Mining resources sector: cutting costs, not insurance cover

While prices fall for many key commodities, such as iron ore, yet costs remain stubbornly

high, businesses in the mining resources sector are understandably running the ruler over

their outgoings.

Common cuts include reducing executive compensation, cutting staff numbers and slashing

travel budgets. It’s also not unusual for companies to attempt to divest non-core assets and

only to go ahead with the least risky new projects.

It’s a fight to survive until the longer term silver linings eventuate – positives such as the

potential for the Philippines, Malaysia, India and other Asian countries to further industrialise

and urbanise.

As a recurring expense, the sums spent on insurance also come under the microscope in this

challenging operating environment.

However, making cuts in the area of insurance and risk management can be a false economy,

thereby reducing the ability of mining resource companies to gain or maintain investment

funding – potentially, leaving them exposed to liability that could send them out of business

if disaster strikes.

EBM Insurance Brokers has more than 30 years’ experience working with mining resource

companies of all sizes throughout Australia and overseas, with insights into the associated

risks and operating conditions.

Over the decades, we’ve worked with clients in both prosperous and challenging periods

within the commodity markets.

In addition to offering access to some of the most comprehensive cover in the business – with

limits of up to $20 million available – EBM also offers services without charge that can help

clients operating in the mining resources arena.

Our injury management service can help employees get back to work as soon as possible,

reducing workers compensation insurance premiums. We also examine tender and contract

documents to advise clients on the insurance implications, thereby negotiating more

appropriate cover.

We profile clients’ businesses for all risks – helping them decide which to transfer via

insurance, which they can take an informed decision to live with and which they may be able

to terminate (for example, by changing a contract or doing business differently).

Clients who would prefer to free up cash flow by paying insurance by the month, rather than

annually, can access our premium funding with its competitive interest rate.

Not every risk can be insured against. We go to great lengths to educate our clients about

legislative changes that could impact them and we advise them how best to respond.

For example, the Personal Property Securities Act – which came into full effect earlier this

year – poses potentially severe risks to any business that leases equipment or provides

inventory to other businesses. That’s because, the goods could be seized and sold if the

business they’re supplying falls into bankruptcy.

The only protection is to have a full and correct entry covering your financial interest in the

items on the Personal Properties Securities Register as soon as possible. Having “title” is no

longer the trump card. Knowing that this uninsurable risk exists, EBM has contacted clients

to alert them use the register in order to help protect them from further risk.

If you’d like to discuss your mining resources risk management and insurance, visit our

website http://www.ebminsurance.com.au/

The above advice is general advice and has not taken into account your personal

circumstances, be sure to read the appropriate Product Disclosure Statement to ensure the

policy meets your individual circumstances.