• Environmental policy tops domestic regulatory concerns
  • Mining companies are investing resources to stop the spread of water pollution
  • Tax increases, resource nationalism negatively impacting businesses

BRUSSELS – 13 March 2013 – International mining executives are bracing for the negative impact the lack of a skilled workforce will have on their organisations, according to new research published by BDO.

Of the mining executives surveyed, 79 percent feel the lack of a skilled workforce will have a negative impact on their business this year. While environmental policy tops executives’ domestic regulatory concerns, with 34 percent citing it as a potential issue in the year ahead, labour and employment issues are a close second, with 30 percent of executives noting it as a major concern. The survey of 130 C-Level and senior financial executives at mining companies in the United States (US), South Africa, United Kingdom (UK), Australia and Canada sought their insights on regulatory affairs, employment and the environment.

While executives around the globe grapple with labour and employment issues, 63 percent of South African executives note this is their primary concern – twice the survey average – due in large part to high regional unemployment rates and sustained labour unrest driven by working conditions related to wages and social issues.

Mining executives are facing labour shortages head-on with technology. The industry has an opportunity to be at the forefront of innovation, improving both production and prospecting with new technologies that will increase efficiency and produce greater returns. In fact, 50 percent of executives believe that substituting technology for labour will have a positive impact on their business in 2013, creating a new intersection in the industry of old and new techniques.

“We are in the midst of a transition in the mining industry from a blue collar to a white collar workforce,” said Charles Dewhurst, Global National Resources Leader, Natural Resources industry group at BDO. “With advancements in technology – from new software that makes prospecting easier, to advancements in mineral transportation – the industry is at a critical juncture. Technology, and the individuals who are skilled in developing and utilitising these tools, is now more important than ever as demands for greater returns and increased productivity are forcing the industry to innovate.”

As commodity prices continue to rise, mining executives desire to increase production to maximize revenues. With 30 percent of executives noting that new technology will improve profitability in 2013, many are reinvesting their profits into technology that will improve and sustain their business in the future.

Despite their broader concerns surrounding labour and employment, 42 percent of mining executives believe that their total number of employees in 2013 will remain about the same, and 38 percent feel the size of their workforce will increase throughout the year.

Mining executives split on environmental priorities

While 34 percent of international mining executives are concerned about domestic environmental policies, where they will direct their resources to address these concerns varies. Water pollution, including acid mine drainage and runoff, is the most-funded environmental initiative at 48 percent. Australia bucks this trend, with only a quarter of its executives citing it as a major project (25 percent). Instead, 38 percent of Australian executives indicate that they are focused on ecosystem disruption, the second most prominent area of funding globally (23 percent). CO2 emissions round out the top three environmental concerns for mining executives, with one in five citing it as a major issue. In fact, South Africa recently began discussions on taxing carbon emissions, potentially making it one of the largest sources of tax revenue in the country.

Other key findings from the survey include:

Corporate Social Responsibility programmes focus on employees, local communities. Forty-six percent of mining executives surveyed say that their corporate social responsibility plans invest most heavily in employee health and safety programmes. Community outreach (30 percent) and environmental stewardship (18 percent) rank second and third amongst investment areas for the industry.

The United Kingdom cites anti-bribery/corruption legislation as a top domestic regulatory concern. Of executives surveyed in the UK, 23 percent cite this legislation as a worry; triple the survey average of 7 percent. This reflects the fact that the UK implemented strict new anti-bribery laws with extra-territorial reach in late 2010. With much of the UK’s mining operations occurring beyond its borders, executives are closely monitoring regulatory developments that may impact the way they do business.

Resource nationalism impacting mining companies around the globe. Of executives surveyed, 61 percent note that resource nationalism will have an impact on their businesses in 2013. Their concern also extends to tax imposition and increases: 67 percent anticipate an impact on their business this year as Australia’s ‘super tax’ takes shape and countries like South Africa plan for similar tax burdens.


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Methodology statement

This is the initial international BDO Natural Resources Study with emphasis on the mining industry. The research was conducted among senior management executives representing a broad mix of companies and geographic areas. Topic coverage was highly diverse including, but not limited to, key drivers of growth for the global mining industry, access to capital and credit, strategies for enhancing profitability, impact of regulations, key targets for geographic expansion and the identification of important threats facing the global mining industry.

This multi-country executive survey was designed and managed by Market Measurement, Inc. in close consultation with BDO. Questionnaire content was in the native language of each country.

The study findings are based upon attitudes, behaviours and perceptions among 132 mining executives with similar levels of representation in the study data across the US, Australia, Canada, South Africa and the United Kingdom. Study participants were identified through major trade and professional associations, subscribers to industry publications and similar sources. Additional characteristics of this important research initiative include:

Job titles: More than one-third (35 percent) are the chairman, CEO, president or managing director of the organisation, with a similar level of representation from CFOs/controllers/directors of finance (28 percent).

Geographic coverage: More than three-quarters (76 percent) have international operations.

Sales revenue: Almost one-half (45 percent) of the participating companies report annual worldwide revenues in excess of $50 million.

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