Activist investors expected to take a strike at some mining firms in 2012.
With a heightened demand for metals and minerals across the globe, a new Deloitte Touche Tohmatsu report suggests that social, economic and political challenges loom for Canadian mining companies.
The report, titled ‘Tracking the Trends 2012,’ highlights what Deloitte describes as the ‘perfect storm’ forcing mining companies in Canada and around the world to incorporate more complex scenarios into their strategic planning.
One of the findings of the study included a lack of key talent in certain areas of the mining industry. The report says that there are not enough workers to fuel the increase in commodity demand that is expected to rise within the next year.
‘With commodity prices surging to all-time highs, accelerated production has become the mantra of most mining companies,’ the report says. ‘There simply are not enough people to power projected mining company growth, and each year skill gaps extend to a wider range of functions.’
Glenn Ives, Deloitte Canada's Americas mining leader, said demographics and ineffective succession planning techniques contributes to the array of problems the industry is currently facing.
‘There is a 20-year gap in the mining industry. If you think about it, mining was not that great an industry to join in the 1980s and 1990s, and so there weren't a lot of new graduates joining the mining industry in that time frame,’ Ives told the Canadian Business Network.
Another top concern is corporate social responsibility (CSR) initiatives. According to the study, ‘industry stakeholders are finding themselves subject to higher levels of activism than ever before,’ due to ‘restless stakeholders,’ who are calling for a commitment to CSR strategies.
Deloitte suggests that in order to meet the demands of the broad stakeholder base, mining companies should combine risk management and CSR strategies to develop and measure key performance indicators that are similar to the methods used to track production.
With tighter laws set to go into effect, regulation is seen as another gray area for mining firms. The report points out that as countries compete to become the world’s toughest regulators, other nations have been ramping up their regulatory initiatives. As a result, regulators are increasingly focusing on the mining industry and there is a need for these firms to review their regulatory compliance procedures.
Other emerging issues identified in the report were those associated with the cost of doing business, commodity price chaos, the battle to keep profits, capital project quandaries, non-traditional financing dilemmas and black swan events.
