Number 1 Risk: License to Operate

Effective Mine Risk Management

by Ina King (Potgieter) November 28, 2019

The heart of risk management in mining is the identification of hazards, assessment of their risk, and application of appropriate controls. Regardless of whether the hazard is geological, environmental, process or human, they should all be addressed through effective risk management.

Mining provides many people access to socio-economic development. But the sector is certainly not without risk. Mine operators, legislators, miners themselves as well as other role-players, experience frequent difficulties and challenges throughout the life of mine.

Judging by the mining sector’s performance on the stock market, investors have concerns about the sector’s future. Disruption, social responsibility, safety, the environment, innovation and technology, and broader stakeholder demands are just some of the issues investors are grappling with.

What Could Possibly Go Wrong?

In their recent study of the Top 10 Mining Risks for 2020, EY notes that for the third year in a row, there have been significant fluctuations in mining risks. Paul Mitchell, Ernst & Young Global Mining & Metals Leader, notes that License to Operate remains in top slot while Future of the Workforce is at number two - up from seven in 2019.

Mining activity, by its very nature, involves some amount of risk. Miner safety, increasingly strict regulations, the reliance on technology, inconsistent demand for raw materials, high commodity prices, human capita, the political landscape, and climate change are concerns that every mining company has – and will — grappled with.

The Captains of Industry can deliver continuous improvements in safety and risk governance standards. For any industry to be successful it must identify the hazards, assess the associated risks and to bring the risks to a tolerable level.

Most mining companies can clearly identify their critical risks. They can clearly point out the observable, frequent risks. But is that enough? Is the mining industry asking the right risk questions?

Risk Assessment

The traditional risk matrix defines the level of risk by considering the category of probability against the category of consequence severity. It is a simple tool to increase visibility of risks and assist risk management decision making. But does the traditional risk matrix work in the mining industry?

The mining sector has a wealth of control measures that have been introduced over the years. If all these measures were effective, there would be far fewer accidents than there currently are. A mine’s ‘critical risks’ are, more often than not, static: an act of nature, human miscalculation, an unchanging economy. The world is changing and so is the industry. Nothing happens in a vacuum. Recognising and planning for the ‘radical’ rather than the ‘static’ or ‘usual’ is crucial.

The risk assessment process at a mine should be continuous – it should never be regarded as a one-off exercise. It is necessary to establish a baseline, but a single risk assessment report is not comprehensive enough.

South African Mining & Technology

The South African mining industry is in transition. From traditional deep level, labour intensive mines to a shallower, more technologically advanced industry. Since 2010, overall mining production has declined marginally, as declining deep level gold production is offset by increased bulk and base metal commodity production.

Digital transformation and effectiveness remain in the top three risks and opportunities. According to Mitchell, innovation could certainly bring a much-needed change to the sector. Some South African mines need to innovate in order to survive. For others, it is simply about improving return on capital investment by being prepared to rethink how work is done. Either way, there are opportunities for growth.


In times of change, there are always opportunities.

When it comes to workplace injuries, environmental impact, the implications of technical failures, political instability and market fluctuations in commodity prices, this industry is more dangerous than most.

South Africa has rich mineral deposits and the mining sector remains a crucial one. But change is needed – not only in how we assess and mitigate risk, but in what we view as a risk. One of the biggest risks to the South African mining industry is whether or not we are ‘future-proof’. Can our minerals, and the way we extract them, continue to be of value?

Innovation is the key to future success in Africa. Technological innovation has the potential to improve productivity, safety and environmental management, as well as offer solutions for skills shortage in the mining industry.

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