Despite concern about the future of the mining sector in Canada, given recent deals that could shift control out of the country, KPMG Canada partner Heather Cheeseman believes that the industry remains healthy and that miners will grow their businesses this year.
In its latest global mining risk report, KPMG states that 66% of mining companies are confident or very confident in their ability to grow this year. The majority (73%) will focus on organic growth, but mergers and acquisitions (40%), as well as innovation and technological transformation (29%) will be increasingly important this year.
"Innovation and new technologies are rapidly reshaping the sector, while environmental and social expectations continue to grow. At the same time, we are seeing consolidation in the industry as companies look to find synergies and drive down costs," comments Cheeseman.
Commenting on consolidation and recent concern raised by deals that cold shift control out of the country – such as US major Newmont’s bid for Canadian miner Goldcorp – Cheeseman says she expects a number of Canadian players to go on offense and be buyers this year.
On innovation, the report finds that mining executives increasingly believe advances in technology will reshape the industry with nearly three-quarters seeing this as more of an opportunity to their companies than a threat.
"More than a third of executives expect technology will drive major disruption in the next three years with 42% saying their own companies are already actively disrupting the sector," says Cheeseman.
"Mining firms are focusing their investments in areas such as data and analytic tools (5%), autonomous vehicles (30%) and robotic process automation (29%)."
She notes that it is a good sign that most see technology as an opportunity to improve the bottom line and separate themselves from their competitors. However, she is concerned that many see only the transformational opportunities, without recognising the associated risk.
"Surprisingly, despite seeing the potential for technology to improve their own businesses, risks related to technology and disruption did not crack the top ten list of threats. Yet, a third expect that technology advances will weaken or eliminate traditional leaders in the sector.
"It appears that many still view major investments in new technology as something to do down the road, not right now. Miners need to understand that digital technology is rapidly changing the industry and by delaying implementation they are at risk of being weakened. There are also technology advances with a lower upfront investment that can quickly add value."
The report also identifies access to talent as a growing risk for miners. "The ability to manage an evolving workforce was reported as the number one capability needed by mining companies," says Cheeseman.
"Attracting talent has long been a challenge for the sector and the adoption of new technologies and increased competition with other sectors for key skills will continue to put upward pressure on labor costs. Mining organisations are using new tools including cloud-based HR systems, data analysis of employee performance and real-time digital learning to manage and develop talent.
"While traditional roles such as mining engineers and geologists remain highly important, less traditional roles such as data scientist or geopolitical specialist are now seen as key in the industry. Equally significant was the fact that 39% of executives said that a workforce capability involving emerging technologies was highly important to their businesses."