The annual ranking of the top risks facing the mining industry from EY found that environment, social and governance (ESG) issues remain the top concern for global mining and metals executives followed closely by geopolitics that rose to second place amid global conflict and uncertainty.

For the first time, supply chain disruption made the list of the Top 10 business risks and opportunities for mining and metals in 2023.

“Environmental, social and governance (ESG) remains the number one challenge, but one that is broadening in scope and complexity,” EY wrote in a summary of the report. “Meanwhile, global conflict and resource nationalism have pushed geopolitics higher up the ranking, requiring miners to develop a deeper understanding of the impact of geopolitics on strategy.”

The top 10 issues, according to the report are: ESG, geopolitics, climate change, license to operate, costs and productivity, supply chain disruption, workforce, capital, digital and innovation and new business models.

The supply chain transformation that was underway before the COVID-19 pandemic has been put under more pressure by the pandemic and the war in Ukraine.

“Now organizations are intensifying efforts to transform supply chains, to better weather current volatility and find new opportunities to boost efficiency, resiliency and transparency,” EY wrote. “Miners are considering more innovative, sophisticated approaches to mitigating supply chain risk, including through stronger relationships with suppliers and collaborative contracting. With the pandemic exposing weaknesses in the “just-in-time” model, we expect to see a mix of “just-in-case” and “just-in-time” supply strategies as miners find a way to balance supply chain resilience with costs.”

Global conflict and trade conflicts helped push geopolitics into second place in the ranking. EY suggests geopolitical risk should now be considered with broader strategic planning with clear ownership of the risk within the organization.

ESG, remains the top concern for mining companies due to its impact on every facet of operations. EY writes that ESG is evolving and will require mining companies to consider different issues and broaden capabilities. More rigorous reporting will become critical if companies are to meet growing stakeholder expectations and avoid accusations of “greenwashing.”

“As we head toward 2023, the mining and metals sector is responding with more fundamental shifts to business and operating models,” the summary states. “New business models offer opportunities for miners to reposition for a changing future, with many companies considering the benefits of strategies to rationalize, grow and transform. Companies that scrutinize and shift business models now can get an edge on competitors as demand and expectations change.”