Canadian and global mining executives say they face a Sisyphus-like struggle to bring new mines into production, but nearly 80 per cent of them are optimistic about the industry’s five-year growth prospects.
That belief was outlined in a recent report by KPMG, Digging deep: Risks and opportunities in mining, involving a survey of 100 executives of operating mines, exploration and development companies, service providers and financiers, mostly in Canada.
That sense of optimistim is up, dramatically, from the 62 per cent recorded in the last survey in 2022. However, the industry responds that it’s facing stringent compliance and regulatory demands, pressure attributed to community and environmental matters, and access to capital issues at a time when world governments want to transition to clean energy and more critical minerals are needed.
"The outlook for growth is strong, yet the risks and opportunities that lie ahead for the mining industry have never been broader or more diverse," said Heather Cheeseman, a partner and the National Mining Leader for KPMG in Canada in a news release.
"The consensus among mining leaders is, that their ability to develop new mines is becoming an almost insurmountable uphill struggle. Access to capital isn't the only barrier. Permitting remains as live an issue as ever, with the length of time and effort required to secure permits showing little sign of improving."
The bottomline, according to the International Energy Agency (IEA), is that unless there’s more investment in new mines and recycling, there will be a shortfall in critical metals and mineral supplies. The world's projected supply of lithium will meet only 50 per cent of global demand by 2035 and copper resources will meet only 70 per cent of demand.
Community relations and social licence to operate are regarded as important near-term and long-term risks to mining operations, the report said,. Access to capital, permitting risk, and geopolitical uncertainty round out the top five.
"The Canadian government's support for the critical minerals exploration and development is likely driving confidence among Canadian mining leaders, while it's increasingly protectionist stance on foreign takeovers garners a mixed reaction," said Katherine Wetmore, a partner and GTA Mining Leader for KPMG in Canada.
"But, while the overall picture is one of confidence, the reality is mining companies are grappling with so many different issues, with the top two risks being community relations and social licence to operate and commodity prices."
Among the report’s findings are that 90 per cent of mining insiders agree that industry and governments must collaborate to align and streamline permitting processes.
On the ESG (environmental, social and governance) side, 61 per cent of survey respondents that these initiatives are driven by regulatory, legal, compliance or contractual obligations rather than meeting the core expectation of stakeholders and building trust. And only 53 per cent responded that their organization has a well-defined ESG strategy with the resources available to act upon it.
Nearly half of mining leaders said mergers and acquisitions are critical strategies for growth as they look to establish strategic alliances, joint ventures, and partnerships to tap into new technologies, innovative ways of working.
"The industry's focus on securing resources for technology and renewable energy is anticipated to drive continued M&A activity in the near future," said Wetmore. "In fact, copper and lithium accounted for over 70 per cent of critical mineral deals by volume last year."
