Industry issues

Key issues affecting companies in the energy, utilities & mining sectors include:

Financial and non-financial reporting

Energy, utilities & mining companies are being impacted by regulation such as Sarbanes-Oxley and the financial reporting requirements of International Financial Reporting Standards (IFRS). A clear opportunity now exists for companies to further develop their financial and non-financial reporting, including environmental, with the aim of bringing greater transparency to reporting.

Related reading: Moving forward
Implementation challenge: IFRS for the oil, gas and utilities industry
Sustainable from the start

Geopolitical risk

Companies are continuing to move beyond their home territories in the pursuit of scale. Increasingly, we are seeing companies expanding on a regional scale. Cross-border expansion brings energy, utilities & mining companies into new markets, where considerable cultural, infrastructure, security or technology challenges must be met.

Issues affecting energy and utilities companies:

Investment pressures

Pressure intensifies on companies as the sector strives to meet its infrastructure funding needs. Increasingly, investors are expressing concerns about the regulatory uncertainty and price volatility facing the industry.

Power Deals

Supply

Security of supply, transmission capacity and the encouragement of renewable energy are major supply-side issues. Among utilities in particular, a shortfall of investment in infrastructure has been identified as a major contributing factor of recent supply failures.

Nuclear

The nuclear sector is facing a number of significant challenges including the increasing debate of the role of nuclear power in meeting security of supply and emissions targets. Other key issues are the development of new technology options for future generation and the development of new contracting arrangements for the management and regulation of nuclear waste.

Related reading: Emission critical

Issues affecting mining companies:

Effective use of cash

Large cash balances are being generated on the back of strong commodity prices. The industry is coming under growing pressure from investors to make effective use of these mounting cash balances. Companies must either channel this cash into attractive growth opportunities, repay existing debt or distribute additional cash to investors.

Junior Mine

Resource constraints

Resource constraints are one of the key risks associated with mining projects, both operational and planned. The current commodity price boom has resulted in shortages of mining engineers and other key staff, equipment and consumables such as tyres for large vehicles. This is limiting the industry's ability to expand production to take advantage of strong commodity prices.

Related reading: Metals Market Sentiment