According to PwC’s Mine 2020 report, the global Top 40 mining companies are so far weathering the COVID-19 crisis but need to take advantage of relative stability to adopt strategies to mitigate against further economic and social risks.
PwC’s forecast for 2020 suggests the big miners will take a modest hit to EBITDA of approximately 6%. This follows a strong financial performance in 2019 - with revenue up 4% to US$692 billion and market capitalisation up to US$752 billion. On this basis PwC believes the Top 40 are in a strong and resilient position to weather the economic uncertainty created by COVID-19.
Despite this positive outlook, the report cautions that mining companies will need to adapt to long-term impacts caused by COVID-19. Miners may need to think about de-risking critical supply chains and investing more in local communities. A shift toward localisation in supply chains and for smaller deals in local markets, as well as different forms of community engagement, may turn out to be enduring consequences of the pandemic.
Jock O’Callaghan, global leader for mining and metals at PwC, stated, “In some respects, the mining sector is well-situated in the wake of COVID-19. Mining companies have strong finances and are mostly still operational, albeit with some level of increased precautionary and preventive control. But the longer-term impacts remain uncertain, and ongoing disruption is likely. Top 40 miners should take advantage of their current position of financial stability to revisit their strategies. Doing so will ensure their businesses can enhance their resilience over the long term and meet the demands of the global economy – meeting their aspiration to resource the future.”
O’Callaghan also had this to say about cybersecurity: “Cybersecurity should be an integral part of the Top 40’s safety and business strategies. Miners should take the opportunity, given their relative resilience, to leverage their strong safety cultures to embed the concept of ‘cyber safety,’ which like other forms of safety, is non-negotiable.”
And with regard to Environmental, Social and Governance goals, O’Callaghan stated: “It is time for miners to sit down and work towards a common global standard about what constitutes responsible mining and how companies will report their performance against it. The job of improving ‘brand mining’ is every miner’s responsibility. The more companies that can demonstrate they are meeting their stakeholders’ expectations, the more the sector benefits through a stronger social licence and the ability to attract higher-quality, more patient capital.”
And that’s good advice.
Mark S. Kuhar, editor