Business risks facing

mining and metals

• The 2010 Ernst & Young

business risk report

The top 10 risks for the mining and

metals industry

1. Capital allocation

2. Skills shortages

3. Cost management

4. Resource nationalism

5. Maintaining a social licence to operate

6. Infrastructure access

7. Access to secure energy

8. Access to capital

9. Price and currency volatility

10.Climate change concerns

Company Leadership can address

those risks by:• Identifying, assessing and restructuring distressed assets and

operations

• Sharing costs and risks through farm-out and joint venture arrangements with new and existing business partners (especially Asian-based)

• Testing investments at lower metal prices and deferring uncommitted expenditure in anticipation of better terms for services and equipment

• Securing additional working capital to fund ongoing exploration and operating costs through measures such as selling assets to unlock liquidity or negotiating with creditors to restructure debt

• Through shared services, outsourcing to lower cost markets and process improvements

• Reducing stockpiling / mine output

Next Steps suggestions by E&Y

1. Conduct an annual risk assessment impact on business drivers.

2. Conduct scenario planning for the major risks that you identify, and develop a number of operational responses.

3. Evaluate your company’s ability to manage risks that you identify - in particular, ensure that your risk management processes are linked to the risks that your business actually faces.

4. Effectively monitor and control processes as they will provide you with earlier warning and improved ability to respond.

5. Keep an open mind about where risks can come from. Ours is an increasingly interdependent global economy and risks that can damage your business can arise in any market sector.