The following are the top ten business risks and opportunities for mining and metals in 2022.

The following are the top ten business risks and opportunities for mining and metals in 2022. 

Disruption is rapidly transforming the mining and metals sector's understanding of where the most significant obstacles – and development opportunities – may lie. The climate problem, as well as rising stakeholder expectations, are becoming more powerful drivers of change. For the first time, environment and social took the top slot in our rankings, followed by decarbonization and then license to operate (LTO), which had maintained the top spot for the previous three years. 

Uncertain demand and innovative business strategies are two new entries to the list, highlighting the persistent instability in a market still afflicted by the COVID-19 epidemic.

Nonetheless, we see more possibilities than hazards for miners who are ready to make the transformative changes that may produce long-term value for businesses and the communities they serve.

Environmental and social issues 

Miners who can demonstrate how they contribute to a more sustainable future will have a competitive edge. 

Miners integrate environmental, social, and governance (ESG) factors into corporate strategies, decision-making, stakeholder reporting, Ecological, social, and governance (ESG) elements become a higher priority for investors, shareholders, and broader group stakeholders. Stakeholder pressure on topics like biodiversity and water management is projected to increase, requiring miners to gradually plan for mine closures and better manage the water-energy nexus to meet expectations.

Decarbonization

Developing a flexible decarbonization plan can aid in achieving net-zero and differentiation. 

With investors and governments abandoning thermal coal investment and carbon prices sure to rise, miners must consider decarbonization as any other strategic risk. 

Creating a flexible route to decarbonization, which involves scenario modelling and an evaluation of finance, technology, and assets, may assist businesses in achieving net-zero and differentiating themselves. And while many organizations have made massive progress in decreasing Scope 1 and 2 emissions, the time has come to focus on Scope 3. Those who successfully regulate these emissions will produce meaningful value and long-term sustainability.

Operating Permit 

May secure its mining's future by creating long-term value for all stakeholders. 

With LTO being more related to an organization's capacity to access resources, cash, and debt, a proactive response to these difficulties is crucial. Broader consultation with Traditional Owners, a more profound emphasis on brand enhancement, and a commitment to delivering value for shareholders and communities may help organizations establish a stronger LTO. Over 40% of our poll respondents believe that community participation will focus on mining and metals investor monitoring in 2022.

Geopolitics 

Miners will need to be proactive in navigating trade disputes, new administrations, and resource nationalism. 

The geopolitics of the COVID-19 pandemic, including export controls and industrial policies to increase "self-sufficiency" in critical products, as well as a global minimum tax on the world's largest corporations, are creating headwinds for globalization and exacerbating strains in the international rules-based order.

More geopolitical issues, such as shifting administrations and resource nationalism, are predicted in 2022. Seventy-nine per cent of miners anticipate an increase in royalties and taxes. Mitigating risks requires a multifaceted strategy that works with governments and strengthens supply chain resilience. 

Capital 

Miners must demonstrate their accomplishments as financing availability is increasingly related to ESG ratings. 

Access to financing for mining and metals firms remains challenging, with investors put off by risks connected with ESG, LTO, community difficulties, and volatility. Some firms with high-carbon assets are looking into alternate funding options like private equity. 

Competing for well-priced financing necessitates miners better demonstrate their accomplishments in both financial and non-financial concerns. Higher ESG ratings can provide access to a broader pool of reasonably priced finance. Because money is scarce, miners should restructure their portfolios and investments to fit their strategy and capitalize on shifting demand, notably for battery materials. 

Demand Uncertainty

Building adaptability can assist miners in dealing with price volatility, substitute concerns, and shifting demand. 

The energy transition increases the demand for minerals essential to renewable energy, electric cars, and energy storage systems. To fulfil this demand, miners will need to overcome significant supply-side obstacles, including acquiring money, securing LTO, and the geopolitical risk associated with minerals concentrated in a few markets. 

In a sector with extensive project lead times, the threat of substitution is also substantial. Advances in technology and the evolution of the energy transition may cause demand for certain commodities to shift faster than miners can keep up. The battery production timeframe highlights this danger.

Digitalization and innovation 

Miners are pushing innovation to address productivity, safety, and environmental, social, and governance (ESG) concerns. 

Digital and innovation have been critical instruments in assisting miners in increasing output. We anticipate using data science, modelling, and scenario planning increasingly more to support more rapid cost decision-making. 

COVID-19 also emphasized digital's enormous potential to enhance workplace health and safety. Miners that previously deployed automation and remote operation centres (ROCs) fared better during the epidemic, and, unsurprisingly, corporations aim to boost investment in these areas, according to our poll. 

Miners are also incorporating technology into their ESG strategy. Digital innovation can enable product diversification into greener items while improving reporting transparency.

Workforce 

Creating an inclusive, safe culture and career paths can help develop a workforce ready for the future. 

Border closures and an unattractive brand make it challenging for miners to locate the proper skills for a changing sector. To compete in a crowded market, miners must create a workplace that appeals to a broader range of workers. Improving cultural safety on-site must be prioritized, and miners should continue the mental health activities initiated in response to the COVID-19 outbreak. Diversity and inclusion are increasingly high on investors' agendas and should be a board-level requirement in mining and metals firms. 

Closing the sector's significant digital literacy gap would need more investment in high-quality online learning, often with other parties.

Brand-new business models 

Six models can assist mining and metals industries to operate in an increasingly uncertain environment. 

Miners have a chance to review whether existing business models are fit for purpose amid continuous uncertainty. Six models may be more helpful in assisting miners in capturing value during periods of volatility: 

Shared value model

Providing better rewards to host communities and governments directly. 

Circular business model: Waste reduction and emission reduction 

Vertical integration refers to acquiring or integrating downstream firms such as automakers. 

Horizontal market integration entails expanding into neighbouring industries, such as technology providers, to boost innovation.

Joint ventures can provide additional value to stakeholders while boosting access to reserves and skills. 

Agreements for Offtake: Providing low-risk capital access 

Companies must first identify where value, risks, and opportunities exist in the existing model before doing in-depth scenario planning and future market evaluations to determine which model suits best.

Joint ventures

Have the potential to provide additional value to stakeholders while also enhancing access to reserves and capabilities. 

Agreements on Offtake: Providing low-risk access to financing 

To determine which model fits best, firms must first identify where value, risks, and opportunities exist in the existing model, then perform in-depth scenario planning and future market evaluations.

Costs and productivity 

Balancing short-term earnings with long-term value can lead to long-term cost reductions. 

The COVID-19 epidemic has increased demand, but it has also increased the price of inputs, transportation, talent, and decarbonization efforts. Reduced costs and increased production require miners to balance short-term benefits and long-term value creation. 

Variability has a significant influence on miners' productivity. Managing this necessitates: 
Geological modelling has been improved to reduce uncertainty. 

Asset performance analytics to enable predictive maintenance and increase dependability 

Consistent results need operational discipline. It has integrated operational models aligned with markets to respond quickly to change.

Productivity approaches oriented on people and aided by technology can assist miners in achieving long-term, end-to-end gains while minimizing the impact on LTO.