Securing insurance for mineral explorers is challenging – but EBM’s got it covered
Australia is the dominant global producer of mined commodities – leading globally in the production of iron ore and lithium, and ranking second in gold and cobalt, while Australia’s ore reserves and resources rank first for iron ore and zinc, and second for gold, coal, nickel and cobalt. Mining and exploration is the largest contributor to the Australian economy with the sector responsible for more than 10% of GDP and exporting hundreds of billions of dollars’ worth of resources each year (resource and energy export earnings are forecast to reach a new record of $450 billion in 2022–23). There are mining operations in every state and territory (the ACT excepted) directly employing over a quarter of a million people. More than 480 mining and exploration companies are active and thousands more businesses provide contracting, support and ancillary services.
Mining plays a crucial role in the Australian economy but it’s an inherently risky business.
The mining industry is heavily regulated and mining companies can be exposed to a myriad of risks – physical, financial and reputational. Research from KPMG and EY identified the key risks facing the industry in 2023 and the list is long – environmental risks, climate change, the volatility of commodity prices, community relations, ESG, geopolitical instability, global trade conflicts, opportunities to access and replace reserves, permitting risk and regulatory processes for developments, licenses to operate, burden of regulatory and compliance changes, costs and productivity, supply chain disruption, workforce and the talent pipeline, capital, digital and innovation, and new business models. Faced with these risks and the potentially far-reaching consequences if things go wrong (fines, criminal charges, litigation, de-registration, bankruptcy, irreparable reputational damage) companies in the sector need the protection of a range of insurances.
To be safeguarded against asset, revenue and people risks, mining companies may need covers such as:
- industrial special risk (ISR)
- construction
- underground works
- plant and equipment (including consequential loss)
- machinery
- cranes and trucks
- hazardous and dangerous goods
- heavy motor and fleet
- transit freight/marine cargo
- bullion and specie
- technical covers, e.g. blasting, over water work cover, underground cover extensions, hot work (above and below ground), underground abandonment of plant and equipment, down-hole cover for surveying equipment
- business interruption
- delay in start-up (DSU)
- surety/trade credit
- fidelity/crime
- workers’ compensation, labour hire and employers’ indemnity
- corporate travel
- personal accident and illness
- expatriate/inpatriate medical expenses
- kidnap and ransom, and
- key person insurance.
Given the environments in which miners operate (physical, political, ESG, legal, social, environmental), they are exposed to numerous liability risks and may also need covers including:
- public and products liability (PPL)
- professional indemnity (PI)
- directors’ and officers’ (D&O) liability
- statutory liability
- employment practices liability (EPL)
- cyber insurance
- contract performance and contractual liability extensions
- environmental and pollution/ environmental impairment liability
- aviation liability
- charterers’ liability, and
- political risk.
Despite the need for mining and exploration companies to have these liability covers, in recent years it has been increasingly difficult to place and renew policies including PI, D&O, cyber and crime. Market volatility has seen insurers withdraw from offering covers altogether, reduce capacity, increase excesses, apply greater scrutiny to policy wordings and coverage enhancements, and increase premiums. Property lines (to protect assets) have also been harder to secure, especially for projects considered to be high risk or in nat-cat zones.
To help mining and exploration clients face these insurance challenges, EBM Insurance & Risk has teamed up with leading insurers to offer the Explorers Insurance Package.
Explorers is designed to meet the unique risks and exposures experienced by mineral explorers. It’s an insurance package designed to match and complement the company’s risk profile and risk management strategy to minimise exposures. The package has been developed by researching the risks and exposures across the explorers’ sector and includes a range of covers tailored to the specific needs of the industry. Covers include, but are not limited to:
- D&O insurance up to $10 million including extensions for statutory liability, crime and EPL
- broadform liability (PPL) up to $20 million with extensions for environmental and contractual exposures
- workers’ compensation with injury management support
- personal accident and illness for executives and directors
- asset, plant and equipment cover
- travel insurance
- journey cover, and
- motor vehicle cover.
Insurance for mining risks is a highly specialised field. With more than 30 years’ experience in working with mining and exploration companies operating across the country and internationally (we count among our valued clients more than 200 mining and mining-related companies), our expert mining resources team has the expertise, insights and the contacts to help you manage your risks and customise a package of policies to suit your mining operations – from exploration to production.
To find out more about EBM’s Explorers Package, get in touch with Ashton George (0413 758 650, ashtong@ebm.com.au) or Thom Anderson-Nicholls (0419 736 808, thoman@ebm.com.au).
