EY report finds rise in digitalisation increases risk for mining and metals sector

19 October 2017 (Last Updated October 26th, 2017 07:20)

A new report from Ernst & Young (EY) has revealed that digital effectiveness is a major issue for the mining and metals industry as companies focus on improving productivity by introducing new technologies.

A new report from Ernst & Young (EY) has revealed that digital effectiveness is a major issue for the mining and metals industry as companies focus on improving productivity by introducing new technologies.

Entitled ‘Top 10 business risks facing mining and metals, 2017-2018’, the report is based on EY discussions with global mining and metals companies, and analysis of the operating environment for companies in the sector.

With increased investment in technology, cyber risks related to the sector have grown significantly, particularly due to the poor deployment of technology and a gap between progress and the scale of opportunity.

EY Global Mining and Metals advisory leader Paul Mitchell said: “The opportunity through digital is huge. But digital goes beyond just adopting new technologies: it is a critical enabler to address the sector’s most urgent operational challenge, improving productivity across the value chain.

“And as the sector increasingly moves toward digital transformation, the attack surface is also becoming larger and it is critical that mining and metals companies accelerate their cybersecurity programme.”

“Digital goes beyond just adopting new technologies: it is a critical enabler to address the sector’s most urgent operational challenge, improving productivity across the value chain.”

In the wake of higher margins and improved cash generation, cash optimisation fell from first to the sixth position in the current year’s ranking.

In order to drive competitive shareholder returns, the companies need to manage the competing demands of short-term capital allocation with longer-term investment in growth.

The EY report has also highlighted regulatory risk to be a new entrant to the top ten risk list, as governments demand a higher return from their natural resources.

Mitchell added: “A change in the regulatory framework can cause significant uncertainty to companies and possibly impact foreign investment.

“It is therefore critical that they keep abreast of proposed regulatory changes and maintain open and transparent communications to all levels of government and their regulatory agencies.”