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Fluctuating commodity prices top risk for companies: survey

March 1, 2018  

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Fluctuating commodity prices is the top risk facing mining and metals companies this year, finds an annual survey of Canadian mining executives by KPMG in Canada.

As volatility re-emerges in commodities markets, shifting prices will be a key theme as mining industry participants from around the world gather in Toronto next week for the 86th annual Prospectors & Developers Association of Canada convention.

“Commodity price risk is once again the leading challenge facing mining executives as they consider the downside of the recent upswing in prices,” says Heather Cheeseman, GTA Mining Leader and Partner, Audit and Risk Consulting, KPMG in Canada. “With volatility making a comeback, mining businesses must plan for the future as they optimize scarce resources, flatten the cost curve, sharpen their focus on corporate social responsibility and mitigate political risk in key jurisdictions.”

The latest issue of Insights into Mining shows a relatively consistent risk landscape compared to previous years as Canadian and global mining businesses continue to navigate uncertainty in a highly competitive industry. Permitting risk and capital allocation returned to the Top 10 this year, while access to capital and liquidity, controlling capital and operating costs, maintaining a social license to operate and managing geopolitical instability also figure high on the list of top risks.

Below are the Top 10 risks facing Canadian mining and metals companies in 2018:

  1. Commodity price risk
  2. Permitting risk
  3. Access to capital, including liquidity
  4. Community relations and social license to operate
  5. Controlling capital costs
  6. Environmental risk
  7. Political risk
  8. Ability to access and replace reserves
  9. Controlling operating costs
  10. Capital allocation

Each year, KPMG in Canada updates the market with critical insights into the risks, challenges and multi-year trends that are top of mind for Canadian miners.

Understanding the geopolitical risk landscape

On Tuesday, 6 March, KPMG in Canada will host Divya Reddy, Practice Head of Global Energy and Natural Resources at Eurasia Group, the world’s leading political analysis firm, to brief company executives on the top geopolitical risks for 2018. Reddy will provide the latest views on hot topics, such as U.S. tax reform and the broader Trump agenda, Brexit and NAFTA negotiations and China’s globalist strategy, and cover the implications for business, including mining and metals companies.

KPMG International last year signed a strategic alliance with Eurasia Group to help global companies understand geopolitical risk in an increasingly uncertain world.