Emerging global trends
We continue to be shaped by the external dynamics in the regions where we operate. We closely observe these longer-term strategic and emerging risks – prioritising them as needed, including them in strategic planning reviews, and adjusting mitigating actions accordingly to protect the sustainability of our business. In addition to Group, regional and catastrophic risks, we have a process in place to identify and manage emerging risks. The potential impact of emerging risks is not clear at present but could develop and materialise over time to become one of our strategic risks. In turn, this may have a significant impact on financial strength and the Group’s reputation.
Typically, we look at a time horizon of five years, however, some emerging risks to the business could have a longer-term time horizon – 10 years, for example. The emerging risks are inextricably linked to the three pillars of our strategy. Each risk has a comprehensive riskmitigating plan in place, which is monitored on an ongoing basis during quarterly reviews by executive management and the Board.
Emerging risks are particularly important in the context of our strategic planning. Accordingly, we identify the business implications of emerging risks on strategic plans. For 2022, we identified specific emerging risks emanating, provided more detail and a deeper understanding of the potential impacts, and how we are mitigating these impacts. Emerging risks for this year centre around two of our primary strategic risks – namely, climate change and resource nationalism.
EMERGING RISK |
IMPACTS |
RISK MITIGATION |
Not achieving 2030 ESG targets and our 2050 net-zero emission targetAchieving the above targets depends on new technology, some of which is still being trialled or has not yet been developed. Most new technology that would enable us to achieve our targets is not commercially viable. The cost of implementing new technology is high, while the adoption of new technology depends on our ability to fund it on a sustainable basis. |
Not meeting our targets could:
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Cost and access to insuranceThe number of catastrophic events is increasing annually, and the severity of damage is worsening. The three catastrophic TSF failures in Canada and Brazil between 2015 and 2018 made insurance for tailings facilities either not available, more restrictive and significantly more expensive. The severity of flooding events is also increasing due to higher levels of rainfall, while extended droughts and higher average temperatures lead to more severe fires. |
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Increased political risks in Ghana, Peru and ChilePart of our strategy is operating and investing in assets in mining-friendly destinations. Traditionally, this was the case for Peru, Chile and Ghana, but over the past three years, the risk of doing business in these jurisdictions has increased. Calls for constitutional reforms started in Chile and have now spread to Peru. While these have had a limited impact to date, that could well change as more interventionist policies get adopted. In Ghana, a recent economic crisis resulted in the government seeking increased tax revenues and greater domestic sales of gold. Clauses under our Development Agreement with the governments are also under threat. |
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