EY suggests increased industry efforts to effectively manage social, safety and environmental aspects of the business during COVID-19 could raise standards in other areas.
"In general, mining companies managed the immediate health and business impacts of COVID-19 well by safeguarding employees and communities, but the lessons learned now need to be applied to other aspects of licence to operate — including water management, decarbonisation and scope-three emissions," said Jeff Swinoga, EY's co-leader for the Canada Mining and Metals unit.
"By developing a clear strategy that addresses a broader spectrum of environmental, social and governance factors across local and national communities, companies can better access the capital they need to seize growth opportunities, diversify and increase their investor base and obtain debt at a lower cost."
"High impact risks" that are rare but potentially catastrophic came in as the number-two risk for miners while "productivity and rising costs" was in third place.
EY said industry executives indicated the pandemic had "clearly demonstrated" the importance of understanding and reviewing potential high-impact risks, "especially given the significant link between a company's ability to identify and manage them well, and its licence to operate".
"Productivity and rising costs continue to be on the radar for mining and metals companies, and their importance has been amplified in these times of volatility," EY co-leader Theo Yameogo said.
"While all mines are affected by declining ore grades, increasing complexities across the value chain and pressure on commodity prices, there's a silver lining," he said.
"COVID-19 restrictions have triggered compelling reasons to rethink cost structures, remove silos and anchor performance around relevant productivity metrics."
New to the list for 2021 were geopolitics at position five and and "volatility" at eight. EY said the shifting geopolitical landscape in large economies was changing sector dynamics and driving a trend towards economic protectionism, including tariffs and export bans. Likewise, fluctuations in both supply and demand can cause increased volatility and more massive swings in commodity prices.
According to EY, COVID-19 has created a critical need for the sector to develop a fast, cohesive response to the crisis. In doing so, it broke many long-standing organisational barriers, in particular those silos inherent on mine sites. Now, many companies are seizing the opportunity to do more to remove complexity, overcome historical obstacles to change and accelerate a transformation agenda that focuses on long-term resilience.
EY believes the sector is in a "perfect storm of disruption" that creates an opportunity to progress long-stalled structural changes and accelerate transformational projects.
"The mining industry will need to make sustainable, long-term decisions as they deal with the return of severe commodity price volatility, the threat of geopolitics and evolving stakeholder priorities," said Yameogo.
"Moving forward, many companies will look to do things differently - to remove complexity, overcome historical barriers and accelerate a transformation agenda that focuses on long-term resilience for the business, symbiotic relationships with communities and the renaissance of the entire sector."
EY surveyed more than 250 global mining and metals executives between June 29 and August 31 this year.