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Most mining companies globally are moving towards stakeholder capitalism

Mining companies moving towards stakeholder capitalism

Canadian companies struggle to raise capital, identified as one of their top 3 risks

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​With climate change concerns fuelling investor activism, the mining industry is moving to embrace stakeholder capitalism, finds KPMG International's latest global mining risk report. Three-quarters of mining companies indicated that the industry needs to redefine success using more holistic metrics that include social values, community stakeholders, health, safety, and long-term development.

"The bottom line is no longer the only gauge of success," says Katherine Wetmore, Partner, Energy and Natural Resources, KPMG in Canada. "The priority is to demonstrate greater transparency and accountability related to sustainable and responsible mining practices."

The sustainability movement explains in part why tailings management was identified as one of the industry's top 10 risks for 2020.

While commodity prices and permitting were predominantly the key risks, Canada was the only country where mining companies identified access to capital among their top three risks. By contrast, Australian companies are most concerned about climate change, including natural disasters and global trade wars, while Brazilian and U.S. companies noted community relations and social license to operate among their top three risks.

The report notes that almost 60 per cent of companies believe that access to traditional sources of financing has deteriorated, and nearly 70 per cent say new business models are needed, such as strategic partnerships, private equity, and public private partnerships.

"With the traditional public mining company model becoming increasingly difficult to maintain, companies are looking at joint ventures and partnerships as important objectives for growth," says Ms. Wetmore. "But, even more importantly, we're seeing a growing recognition from mining companies to be more innovative and use technology to help them become more productive and efficient and to achieve longer term sustainable growth."

The largest companies – over US$10 billion – said they do not feel the need to merge and can rely on technology, organic growth, and talent to grow their organizations.

Companies identified organic growth through exploration and capital investment, together with innovation and technology transformation as their two most-important growth objectives for their organization.

The top 10 risks identified by global mining and metals companies include:

  • Commodity price risk
  • Permitting risk
  • Access to capital, including liquidity
  • Community relations and social license to operate
  • Political Instability
  • Economic downturn/uncertainty
  • Regulatory and compliance changes & Environmental risks, including new regulations
  • Global trade war - new
  • Ability to access and replace reserves
  • Tailings management – new

About KPMG in Canada

KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) is a limited liability partnership, established under the laws of Ontario, and the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG has more than 7,000 professionals/employees in over 40 locations across Canada serving private- and public-sector clients. KPMG is consistently recognized as an employer of choice and one of the best places to work in the country.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

For more information, please contact:

Caroline Van Hasselt
National Communications
KPMG in Canada
(416) 777-3288
cvanhasselt@kpmg.ca

© 2020 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.

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