KPMG South Africa launches mining risk survey

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From the forum, KPMG conducted a mining risk survey with over 80 c-suite delegates that were at the forum. Viewers of the survey will learn that uncertain regulatory framework, weaker commodity prices, increased working costs, constrained infrastructure, high labour costs coupled with poor levels of productivity and strained labour management relations, are some of the challenges that have placed South Africa’s mining industry in dire straits.

KPMG’s head of mining in South Africa, Jacques Erasmus, says that despite the fact that South Africa is not in the best place from an economic perspective, and is fraught with political issues and industrial challenges, there is still room for optimism about the future and opportunities in the country’s mining sector.

Long-term outlook

“The long-term economic fundamentals of the industry are still strong. For thousands of years, mining has been the key engine propelling the development of civilisation and mining is still most important in this technically advanced global community,” says Erasmus.

When making comparisons between the South African and North American survey results show how different perceptions can be between regions in a global industry and how much the stability of the local economy impacts the risks which executives focus on.

While six of the top ten risks overlapped between the two regions, they appeared in a very different order and there were some major differences. In both regions, the survey results reinforce the importance of having a robust enterprise risk management process that identifies emerging risks, in order to deal with a complex web of issues at the company level.

The top risks once again demonstrates and highlights challenges that the African and more specifically the South African mining industry finds itself in.

Importance of engagement

“The fact that African executives are still facing challenges linked to emerging economies are not surprising and it is something that we expect to see for several years. It does, however, illustrate the importance of collaborative engagement between mining companies, the government and labour,” concludes Erasmus.

The survey results also revealed that mining executives are still focussed on ensuring that the fundamentals are secured and managed at their mining companies. This compares to KPMG Canada’s Annual Mining Executive Forum in North America where survey results suggested that executives may be starting to look toward the future even though external business conditions such the global economy, commodity prices and equity markets remain volatile.