Ignore non-technical risks at your own peril; embrace them to drive success.

Mining leaders seem to understand the perils of non-technical risks like environmental and social risks. Consider this, in a recent survey conducted by E&Y (an accounting firm), mining leaders ranked ESG as their #1 risk.[1] Raising capital and funding ranked 8th. This suggests that mining executives are more concerned about whether their project will get approval than whether they will find investment and capital.

Investors are also keenly focused on non-technical risks. More often than not, the very first thing a prospective investor or acquirer wants to know is whether the non-technical risks have been identified, assessed and mitigated (if not avoided). They know that non-technical risks can seriously influence whether a project is investable, or even buildable. Many have heard about (or been involved in) projects where investors have lost all their capital because of one misjudged or unidentified non-technical risk.

Non-technical risks include a broad basket of potential issues and challenges that could, if not properly managed, result in a mine not receiving its required permits or social acceptance. These could be political risks (perhaps a change in policy), environmental risks (like erroneously placing a tailings dam in an existing lake), social risks (including not getting community consent or buy-in) or a range of other non-technical and non-financial risks. And they could result in what otherwise looks like a perfectly profitable and well-designed operation, never being constructed.

Why wait?

It is, frankly, somewhat surprising that mine promotors, owners and developers aren’t spending more time identifying non-technical risks at the very early stages of their projects. The reality is that it doesn’t take a significant investment in time or effort. With the right people in the room―geotechnical professionals, waste management experts, water and hydrology specialists, economic analysts, socioeconomic and community consultation specialists, study managers and others―this type of exercise can be completed in a matter of days or hours.

When non-technical considerations are identified early in the process (at initial exploration and conceptualization, even before the preliminary economic assessment), they are much easier to de-risk.

In part, that’s just good project management―changes made early are always less costly and less complicated than changes made in the construction phase. But it is also because non-traditional risks tend to snowball the longer they are ignored. If trust with the local community is lost from the very start, winning it back becomes an uphill battle.

There are also massive financial and economic benefits to conducting non-technical risk assessments at the earliest stages of the lifecycle. Early assessments provide project and study managers with data and insights they need to design projects more effectively (you want to know all of your specs, restrictions and limitations at the start). It provides financial analysts with a clearer view of the numbers and the capital requirements. Some may even find that a robust approach to non-technical risk management can unlock new forms of alternative capital like sustainability-linked loans.

This type of early de-risking can often mean the difference between project success and project delays and overruns. As an integrated firm, Ausenco’s environmental engineers and consultants work in lock-step with our design engineers to iteratively identify, avoid, manage and mitigate non-technical risks as they arise through smart adjustments to the design. We use that information and our findings to ensure our clients have de-risked across the lifecycle through to mine closure and post-closure.

What we have found is that early non-technical risk assessments can help bring greater confidence to the development of a project. Done properly, they should allow mine leaders to accurately predict the outcome of permitting applications and regulated assessments. They should also allow risk managers to spot potential issues in time to make changes, thereby reducing the chances of a project getting stuck in permitting. Indeed, when you do these types of assessments early, you should find no surprises in the permitting phase.

This early work pays dividends later. Closure permitting, costs and construction have become a significant lifecycle risk in mining over the last decade, and early de-risking can address these long-term concerns proactively, resulting in a better, more investible, more cohesive project.

There is a better way

As an integrated consulting, engineering, procurement, construction management and operations service provider, we have a better view on the impact that non-technical risks can have on the success of a project across the lifecycle. And we believe there is a better way to develop cohesive mining projects that dramatically increase the odds of success.

That is why we try to encourage our clients to undertake these types of assessments as early as possible, and then work closely with them to identify all of the potential ESG and non-technical risks―and all of the related downstream impacts and opportunities―that could influence their project. We then continuously update our assessments and findings as the project progresses and as expectations and regulations change.

The key is to start de-risking non-technical risks early in the engineering and design phase, and then reassessing your non-technical risks throughout the project lifecycle to identify the potential pitfalls and take appropriate steps as early as possible to manage them. That means better planning, better building, better monitoring, better operations, better closures and better post-closures.

Ultimately, we believe that an early and holistic approach to non-technical risk assessments delivers exponential returns in time and resources. It makes a project more investable. It improves community, public and regulator relationships. It reduces project uncertainty. It provides key insights to support tradeoff decision-making. And it enhances confidence through permitting and delivery. It is how modern successful mines will be built.

Non-technical risks have the potential to derail your project and make it less investable. At Ausenco, we know there is a better way―and it starts with an early and robust assessment of your non-technical risks.

To learn more about Ausenco’s integrated approach – or to discuss your own project – contact Andrea Daezli or your nearest Ausenco office.

[1] Top 10 business risks and opportunities for mining and metals in 2023, EY, 2023