Mining & Metals Industry Session Key Issues Facing the Mining Industry. Speakers Moderator: Ryan Brown, Client Advocate, Lockton Mining Prac:ce

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2 Mining & Metals Industry Session Key Issues Facing the Mining Industry Speakers Moderator: Ryan Brown, Client Advocate, Lockton Mining Prac:ce

3 Panelists Tim Mullarkey Director, Risk Management & Insurance, Arch Coal, Inc. Anne Chalmers Vice President, Risk & Security & Chair Materials Stewardship, Teck Resources Limited Ryan Brown Client Advocate Lockton Mining Pratice Patrick Walker Risk Manager Rio Tinto

4 Arch Coal, Inc. Operational Footprint

5 Rio Tinto Teck Resources Limited Global Footprints Multiple Commodities

6 Current Issues Commodity Pressures = Risk Management Challenges Intense focus on controllable costs Implications of acquisitions, mergers, and divestitures Idling of mines, layoffs Financial Implications Rethinking risk appetite, limit adequacy, retention strategies Weakened credit profile and liquidity concerns $$

7 Collateral Considerations Insurers Federal Surety providers States

8 NGO Pressures Well-funded, very structured entities creating head winds Increasing impact in regulatory/legislative matters Permitting, banking, shareholders/investors Insurers? Surety providers?

9 Evolving role for Risk Management in the Sector Capital Planning Sales/ Marke7ng/ Logis7cs Security, Supply Chain EH&S Internal Audit Communica7ons Opera7ons Investor Rela7ons Legal Today s risk professional is networking internally Accoun7ng/ Finance

10 Board & C-suite Risk Concerns Environmental issues Other Issues Cyber exposures Availability/ sustainability of risk capital for those in the sector

11 Questions / Comments?

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13 Mining Claims: Making the Complex Simple Speakers: Denis Smith, Executive General Adjuster, Cunningham Lindsey International Joseph Scarlato, Director Energy & Mining, Meaden & Moore LLP

14 Learning Objectives At the end of this session, you will know: What is Generally Needed at the Onset of a Loss Control Experts Claims Service Critical Path to Success Business Interruption Concepts

15 Limit amount of loss Control Provide efficient claim service Minimize disputes Maintain proper reserves Control adjustment including expert expenses Efficient use of personnel An informed management

16 Experts Adjusters, industry experts, and lawyers are often involved Successful individuals are: Technically proficient Personable Co-operative Committed and able to devote time Respected Loyal Pro-active

17 Claims Service Control site Measure financial impact Provide partial payments Offer beginning to end of claim process Compensate fairly

18 Key Loss initiatives Expectation Management Agreed scope of damage Pricing of loss affected area Critical path Loss mitigation Business interruption

19 Minimize Disputes Provide candid, open dialogue A plan; a point; a person Deal with coverage issues openly Ask Does this work for everyone?

20 The Process To Get To A Result Loss. Communication. Common cause approach. Scope/Pricing. Coverage conversation. PD/BI, Audit/Measurement. Financial Management, Payments. Closure.

21 Business Interruption Gross Profit vs Gross Earnings Indemnity granted following loss/damage to Insured property as a direct result of an Insured peril, subject to a concept of actual loss sustained. Formula for lost sales, lost production. What would the Insured have enjoyed had the loss not happened. Indemnity period. Resumption of business, loss mitigation. Prevention of access. Civil Authorities. Deductibles, Waiting Periods versus Dollar Amounts. Exclusions, consequential loss, due to delay, lack of performance, loss of contract except as provided.

22 Insured Extinguishment Communication/Control Protection Life/Property Environmental (EPA & OSHA) Decision to Reinstate Options Location Design Upgrade Code Changes in Business Direction Shareholders BI? CBI Upstream/ Downstream Finances to Rebuild Thoughts? Insurer Communication/Control Access Adjuster/Experts C/O Scope R/R ROD Pollution/Contamination Code BI Critical Path Expediting Extra Expense Progress Payments Coverage

23 Underwriting vs. Claims Understanding the coverage Are the facts as it was reported? Policy intent Rectification Did we pay attention?

24 Economic Impact Mining Business Interruption IS Different! Why? Finite Resource Mining Plans Commodity Pricing Specifics of a Mine

25 Mining Plans Each mine in the world has a specific mining plan based on: Geology Economic Strategy Number of Pits or Ore Bodies Commodity Pricing Corporate Strategy

26 Mining Plan Considerations High-Grading via Mining Plan Overburden acceleration Change in Mining Plan Ore Plan to Actual

27 Commodity Pricing Economic Impact Considerations Stated Value vs Actual Value Can an Insured Benefit? Jurisdiction?! Windfall Commodity Pricing Time of Loss? Incurred Loss? Time of Payment? Spot vs Contract Pricing

28 Questions?

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30 Speakers: MIG - Briefing

31 RIMS 2015 New Orleans April 28 th, 2015 MIG-Briefing

32 Agenda Anti Trust Statement About MIG MIG Working Groups MIG Regional MIG Going Forward Questions 32

33 Anti Trust Statement MIG is committed to effective competition in the Mining Market. MIG will not allow its meetings, organization or facilities to be used for any illegal, unlawful or anti-competitive purposes and it is the duty of each Member to: Ensure that MIG does not contravene or assist any other party in the contravention of any applicable law or regulation, including but not limited to US, EU and UK competition law and Be aware of their responsibilities under applicable law or regulation, including but not limited to US, EU and UK competition law, and ensure that all reasonable care is taken to ensure that no infringement occurs. All Members by joining MIG and each of their Delegates irrevocably authorize the chairman to disclose to any relevant governmental, supranational, regulatory or other person having legal authority over all reasonable cooperation to such persons as may be required or in the interests of MIG. 33

34 About MIG Mission Statement The Mining Insurance Group has been established by: mining companies, risk managers, underwriters, claims adjusters, brokers, and other service providers involved in risk management and insurance related activities in the mining industry. The Mining Insurance Group is a non-commercial undertaking organized by a committee drawn from professionals with extensive experience of mining risks and claims and is a cooperative forum enabling the ongoing improvements in the underwriting, risk management and claims processes, along with the exchange of views, experiences and dissemination of knowledge. 34

35 About MIG Structure MIG unincorporated association Group of volunteers/no paid staff All members are considered equal 63 members at present MIG has no parent nor subsidiaries nor accountability Promotional activity is not acceptable Membership cost 250 annual ( April April) 35

36 About MIG Benefits of MIG Membership Members: Are given the opportunity to contribute, share, learn and influence the mining insurance world within a diverse group of players Can participate in a wide range of mining specific events, forums, seminars, conferences and discussions Be part of a collaborative industry practice, on a non-commercial basis Have the opportunity to join the various working groups Network with people in the industry New members are encouraged to join 36

37 MIG Working Groups Working Groups MIG members volunteers have the opportunity to join the various work groups, such as: Claims Protocol Policy Wording MIG Australia MIG North America MIG South America 37

38 MIG Working Groups Claims Protocol Mobilization and Next Steps Issued October 2013 Used in December and 2014 renewals Input to date is very positive Used as an endorsement or a separate agreement or best practice Need for a Regional Working Group to enhance and refine 38

39 MIG Working Groups Wording Mobilization and Next Steps Initial Wording released April 29, RIMS Denver Need for agreement among brokers, underwriters, reinsurers and adjusters Need for additional extensions / clauses as requested Legal wording to be reviewed to confirm functionality Continuous process to enhance wordings, extensions and endorsements Expansion of wording as required by Members Need for a Regional Working Group to expand, enhance and refine 39

40 MIG Australia, North and South America Regional and Global Connectivity Anne Chalmers Brian Birchall Lima Tom Holliday MaKhew Frost Santiago 40

41 MIG Initiatives 2015 Interest to Proceed as a Regional Group Is there sufficient interest to establish a MIG United States and/or South African and/or European and/or Asian Group to benefit from the exchange of views, experiences and dissemination of knowledge? A call for volunteers to assist in the organization of MIG Regional Groups A call for volunteers for Wordings Working Group and Claims Protocol Working Group to feed content to the Board 41

42 MIG Initiatives 2015 Survey We will be sending out a questionnaire to all members to identify key issues of interest and/or concern for future discussions and future initiatives within MIG. The survey will be web-based and available on: A call for active participation of members and prospective members in the survey to make sure the focus of MIG s work is going in the right direction 42

43 MIG Initiatives 2015 Claims Data Base Based on the available collective knowledge and experience amongst the MIG members we are hopeful to build a reliable and detailed data base founded on materially accurate facts and unpolluted by insurance parameters like retentions, cover, settlement basis etc. A call for volunteers to assist in the creation of such a work product on regional and collective level 43

44 MIG Initiatives 2015 MIG Conference Is there sufficient interest to establish a regular MIG conference to benefit from the exchange of views, experiences and dissemination of knowledge on a regular and collective basis. A call for ticking the respective box on the questionnaire and have your input in respect of venue, time and frequency etc. 44

45 Questions 45