Despite the challenges that the local gold sector faces, the gold price remains strong, which is likely to continue in the short term, notes multinational professional services firm EY Africa energy and natural resources leader Wickus Botha.

He points out that these challenges primarily lie in the complexities surrounding cost structures and ultradeep-level mining, which limits operational flexibility to scale production or respond swiftly to address cost and productivity issues.

As a result, any decision or initiative takes considerable time before the impact can be observed.

The recent EY business risks and opportunities survey – with a sample size of more than 150 global mining executives – found that retaining a licence to operate was the major challenge for miners, as global scrutiny continues to evolve beyond the narrow focus on social and environmental issues, says EY global mining and metals leader Paul Mitchell.

He notes that some of the factors affecting the social licence to operate include rising volatility, owing to changing regulations; global trade tensions; civil unrest; increased pressure from investors; and the need to improve perceptions of the industry among all stakeholders as a sustainable and ethical industry.

Mitchell adds that, generally, the mining industry is regarded as “old-fashioned and dirty”, and so building a social bond is “make or break”.

“Miners need to be part of the solution, not the problem, hence their engagement on topics such as the circular economy and green mining, is key. Identifying, measuring and communicating the long-term value drivers for sustainable and inclusive growth is a key opportunity.”

Botha states that, when looking at the business risk report, other challenges for executives are future workforce, productivity, innovation and digital transformation.

Future workforce refers to the new role employees will take on when companies start to digitalise certain operations.

He says all these challenges are relevant to the gold sector, and that “the overall economic, social and operating environment that mines exist in today requires better stakeholder engagement”, specifically for the aforementioned challenges.

As such, Botha stresses that the success and sustainability of mining companies depend on their ability to engage and provide sufficient response for all stakeholder needs, in a balanced and inclusive manner.

Further, productivity, digital transformation and innovation are all aimed at reducing cost structures and improving throughput. In turn, future workforce is a key consideration, as typical roles and jobs are rapidly evolving because of technology.

Botha notes that, while this has not necessarily resulted in any kind of reduced workforce, the change in required skills sets has necessitated that companies, employees, unions and education authorities work together to reskill and retrain mineworkers to enable them to respond to the industry’s changing needs.

Mitchell adds that there is consensus that digital and technological innovation has the potential to provide step-change improvements in productivity, safety and environmental management in mining. However, to achieve this, a different workforce will be required, and the industry is “grappling” with how and where to begin the transition.

Further, he suggests that, amid the competitive market for digital and data-related skills, the mining industry may find it difficult to compete, particularly when the perception of the industry is taken into consideration.

A better understanding of future skills required will enable mining companies to strategically plan their workforce and sustain their competitive advantage in global markets, adds Mitchell.

Mitchell says that a recent EY study found that 77% of occupations in the mining industry will be enhanced or redesigned by 2030, owing to technological advancements: “Our advice would be to start with the end in mind and begin planning now.”

However, Botha adds that, although the uptake in technology is vast, actually yielding the benefits takes time.

“The key enablers to better [integrate technology into operations without compromising the jobs of employees] is to include more technology-focused legislation, a reskilled workforce, the availability of capital to invest, as well as greater investment in research, development and innovation.”

Meanwhile, he notes that government has been trying to mitigate these challenges by allowing mining houses to self-generate electricity and by introducing legislation that will provide a guideline for mining houses.

“Although much has been done to develop legislation, such as Mining Charter III, much work must still be done to create a legislative framework that encourages and promotes the better use of technology.”

Botha concludes that governments must be clear and consistent in the way that policies are developed to create stability, transparency and predictability.