The mining industry has always been a risky one, with worker safety concerns representing only a portion of the challenges. Increasingly strict regulations, the reliance on technology, inconsistent demand for raw materials and high commodity prices are concerns that every mining company has grappled with. Fortunately, most mining businesses are able to counteract this with effective risk management programs. Many industry executives are already ahead of the game in terms of their ability to effectively manage risks. They understand that big gains often come with taking big risks, and well-designed programs enable them to safely pursue those opportunities. This is almost a necessity, given the instability of their operational environment and the difficulty with assessing which opportunities will pay off. A risk management program allows mining companies ensure the success of their operations. Canadian Mining Journal contributor Michael Marino, who is also the assistant vice president at RSA Insurance, explains that effective collaboration with risk management experts could greatly benefit mining operations. The key lies in understanding all the risks before committing to any specific project. You sould Review the political landscape thoroughly before beginning a mining operation, as problems in this realm can halt an operation at any development stage. Typical threats to supply chains include poor access to replacement equipment in remote areas, transportation barriers and difficulty accessing qualified laborers, so a review of these risks is non-negotiable in order to properly monitor project profitability. Mining Process:
Types of risk in mining: A separate report from Ernst & Young noted some of the key risks that mining companies need to look out for in 2015. While the environment in which they operate is always changing and presenting new threats, it’s crucial that business leaders in the industry are able to understand risk trends so they can develop more effective programs. One of the leading concerns in the industry is a skills shortage. During the economic recession, the mining industry went relatively unaffected and as such, attracted workers from other walks of life. Now that the global economy is normalizing, some of these people are returning to their previous sectors. Additionally, baby boomer miners are retiring and there isn’t an influx of talented workers to replace them. This can lead to project delays, greater labor costs and other production impacts. Another key risk is resource nationalism. Countries are beginning to realize the value of the raw materials that stem from their land and as such, are beginning to impose higher taxes on foreign mining companies. This can increase the cost of operations significantly. There are dozens of risks that mining companies face on a regular basis, which is why it’s critical for them to develop an effective risk management programs that can help them deal with threats and capitalize on opportunities. By utilizing modern risk management software and tools, combined with the expertise of risk management consultants, mining businesses will be better suited to deal with volatile industry they work in. Types of risks in mining: The Effect of the Financial Crisis On Mining As a number of mining companies were financing operational expansion on the back of debt, many have been significantly affected by the recent global financial crisis. Credit markets seized up, requiring balance sheets to be shored up to prevent a funding crisis. Drastic measures had to be taken including suspending operations, divestment of non core assets and other cost-cutting measures to protect earnings. Less than two years later, these strategies have, broadly speaking, paid off. Operational efficiencies have increased and, as many countries demand more and more commodities (including coal, copper and iron ore) to underpin the expansion of their infrastructure, the mining industry is once again thriving with commodity prices rising. Additionally, the ongoing rapid expansion of a middle class in China, India, other parts of Asia, Latin America and Eastern Europe, continue to fuel the voracious demand for these commodities. Global Expansion Brings New Risks To satisfy this demand, heavy investment has been seen in mining assets in Canada, South America, Australia, Asia and Central Europe amongst others. In addition, some mining companies are looking at ways to get to quality reserves in non-traditional locations, including Mongolia, the Democratic Republic of the Congo, Afghanistan and Mauritania. Safety and environmental control of mining activity remain key drivers, but expectations of sustainable development require the provision of electricity, water, healthcare and education to the local communities where mining operations are based. Companies are also more exposed to Political Risks and K&R activity than had previously been the case. The creation of new mining techniques (such as the ability to secure minerals from under ice, lakes, and inside volcanic Sulphur mines) requires the development and use of advanced extractive technologies which can create additional risks. The expanding geographical reach of mining companies brings greater exposure to host government actions – such intervention has increased substantially in recent years. The economic crisis has led to the introduction of new taxes and royalties on mining companies. We have seen levies introduced in Chile and many parts of Africa – and proposed in Australia. Some countries are also looking to replace lost revenue by nationalizing mineral assets, which could lead to the imposition of resource rents, affect royalty rates, increase control of foreign participation, and introduce new mining codes. Furthermore, the increased demand for rare earths, particularly in the ‘green’ sector, and then the tightening of export restrictions on these by China, searches for alternative sources of supply are ongoing in Australia, Brazil, Canada, South Africa, Greenland and the US. Many existing sources were mothballed when China undercut world prices in the 1990s and it will clearly take some time to restart production. Environmental Responsibilities Mining owners and operators face many significant and complex environmental risks throughout the mining cycle including groundwork, handling hazardous substances, waste disposal and control. These include risks arising from more onerous regulations on liability for environmental damage and growing pressure from shareholders to disclose environmental performance. New regulatory structures are designed to address the potential impacts of mining activities on the environment and to ensure the local community doesn’t become financially liable for the reclamation of abandoned sites with a risk of civil fines, penalties and sanctions being imposed on those companies who fail to satisfy the local civil authorities. Changing Weather Patterns In the last 12 months, natural disasters such as earthquakes and floods have had a real impact on mining companies, as have climate change and water scarcity issues. Factoring the potential effects of climate change is of particular relevance to the mining industry when undertaking environmental risk assessments (as well as integrating them within Enterprise Risk Management programs). Human Capital An ageing specialist workforce affects many sectors, but perhaps none more so than in mining – particularly in the developed countries where the disparity between the numbers approaching retirement and those entering industry is increasing. Growing demand for metals and minerals just adds to this challenge.   Risk management in mining: The safety of people, plant and the environment is central to process planning and management. There are fashions in the methods and techniques used to assess such risks even though the underlying principles are always the same. However, with the growing need to be seen to do the right thing as well as actually doing it, while minimizing the cost of studies, the approach to risk identification and assessment has started to become more formal. Process risk assessment and management takes in everything from long term low level hazards to major catastrophic events, as well as OH&S. A strong technical input is generally required to ensure that all significant issues are identified, and the assessment of the likelihoods and impacts of process risks usually rests on engineering analysis. Techniques for analyzing major risks, such as explosion, fire or the release of toxic materials, are often specialist fields in their own right, supported by sophisticated computer based tools. Mining operations are complex. They aren't your run-of-the-mill type projects. These billion dollar complexes consist of various interconnected projects, operating simultaneously to deliver refined commodities like gold, silver, coal and iron ore. It’s a five stage process. What you get: • safety concept • Hazardous area classification • Active fire fighting • HAZOP& HAZID reports • List of hazardous sources • Q H.S.E Plan • Safety and environmental management • Hazardous area classification and procedure review • Design safety management • Safety equipment layout • Material safety data sheet (MSDS) • Risk Likelihood and impact analysis Report • SIL Study Report • ONSHORE F & G SYSTEM • Waste & Emission Management