Mining's social risk rises

Sector calls out for shared vision

Disruptive events, like violent community protests, pose risks that can destroy mining projects and threaten the recent promise shown in South Africa’s fragile mining sector. Rather than avoiding these risks by withholding their resources, investors could be
supporting the solutions.

“One of the most important obstacles currently facing the  mining  sector  in  South  Africa,  is  the  lack  of  a shared  belief  in  the  industry’s future  –  and  how  such a future is envisaged and achieved,” said SRK director and  principal  consultant  Andrew van Zyl. “While management, labour, government and communities are key role players, there is an important contribution to be made by financiers and investors in providing vision and resources to create a more prosperous sector.”

Environmental,  social  and governance  (ESG)  risks can  pose  significant  financial  and  reputational  risks for  investors.  Various  global  initiatives  have  focused on  aligning  mining  strategies  with  the Sustainable Development  Goals. These  address  mining’s  impact from exploration, through operations to mine closure, and are highly cognisant of ESG risks. Significantly, the Investing in Africa Mining Indaba 2020, being held in Cape Town in February, has made this risk area one of its regular focal points.

“These risks are increasingly important ‘modifying factors’ in the equations by which we convert mineral resources, or theoretical ore in the ground, to mineral reserves that can actually be profitably mined,” said Van Zyl.

Authors: Andrew van Zyl (Director | Principal Consultant)

SRK Africa