Accounting giant Ernst and Young says ESG has topped the list of miner’s fears for second year in a row, while Russia’s invasion of Ukraine, resource nationalism and Chinese tensions with the West have pushed geopolitics into second place.

The annual survey of the quandaries and hopes of the world’s biggest mining companies has revealed concerns about the long term future continue to dominate, with climate change rounding out the top three of EY’s 15th annual Top 10 Business Risks and Opportunities for mining and metals survey.

But also moving up are issues brought to the fore by this year’s sudden shockwave of inflation, with supply chain disruption entering the list in sixth place and costs and productivity rising from 10th to 5th, behind license to operate.

“Managing ESG risk is becoming more complex. Miners who get it right can get an edge on competitors in many ways – from accessing capital, to securing license to operate, attracting talent and mitigating climate risk,” EY Global Mining and Metals leader Paul Mitchell said, with issues around diversity and workplace harassment also increasing in importance in the wake of a series of reports on sexual assaults at mine sites in WA.

“The sector needs to do more to improve health, safety and wellbeing. A balanced approach to managing both critical risks and foundational workplace safety and well-being can help companies build a holistic, robust approach,” he said.


Time for miners to show they’re serious about decarbonisation

Miners have increasingly rolled out serious and ambitious targets for decarbonisation, with Fortescue Metals Group (ASX:FMG) divulging plans last week to spend US$6.2 billion in a bid to eliminate carbon emissions at its iron ore mines by 2030.

But EY says not enough miners are taking action to minimise “the physical risks of climate change”. 76% of respondents listed water stewardship as their biggest ESG risk, while many miners are seeing emissions reductions stagnate with diesel and fossil fuel generated power still making up the bulk of their electricity supply.

“Many mining and metals companies have committed to highly ambitious decarbonization targets and a sharper focus on reporting emissions, but 2023 will reveal whether the sector is on the trajectory to net zero,” Mitchell said.

He thinks mining companies are not making the most of data and analytics, with ESG reporting platforms expected to be the focus of digital investment over the next two years.

“Companies that scrutinize and shift business models now, can get an edge on competitors, as demand and expectations change,” he said.


How did the miners end up today?

They finished the session in an ebullient mood, with all the big lithium stocks among the winners, and coal miner Whitehaven (ASX:WHC) and iron ore company Fortescue (ASX:FMG) leading the large caps.

Rio, BHP, South32 (ASX:S32) and BlueScope Steel (ASX:BSL) were all heavily in the green as the Materials sector lifted 2.57%. Energy stocks were up 1.72%, arresting a poor day across other areas of the ASX 200.

Miners were among the leading mid-tiers as well, with gold miner Perseus (ASX:PRU), copper digger Sandfire (ASX:SFR), high grade iron ore producer Champion Iron (ASX:CIA), coal bull New Hope (ASX:NHC) and lithium plays Sayona (ASX:SYA) and Lake (ASX:LKE) finding favour.

Core Lithium (ASX:CXO) fell after releasing an operating update, saying its concentrate plant at the new Finniss operation in the Pilbara would be operational from the first half of next year.

The company is planning a tender via a digital exchange in the style of Pilbara Minerals’ Battery Material Exchange platform for the first shipment of DSO lithium from Finniss after pulling the first spodumene ore from the Grants pit on September 15.


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