KPMG says climate change miners’ top risk

Climate change risks have overtaken concerns around commodity prices among top ASX-listed mining companies, according to a report by KPMG.

KPMG’s 2024 mining risk forecast revealed climate change was the number one risk facing ASX 300 mining companies based on self-reported material risks from recent annual reports.

Community relations and social licence to operate climbed to the second greatest risk, followed by commodity prices falling to third place, after it was the top risk facing miners for three years.

Risks around health, safety and security also were of concern, as were operation and access to resources risks, according to the data.

“What stands out is that climate and community/social licence risks have jumped in the past year to be the new top two concerns for miners,” KPMG risk consulting partner Caron Sugars said.

“They are front of mind for the sector right now and are being talked about in boardrooms of Australian miners.

“We would say the challenges from uncertainty regarding climate change and social licence to operate are considerable, but so too are the opportunities for the sector. Miners need to ‘bake in’ risk strategy around climate change.”

Uncertainty over commodity prices was considered the greatest risk last year, followed by financial risks and the search for talent.

KPMG Australia partner in charge of mining and metals, Nick Harridge, noted short-term volatility for spot prices in minerals such as lithium and nickel, but said that critical minerals remained a demand and supply story with longer-term demand expected.

“While conditionals are more challenging for a mining company than ever, capital also wants to invest,” he said.

“We’re seeing additional pressures around commodity price volatility and downward pressure on margins.

“At the same time, operational and capital expenditure pressures have increased and staffing shortages of twenty per cent or more mean the need for rigorous planning and cost management.”