Some key Issues facing the global Mining industry, with insurance implications
- Resource nationalism: Resource nationalism and business interruption as a consequence of strikes probably represented the two biggest risks facing mining companies world-wide in 2012
- Infrastructure: global warming, increased storms, floods and natural hazards
- Social licence to operate: From an insurance point of view, terrorism is one of the key risks facing mining operations, arising from social unrest. Also, third party liability, and Directors’ and Officers’ insurance are two of the key considerations in surrounding a social licence to operate.
- Supply chains: with prevailing exploding demand for mine supplies, global supply shortages can impact mine operations from conditions such as: misappropriation; flooding; piracy, sanctions
- Skills shortages: Among the key considerations for keeping skilled employees is the provision of adequate employee benefits.
(Source: from “WILLIS mining market review, Spring 2013”
Some key Insurable risks facing Mining Companies
*the following is a list of some mine insurance coverages (subject to differing availability based on mine conditions)-this list is not exhaustive
- Property, assets & infrastructure, above or below ground, such as: Processing buildings; Crushers; Conveyors; Shops and offices.
- Pre-development, early works insurance, including construction property, equipment, liability
- Construction insurances, including Course of Construction, and Delay in Start-up business interruption; Surety bonding, including Reclamation bonds; Wrap-Up liability programs protecting all parties under one contract, centralizing defence protection with one legal strategy; testing and commissioning
- Terrorism, including from hostile activities
- Mining equipment, such as: Haul trucks; Drills and shovels; Continuous miners and other mining equipment
- Business Interruption, contingent business income and extra expense insurance: for surface and processing facilities (and occasionally underground) often considering tonnage of minerals in determining the insurance levels for business income
- Liability insurance (primary and excess liability) covering mining and processing operations for 3rd party bodily injury, property damage, personal injury and advertising injury, often including blasting, contractual liability, and underground cover
- Pollution Insurance, for damage to third party property, can be arranged on a Wrap Up basis covering all parties
- Professional liability, for engineering and other professional services
- Automobile-trucks, cars, owned and non-owned
- Executive Protection, including Directors & Officers and Employment Practices Liability and Fiduciary liability
- Embezzlement, Crime, Kidnap & Ransom and Extortion
- Foreign Voluntary Workers Compensation
- Marine Cargo for all materials and physical plant, transit of equipment and materials, to and from mine site
- Contract Surety – includes reclamation bonds
- Political Risk: Confiscation, expropriation and nationalisation, (including licence cancellation); Political violence; Embargo; Currency inconvertibility / exchange transfer; Breach of contract.
- Contract Frustration and alternatives risks, such as: reps and warranties, force majeure, tax opinion
Some key risk management services for Mining risks:
*the following is a brief example of some risk control services for mine exposures -this list is not exhaustive
- Exposure analysis, and insurable/non-insurable risks study conducted
- Loss exposure analysis of mining equipment exposures
- Loss Prevention on fire protection issues, including mobile equipment, non-destructive testing such as infrared scanning for key equipment
- Identify third-party liability exposures, i.e. contractors, neighbouring communities
- Supply chain loss exposure analysis
- Pollution liability analysis, addressing such issues as: contractor pollution, inherent process pollution, existing pre-conditions
- Equipment and machinery breakdown, preventative maintenance and business interruption studies
- Business Continuity, Emergency Response, and Crisis Planning studies
- Business Interruption and Contingent Business Interruption Studies, with recipient and contributing properties
Corporate social responsibility extends beyond impact assessments and now requires meeting the expectations and demands from Non-Government Organizations (NGOs) and other relevant stakeholders, and operating with higher levels of transparency and sustainability. Mining companies will need to commit to a higher level of responsible
behaviour by embedding sustainability into their internal metrics, their capital project methodologies and their negotiations with local communities, governments, NGOs and regulators”.
Source: Tracking the Trends 2013, Deloitte