Future growth now the top business risk for mining and metals companies

Canadian companies also dealing with new regulations, talent crunch

VANCOUVER, July 7, 2015 /CNW/ - Cyclical behavior and short-term focused shareholders have pushed "switch to growth" to the top of EY's annual ranking of business risks in mining and metals companies globally.

Bruce Sprague, EY's Canadian Mining & Metals Leader says: "A switch to growth mode, productivity improvement and access to capital are all critical risks for mining companies around the world – and Canadian companies are no different. But we have some additional risks that companies here can't afford to let fly under their radar. Increased transparency requirements – such as the Extractive Sector Transparency Measures Act which came into effect on June 1 – and a looming skills shortage are issues that should be top-of-mind for mining companies in Canada."

EY's report, Business risks in mining and metals 2015-2016, notes that in Canada an estimated 40% of the workforce in resource extraction sector is at least 50 years old, and around 33% of those are expected to retire by 2022.

"These retirements will impact operational continuity and lead to a great loss of organizational know-how and operational experience for mining companies," says Sprague. "It's a big issue that companies must address. Strong talent management programs that focus on retaining the right people for today's challenges will be as critical to the future success of mining companies as investment in exploration."

According to the report, the top 10 business risks for mining and metals companies today, compared to the top 10 in EY's 2008 report at the peak of the super-cycle, provides a stark contrast to the issues faced now and then, and underlines the cyclical nature of the sector. Just three of the top 10 risks from 2008 rank in the top 10 this year.

"A focus on regaining lost productivity has led to a serious lack of innovation in the sector, which pushed it into our top 10 risks this year," says Sprague. "There's a lot of room for improvement when it comes to innovation. It's no secret that compared to most other industries, there has been minimal transformational innovation in the mining sector. That's something companies across the board really need to prioritize if they're to thrive into the future."

Top 10 risks
2015		2008 (peak of the super-cycle)
01	Switch to growth	01	Skills shortage
02	Productivity improvement	02	Industry consolidation
03	Access to capital	03	Infrastructure access
04	Resource nationalism	04	Social license to operate
05	Social license to operate	05	Climate change
06	Price and currency volatility	06	Rising costs
07	Capital projects	07	Pipeline shrinkage
08	Access to energy	08	Resource nationalism
09	Cybersecurity	09	Access to energy
10	Innovation	10	Increased regulation

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SOURCE EY (Ernst & Young)

Erika Bennett, [email protected], 403 206 5157; Julie Fournier,[email protected], 514 874 4308; Sasha Anopina, [email protected], 416 943 2637