Climate change overtakes commodity prices as biggest risk at top end of the mining sector, KPMG finds

After spending most of 2023 with commodity price woes at the top of their risk list, Australia’s largest mining companies are now more worried about their environmental obligations and social licence.

KPMG’s 2024 mining risk forecast released on Wednesday had climate change as the number one risk among ASX300 mining and mining services companies, based on the firm’s analysis of material self-reported risks to the market.

The second biggest risk struck a similar tone, with community relations and social licence to operate jumping up from third place in the previous year.

Discussing the report findings as well as anecdotal feedback from clients, KPMG partner risk consulting Caron Sugars said there was a lot of uncertainty for companies about what stakeholders were expecting on climate reporting, emissions reduction targets and how to meet them.

She said organisations also wanted to avoid being seen to be greenwashing and were figuring out the workforce

The KPMG partner also pointed out it was just as much about the risks that didn’t make the list as those that did.

“It is surprising that we aren’t seeing a stronger focus on cyber, but potentially its wrapped into some other risks,” she said, adding that political instability had also dropped off the list, with conflict in the Middle East occurring too recently to be included in the analysis.

Commodity price risk was still front of mind for miners in third place, KPMG Australia partner mining and metals Nick Harridge said, despite falling from the top spot last year.

He said a tough 2023 on the price front for the likes of lithium and nickel, coupled with higher operating costs, would likely to set the scene for deals.

“Where we’re sitting at this juncture now...we are seeing the opportunity for more corporate M&A and that is across the operators and developers,” he said.