KPMG projects mining growth in 2020

Australian gold prices are at record highs.

KPMG Australian and global mining leader Trevor Hart predicts that a commodity ‘mini boom’ will be one of four key areas that leads mining sector growth in 2020.

The ‘mini-boom’, along with an increased focus on technology and collaboration; environmental, social and governance (ESG); and risk management are KPMG’s potential drivers of growth and productivity.

The Australian Government expects a new high of commodity exports in 2020 due to a swing in global iron ore and gold ore prices, along with a favourable Australian dollar.

“In the June quarter of 2019, the Department of Industry, Innovation and Science revised its export estimate upward by $12.9 billion for current financial year (FY2020) to $285 billion,” Hart said.

Along with higher prices and larger production volumes, there will be an increase in investments in mining projects and exploration activity, increasing the replacement of reserves.

An increased focus on technology and collaboration will drive asset optimisation, reduce costs and increase productivity.

“Increasingly the benefits of collaboration are being considered and I see this continuing. Whether it is between miners and the suppliers to install digital sensors, the electrification and automation of equipment or with other miners on safety initiatives or the reduction of water usage in processing, the scale and number of opportunities will increasingly encourage collaboration,” Hart said.

Measuring success through environmental, social and governance (ESG) policies will also be key in attracting talent, capital, customers, and maintaining community support.

“As ESG becomes increasingly complex, miners of all size must have a clear strategy, with measures that identify success. Going forward, these measures will be attached to executive remuneration and reported,” Hart said.

Due to global uncertainty stemming from trade discussions between China and the United States, global uncertainty means risk management will be vital.

“Active risk management must help protect the strategy against risks such as demand volatility, disruption and competition – as well as mitigate the threats of poor culture, conduct and cyber risk,” Hart said.

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