FY26 RISK RADAR

Referencing KPMG’s Australian Mining Risk Forecast 2024 and EY’s Top 10 risks and opportunities for mining and metals companies in 2025, the Australian Mining Review brings you our FY26 Risk Radar.

The Australian mining industry is staring down the barrel of a few tough challenges in FY26.

The growing significance of environmental, social and governance (ESG) considerations is stirring up changes in how new projects are developed. The spotlight is now on sustainability and local consultation, which brings with it economic hurdles as well as technical and operational risks. Amidst all this, the value of collaboration through joint ventures and partnerships is being recognised as a key to making the most of capital while curbing geopolitical risks.

On top of this, ongoing economic volatility is adding another dimension to the challenge.

Governments and central banks are grappling with the tricky task of controlling inflation while trying to stimulate growth. The mining industry finds itself dealing with uncertain markets where lower growth could limit the capital available for new energy projects. This could lead to slower demand in mining, higher input and operational costs and a rise in capital cost.

Companies will need to make some bold moves in the coming year to minimise these risks and maximise opportunities. This might mean proactive transformations of business models, embracing innovation and forging partnerships.

Companies that can adapt in a sustainable and efficient way could find themselves ahead of the game.

Engineering consultant in asset and energy management Pascale J. Petit, Adaptus managing director Mayuran Sivapalan and technical director Michael Marinovich speak with the Australian Mining Review on risk management in the mining industry.

#10 Regulatory risks

Resource and reserve depletion and access to resources are big risks this year, especially when it comes to jumpstarting our critical minerals industry. But one issue that is a continuous roadblock to getting new projects up and running or extending access or life of existing projects is regulatory barriers.

Not only do miners have to grapple with intense and varied regulatory processes for mine approvals, but the regulatory landscape is always shifting underneath their feet.

According to EY, miners are finding that regulatory issues prolong the time from discovery to production, with long delays to obtain permits, navigate overlapping red tape from different authorities and mitigate litigation risks. For example, it takes 29 years to develop a mine in the US, second only to Zambia’s 34 years.

The following risks on this list are proliferated by concerns introduced from an increased focus on ESG, climate change and the energy transition. Regulation is no different, with new reporting standards and procedures for miners to follow, many of which designed to address some of the following entries such as social licence to operate.

In Australia, 2024 saw the release of the first Australian Sustainability Reporting Standards (ASRS).

KPMG says this caused business leaders to stretch their thinking and ensure that from the top down they are making strategic decisions that take climate and broader ESG considerations more into account.

“There are now mandatory requirements to disclose risks and opportunities of climate change on businesses, which has driven a significant level of effort because it has created some certainty that this issue isn’t going away,” Mr Marinovich said.

“Given the strength of the election results, these new laws are going to be solidified in the next six to nine years. Organisations need to get a handle on what this means for them, in terms of what their exposure is and what that might mean from an opportunity standpoint.”

According to KPMG’s 2024 study, 90% of ASX100 companies recognised climate change as a financial risk and 76% are already reporting in line with the recommendations of the Taskforce on Climate-Related Financial Disclosures. This puts these companies in a strong position to report against the Australian Sustainability Reporting Standard (ASRS).

As of December 2024, 97% of Australia’s top companies continue to provide sustainability reporting, which marginally outperforms 2024 performance of global peers, according to KPMG.

Global experiences have a varying influence on the primary risks mining is facing.

“In some countries, emissions targets are becoming increasingly stringent,” Ms Petit said.

“However, there is a clear risk of regulatory misalignment between federal and state or regional governments.

“This misalignment particularly affects permitting, especially environmental permitting and land access, and can significantly impact project timelines.

“These challenges are frequently encountered by multi-national mining and processing operations operating across various jurisdictions.

• “In other countries, the consequences of regulatory uncertainty and policy volatility affect investor confidence in mining and/or clean energy projects.
• “The threat of resource nationalism and geopolitical risks also impact supply chains and investment security.”

Within risks, opportunity can still be found. Changes to the regulatory environment could improve transparency, allowing junior miners to learn from their larger peers in uncharted and risky territory.

Mr Marinovich says a major benefit of the mandatory disclosures is improved visibility.

“This will save a lot of time and effort for those more junior companies who are less mature because they can see what has been working for larger companies that have been on the journey for a lot longer,” he said.

#9 Talent attraction and retention

Talent attraction and retention has been a concern across industries over the years, particularly during the height of the COVID-19 pandemic. Additionally, the constantly shifting legalities around immigration for skilled labourers and education continues to introduce uncertainties to the workforce.

The Australian Resources and Energy Employer Association’s (AREEA) Resources and Energy Workforce Forecast (2024-2029) estimates that there are 107 major resources and energy projects in Australia’s investment pipeline, either already committed or considered advanced, expected to enter production between the second half of 2024 and end of 2029.

According to the report, these projects are worth roughly $131b in capital investment to Australia and are forecast to drive demand for around 26,810 new production-related jobs over the projected timeline.

While projects and capital show no signs of slowing, recent market challenges mean projected workforce growth to support these projects will be coming off a much lower than expected base. According to AREAA, employment went backwards in 2024 for the first time since the COVID pandemic.

AREEA attributes this to volatile international prices for critical minerals and rare earths which lead to the suspension of work at key nickel and lithium operations — which were riding high only in 2023.

Government regulations, training and migration could all be targeted to address this concern. But one pathway that addresses multiple risks and initiatives is the investment in Indigenous and regional workforces.

“On the social side, there are lots of levers that are quite positive. If you’re developing an asset in a remote area, how you might develop and engage a local workforce allows you to have a much greater social value impact and multiplier and positive impact that isn’t captured in your financial statements currently,” Mr Marinovich said.

“Before organisations get to the idea of balancing those trade-offs, it’s about that integration of those value drivers. When looking at workforce options, how do miners approach the social value that they might create depending on who they contract or where they contract their workforce.”

A 2021 journal article from The Extractive Industries and Society titled Factors supporting indigenous employee retention in the Australian mining industry: A case study of the Pilbara region revealed that Indigenous employment across the mining industry has increased almost five-fold from 1390 in 2001 to 6649 in 2016.

“However, it is likely that variability remains high across operations and companies,” the article reported.

“A 2007 study of ten Australian mines revealed the Indigenous proportion of their workforces ranged from one percent up to 22%.

“More recent research in WA’s Pilbara region indicates that mining presently accounts for almost two-thirds of all employment for Indigenous men and one-third of all Indigenous women in the region.”

While there is positive growth in this area, like all employment markets, automation and technology advancement could have unforeseen impacts on employment, presenting cascading risk potential for Australia’s mining workforce.

#8 Health and safety

Health and safety is always a top priority for miners. But maintaining safe working environments is becoming difficult, with increasing demand to open new mines and increase production.

To maintain safety and maintain social licence to operate and talent attraction, miners must continue to improve health and safety initiatives.

BDO’s Annual Mining Report 2025 outlines key considerations for the global mining industry.

While considerably contributing to value creation, mining remains one of the most hazardous industries, accounting for around 8% of total occupational fatal accidents globally, according to BDO.

“The industry has made significant progress in reducing the injury rate, but the pace is slow with the higher number of non-massive events,” the BDO said in its report.

“For example, the USA recorded 40 mining fatalities in 2023, the highest in a single year since 2014, with 65% of incidents related to machinery and powered haulage.

“This negative trend is exacerbated by the rise of illegal mining activities.

“Psychosocial problems add to increased hazards in mining amid insufficient training and extended working hours, all within the context of growing extraction targets and opening new mines.”

Mining companies are looking to attain a zero-harm environment amongst these challenges. Emerging technology, such as AI and automation, may help support this mission.

But BDO highlights that there is still work to be done when it comes to innovation.

“Technologies hold significant potential for improving mining safety, particularly by reducing person-vehicle interaction risks,” BDO said in its report.

“However, 89% of respondents from the industry reported a disconnect between corporate and mine site teams regarding innovation progress.

“This gap can hinder technology adoption, making close communication with on-site staff essential.”

#7 Licence to operate

Australia’s public seems to have a complicated relationship with mining.

CSIRO’s 2024 citizen survey Australian attitudes toward mining found that public trust in the mining industry, often referred to as social licence, has improved since the agency’s 2014 survey.

Additionally, in 2024, 73% of respondents acknowledged that access to critical minerals is essential for achieving net zero emissions while 72% believed mining would support Australia’s future prosperity.

Despite strong support for mining, 61% of survey respondents agree that mining has negative environmental impacts while 32% of respondents believe Australia should reduce mining activity, even if it delays the transition to net zero emissions.

Whilst the economic contribution of mining and its importance in supporting the energy transition are widely recognised, building trust, ensuring fair distribution of benefits and actively engaging communities are key to maintaining the industry’s social license, according to CSIRO.

CSIRO argues that further improvement is contingent upon the industry’s ability to address environmental concerns, engage with communities transparently and ensure fair distribution of economic benefits.

#6 Commodity price risks

Australia’s mining industry is well-acquainted with both the positives and negatives of volatility in materials markets. Thanks to uncertainty across global economic markets, gold saw record-breaking prices in FY25. But not all commodities saw benefits, with nickel and lithium suffering through fluctuating market conditions and non-ideal price points.

KPMG, who identified commodity price risk as a top industry risk for 2024, forecast commodity price volatility to continue to exert downward pressure on margins, as will escalating operational and capital expenditure cost pressures.

According to KPMG’s 2024 forecast, one-third of global metals and mining executives surveyed expected to significantly change their portfolio of products toward commodities and metals used to accelerate the transition to cleaner energy.

This trend is likely to continue in 2026, with commodity prices projected to reach a six-year low.

According to the World Bank’s April 2025 Commodity Markets Outlook, commodity prices are set to fall sharply this year, by about 12% overall, as weakening global economic growth weighs on demand.

“The anticipated commodity price softening is broad-based, however, with more than half of the commodities in the forecast set to decrease this year, many by more than 10%,” the World Bank said in its report.

“The latest shocks to hit commodity markets extend a so far tumultuous decade, marked by the highest level of commodity price volatility in at least half a century.”

Mr Marinovich says that even the most forward thinking of the organisations were bullish on a lot of these issues.

“They have exposure to commodity price risk, and we have seen things freeze at different times, just because a particular project or an expansion isn’t going ahead, because of that squeeze driven by global market forces,” he said.

“That’s an ongoing risk to these businesses.”

#5 Access to resources

Despite growing momentum in both emerging and established markets, the question of whether we have enough resources remains.

As critical minerals become increasingly important, more challenges are presented to miners, as minerals like rare earths are costly and difficult to extract and process.

To meet demand for electricity storage alone, the world will require 50 new lithium mines, 60 new nickel mines and 17 cobalt mines, according to the Minerals Council of Australia (MCA).

The issue is exacerbated by declining ore grades, which is increasing the cost of extraction. High-grade resources are nearing exhaustion and accessing metals from new projects with lower ore grades requires greater expenditure and energy.

Whether it’s a lack of identified reserves or a lack of economic incentive, more investment and support will be needed for exploration and processing to maintain healthy markets for critical minerals.

In Australia, total mineral exploration expenditure saw a 7% drop in CY24.

According to the Association of Mining and exploration Companies (AMEC), nationally, across the five years from 2020 to 2024 inclusive, drilling activity has fallen 10.4% despite a 41% increase in expenditure — led mainly by a 34% drop in exploration for new deposits.

But this isn’t due to a lack of stagnation or interest, meaning with the right support and motivation, new resource opportunities could still be unlocked.

#4 Financial risks

The whopping price tag of exploration leads into our #4 risk.

Financial risks for miners encompass capital requirements and cost of new technology needed for extraction, processing, transport, automation and more.

In a recent EY CEO Outlook Pulse Survey, all mining and metals respondents said they plan to undertake some form of transaction over the next 12 months.

Respondents noted that capital was being allocated to new or changing business models as mining companies look to invest in growth areas such as integrating recycling or vertical integration into advanced processing.

EY also notes the financial risks coming from exploration concerns, as brownfield projects and acquisitions remain areas of focus.

Mining companies may need to reassess how they quantify financials.

“Once we get down to the study level and the old school decision making of ‘financials only,’ that’s where organisations go back to the old ways of thinking of ‘if the net present value (NPV) stacks up, we’ll do it’,” Mr Marinovich said.

“Technology costs and capital requirements are a big reason projects don’t get over the line. Because so many mines, especially in the mid-caps, are smaller and the resources they’re mining facilitate shorter mine life, miners can’t pay off the initial investment as well as operations that have a longer mine life.

“Once organisations approach the NPV from a triple bottom line perspective, it can actually tip over the other way.”

“The regulations require organisations to quantify the financial materiality of ESG issues on their business, allowing organisations to have a broader financial lens on what business-as-usual actually means,” Mr Sivapalan said.

“Currently, financial shareholder value is represented largely by profit and measures of profit, but the reality is that the broader stakeholder value dimension, in terms of positive and negative impacts, isn’t currently characterised in monetary quantitative terms.”

#3 Climate change

The driver of many previous risks as well as energy transition and net-zero initiatives is climate change.

According to the United Nations (UN), to avert the worst impacts of climate change and preserve a liveable planet, global temperature increase needs to be limited to 1.5°C above pre-industrial levels.

Currently, the Earth is already about 1.2°C warmer than it was in the late 1800s, prompting the signing of the Paris Agreement, which requires emissions to be reduced by 45% by 2030 and reach net zero by 2050.

The UN Environment Programme Finance Initiative explains the reach of climate change in its Climate Risks in the Metals and Mining Sector, May 2024 sectoral risk briefing.

Climate change can be a threat multiplier.

“Climate change can exacerbate all other challenges, increasing geopolitical conflicts over resources, crippling infrastructure and supply chains, extending the range of dangerous pathogens and collapsing the natural systems upon which we depend,” the agency said in its briefing.

Physical impacts of climate change, such as flooding, cyclones and high temperatures are already disrupting productivity for mining operations. The frequency and intensity of these impacts could increase under climate change scenarios, making the risk increasingly relevant to mining companies.

In addition to physical impacts, climate change has also put more focus on the mining industry in reducing the sector’s emissions while simultaneously ramping up production of materials needed for the energy transition.

As we get closer to the milestones outlined in the Paris Agreement, mining companies may find more responsibility falling on their shoulders as they take up the big task of getting us over the line to net zero.

#2 Geopolitics

2025 has already had its share of trade tensions, tariffs, political instability and economic uncertainty.

Now, self-sufficiency, sovereign processing and supply chain transparency are all major concerns for miners, especially with the increased demand on emerging commodities like many critical minerals.

To aid in improving national security, many countries are looking to establish self-sufficiency and new partnerships with alternative suppliers in light of extremely concentrated supply chains of critical minerals.

Major economies, such as the US, are now looking at sourcing materials from ‘friendly’ countries. Although countries like Australia have globally significant reserves of many critical minerals, we are still lagging when it comes to the facilities needed for processing and refining.

Although risky, this presents economic opportunities for investment and innovation.

“Companies that are in the battery minerals supply chain or metal producers that are critical for some of those technologies, like electrolysers, have seen an opportunity,” Mr Sivapalan said.

“They can position themselves as preferable suppliers to countries like Russia, South Africa and China, where the standards aren’t so great.”

#1 Low resilience

As we quickly approach net zero targets, it seems the unstoppable force — the energy transition — is meeting the immovable object — the mining industry.

While some of the industry’s greatest strengths come from its stability and consistency, literally providing Australia’s foundation from the ground up, these same qualities open the industry up to foundational risks due to an inability to change and adapt quickly.

To deal with risks, both unforeseen and predicted, and exponential complexity introduced by trade and a changing climate, the mining industry will need to adapt.

How do mining operations become more resilient?

“We’ve been grappling with defining the difference between risk and resilience because it’s not exactly clear,” Mr Sivapalan said.

“What we have landed on through this work with other organisations is this idea that in risk management there is a formal process to identify hazards and their consequences. It’s a mature approach that works really well when you can sit down and work through what the risk events are.

“Resilience on the other hand has to do with how an organisation structures itself such that it can be prepared for anything that might emerge as a risk event.

“It determines how an organisation can be set up in such a way that it can cushion itself against the implications of a risk event and get back to business as usual, or ideally, get to a point where it’s better off once the risk has passed through.”

“Increasingly, organisations will start to adopt this resilience thinking. This is because of the true nature of the interconnectedness of risks and the fact that there are so many different dimensions to them, making it very hard to successfully identify and manage every risk.

“Instead, organisations have to have a maturity in how resilient they can be, such that if those risks emerge, they have the ability to successfully absorb them and bounce back effectively.”

Miners may need to embrace a change in perspective to find their pathway to resilience.

“Balancing immediate pressures with long-term transition commitments can create significant strain, even for the most resilient miner,” Ms Petit said.

Ms Petit provides a suggestion for how this intricate balancing act can be achieved.

“Making transition core to current business whereby instead of viewing decarbonisation and energy transition as separate ‘projects’, they are integrated into decision-making processes to prioritise ‘no-regrets’ and high-impact, high-value initiatives, is critical.”