A new survey of mining leaders by KPMG in Canada finds an industry confronted by stringent compliance and regulatory demands, pressures related to community and environmental matters, and concerns about access to capital at a time when the world’s transition to clean energy depends on the secure and sustainable supply of critical minerals.
“The outlook for growth is strong, yet the risks and opportunities that lie ahead for the mining industry have never been broader or more diverse,” says Heather Cheeseman, a partner and the National Mining Leader for KPMG in Canada. “The consensus among mining leaders is, that their ability to develop new mines is becoming an almost insurmountable uphill struggle. Access to capital isn’t the only barrier. Permitting remains as live an issue as ever, with the length of time and effort required to secure permits showing little sign of improving.”
The International Energy Agency (IEA) warned earlier this year that unless more investment is made in projects such as new mines and recycling, there would be a shortfall in critical metals and mineral supplies. According to the IEA, the world’s projected supply of lithium will meet only 50 per cent of global demand by 2035 and copper resources will meet only 70 per cent of demand.
Despite the apparent challenges with developing and operating mines, nearly 80 per cent of mining executives are optimistic about the industry’s five-year growth prospects, up sharply from 62 per cent from KPMG’s last global survey in 2022, the report says.
“The Canadian government’s support for the critical minerals exploration and development is likely driving confidence among Canadian mining leaders, while it’s increasingly protectionist stance on foreign takeovers garners a mixed reaction,” says Katherine Wetmore, a partner and GTA Mining Leader for KPMG in Canada. “But, while the overall picture is one of confidence, the reality is mining companies are grappling with so many different issues, with the top two risks being community relations and social licence to operate and commodity prices.”
Community relations and social licence to operate are regarded as important near-term and long-term risks to operations, the report finds. Access to capital, permitting risk, and geopolitical uncertainty round out the top five.
Nearly half (46 per cent) of mining leaders said mergers and acquisitions are critical strategies for their growth, although they are increasingly looking to establish strategic alliances, joint ventures, and partnerships to tap into new technologies, innovative ways of working and expert skillsets, the report says.
“The industry’s focus on securing resources for technology and renewable energy is anticipated to drive continued M&A activity in the near future,” says Ms. Wetmore. “In fact, copper and lithium accounted for over 70 per cent of critical mineral deals by volume last year.”
The report is based on a survey of 100 mining executives worldwide, primarily in Canada, and include operators, exploration and development companies, mining service providers, and mine finance companies with a market capitalization between $100 million to more than $10 billion.
The key findings include:
- 79 per cent of mining executives are optimistic about the industry’s five-year growth prospects
- 90 per cent agree industry and governments must work more closely together to align and streamline permitting processes
- 78 per cent believe the risk of operating in foreign countries is increasing, making collaboration within industry and across governmental bodies even more important
- 61 per cent agree that environmental, social and governance (ESG) initiatives are mainly driven by regulatory, legal, compliance or contractual obligations as opposed to meeting the core expectation of stakeholders and building trust
- 53 per cent agree their organization has a well-defined ESG strategy with the resources needed to execute on it and only 55 per cent believe ESG risks are well-defined and understood internally
- Only 40 per cent say their organization has made formal commitments to reach net zero commitments across scopes 1, 2 and 3 by 2050 or earlier.
For more insights, read the report, Digging deep: Risks and opportunities in mining.
About KPMG in Canada
KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.
The firm is established under the laws of Ontario and is a member of KPMG's global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca.
For media inquiries:
Caroline Van Hasselt
National Communications and Media Relations
KPMG in Canada
(416) 777-3328
cvanhasselt@kpmg.ca
To arrange an interview with a KPMG spokesperson, please contact:
Nancy White
National Communications
KPMG in Canada
(416) 777-3306
nancywhite@kpmg.ca
