Page 115 - Risk Report 2024

7. Energy 8. Logistics

Mining, mineral processing, and refining operations are energy The sector relies heavily on efficient rail operations, particularly
intensive and require a reliable electricity supply. Erratic electricity for bulk commodities, and failures of this service have
supply due to Eskom’s challenges, may potentially have devastating forced a shift to road transport, which have amplified syndicate
impacts on the sector in terms of safety, production, current and activities, and security threats to commodities. The sector must
future project interruption, and shortened life of mines (especially continually update security protocols, including routes, escort
in the event of a national grid collapse). Increased electricity costs processes, and storage facilities. Through the Minerals Council,
may impact overall production costs, and project costs – resulting
in lower free cash flow margins. An unreliable power supply also has mining companies have assisted in addressing some of the
an ongoing impact on the economy, with further indirect potential challenges.
increases in operational costs. Most mining firms maintain structured
routine engagements with Eskom to receive grid status updates
and energy security forecasts. They have devised tailored energy
security strategies and tactical plans specific to their operations,
encompassing proactive assessments of future energy demands
aligned with operational needs, coupled with exploration of diverse
energy technology options such as solar, wind, and hydropower. Given
the critical nature of uninterrupted power supply, particularly for
underground operations, firms conduct comprehensive grid collapse
simulations utilising backup power systems as part of holistic BCPs
covering all facets of the organisation, including underground,
surface, and service areas, to manage potential impacts of a national
grid failure.

9. Food Security 10. Climate Change
The sector may face production challenges, due to limitations Climate change, GHG emissions, and access to secure and
on access to food (whether resulting from economic or logistical sustainable green energy are material risks to sustainable
constraints), and broader socio-economic impacts on local mining. Climate change affects many aspects of mine closure
communities. This prompts many mining companies to address design and costs (e.g. wetter conditions, increases in extreme
food security concerns as part of their CSI efforts, including weather events, increased risk of land erosion and base-flow
practical programs to support agriculture ventures, promote conditions). Higher temperatures and drier conditions can affect
subsistence farming, and contribute to sustainable food water balances, efficiency of cooling systems, increased fire
systems. These efforts not only help to mitigate the potential risks, and potential degradation of vegetation and biodiversity.
consequences of food insecurity but also contribute to the Further resultant risks to mining operations include overtopping
broader socio-economic development of local communities. of tailings dams and other water storage areas during extreme
rainfall events, and post-closure landscape design. The
efficiency of habitat restoration and rehabilitation are also
affected by extreme climate variation post mine closure, and
reduced water availability due to extreme temperatures (higher
evaporation) and water stress, as well as increased risk of
flooding. In response, the sector must understand the impact
of climate change on its various operations and implement
climate decarbonisation and climate change targets.

11. Technology 12. Skills

Continually evolving cyber risks for the sector include 3rd Amid a global shortage in mining skills, international mining
party attacks via the internet using various attack vectors to groups increasingly poach highly skilled SA mining employees.
exploit human or technical vulnerabilities (e.g. malicious intent The sector also faces an aging workforce with youth not being
to harm information or operational technology infrastructure, interested in conventional mining. Implementation of labour
reputational damage, and operational disruption for rationalisation processes in certain mining sectors require
monetary gain or competitive advantage). Proactive cyber cost curtailment, and cash preservation measures which will
risk assessments and continuous control effectiveness and increase the loss of critical skills. In response, mining companies
monitoring are critically important to inform disaster recovery have implemented skills retention programs, including training,
plans. On the opportunity side, technology developments in mentorship, flexible working hours, competitive rewards, etc.
mechatronics, instrumentation and metallurgy have enabled
exploitation of mineral that were previously unprofitable and
unsafe. The industry is seeing an increase in mechanisation and
digitisation to improve productivity and safety.