlight on how mines are tracking, managing, and reporting their sustainability efforts. As a result, it is no longer sufficient for mining companies to simply take intentional steps towards managing ESG risks and navigating the potential for work stoppages due to government or community action. They also need to be completely transparent in how they are tracking their efforts, reporting their progress, and mitigating these risks.

In fact, according to Cecilia Jofré, Senior Executive and Global Chief Sales Officer at IsoMetrix, mining companies should strive to be ESG trendsetters.

"Private enterprise should ideally be looking to go beyond what current legislation requires in a particular jurisdiction to comply with what is best global practice," said Jofré. "This will help accelerate the pace of change throughout the industry and set an example for other companies within their sector."

An important step in managing ESG risks is through shared data and protocols. Implementing a comprehensive technology solution that can collect data concerning outside factors on a specific project — and make that data available company-wide — is a necessary step for operating in the current climate.

IsoMetrix, a leading EHS and ESG software company, offers multiple solutions which make collecting, standardizing, and reporting ESG data easy. These solutions can help set sustainability KPIs, measure performance based on the KPIs, and monitor community feedback to help ensure social license to operate. In addition, the IsoMetrix platform can manage key ESG risks, indicators, and conditions that may materially affect a mining company’s ESG profile, such as incidents and due diligence findings. It allows managers to then assign actions to their staff based on the findings and effectively track them through to close out, promoting accountability and advancing progress towards ESG objectives. As investors place time and resources into ESG efforts, investing in a technology platform that promotes accountability and scalability of these efforts is paramount.

Find out more about IsoMetrix and its solutions for managing risk in mining. For more information on Mining Journal’s World Risk Report 2021, visit the Mining Journal’s website.

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