Mine sites operate as complex ecosystems, with high-value assets and critical machinery working towards one goal: extracting and processing commodities for sale.
Mine operators typically employ risk-management strategies to preserve assets, fulfil insurance requirements, and keep operations running smoothly.
But doing this effectively requires deep operational knowledge and data-driven engineering insight into high-risk assets and potential loss scenarios – expertise difficult to maintain in-house.
FM – a large global property insurer with a dedicated engineering network – helps mining operators identify and manage the risks that matter the most to their organisations, proactively helping them avoid costly losses and downtime.
“FM’s philosophy has always been that the majority of losses are preventable,” FM account engineering group manager Matt Pilgrim told Australian Mining.
“We employ thousands of engineers worldwide who go out and evaluate essentially every location that we insure. This informs a risk assessment to understand the risk profile of each individual site.”
These risk assessments help our underwriters structure insurance programs that meet the clients’ needs and offer invaluable insights into key processes, equipment and hazards.
“Our field engineers collect around 700 data points when conducting a site evaluation,” Pilgrim said. “This incorporates almost every moving part on a site, including the buildings, equipment, processes, protection systems and natural hazard exposures.
“When we combine this with loss history using predictive analytics, we get some powerful insights about loss drivers at both a location level and an industry level.
“Our role is then to present our risk assessment to a client and say, ‘Here’s what we know about your industry and where losses are most likely to occur. Here are your assets most at risk of loss. Here’s the risk profile of your business overall.”
Targeted recommendations
Once a risk profile is determined, FM provides recommendations on best practices to mitigate risk and avoid losses. This informs a risk-management plan.
“This helps us understand, ‘Where are we at today, and what do we agree is a good end goal?’,” Pilgrim said. “This could be for two, three or five years down the track, depending on what is best suited to the client and their own risk appetite.
“We apply our engineering resources to help clients understand what the best solutions are, how to go about applying them, and what the priorities should be. We’re a mining company’s partner on their risk-management journey.”
Once the priorities are agreed upon, the journey usually starts with identifying any ‘low hanging fruit’. Pilgrim said FM typically advises mining companies to first address risks that can be implemented quickly and don’t come with a large capital expense.
This might involve adapting loss prevention procedures that reduce the likelihood of loss, such as hot-work processes that present fire hazards, or online condition monitoring for critical equipment, for example.
“Hot work fires are a major loss driver in the mining industry,” Pilgrim said. “FM could suggest best practices, such as clearing combustibles when carrying out hot work or having extinguishers or hoses laid out to quickly respond in the event of a fire.
“Longer-term risk management priorities often involve some capital outlay, such as purchasing critical spares or improving fire protection which greatly reduce the consequence of a loss and can have an enormous impact on the overall risk profile of a site.
“We try to help our clients find the right balance when it comes to spending capital on risk improvement, as every client has a different risk appetite and capital is often constrained. That’s where our data and analytics really come into their own in terms of prioritising risk improvement spend.”
Insights backed by research
FM calls on an extensive range of mining-specific engineering standards and data sheets to inform its consultations, produced by the company’s engineering and research arm.
“A lot of the value that FM brings is our research,” Pilgrim said. “We have facilities in the US that carry out large scale testing for fire, explosion, natural hazards and equipment. We run tests to understand how things behave when it all goes wrong, and how to best protect our clients’ assets. A huge area of focus for our researchers right now is emerging risk.
“We want to help guide our clients through the mining industry’s next evolution, where decarbonisation, digitisation and technology are front of mind.”
FM conducts research and testing to develop best practices regarding the installation of battery energy storage systems (BESS), for example, which can pose fire risks due to the lithium-ion batteries that power these systems.
This could involve simple measures like providing adequate space separation, off-gas detection to provide early indication of thermal runaway, or in some cases active fire protection.
Mining misconceptions
When asked what the most common misconceptions regarding loss in the mining industry are, Pilgrim provided some fascinating insights.
“We analysed 10 years of mining loss history and found only 25 per cent of our gross losses were connected to physical damage, with 75 per cent tied to the resulting business interruption,” Pilgrim said. “By far the majority of loss that we pay is the downtime associated with equipment being unavailable, as opposed to the actual physical cost of fixing things. That’s why understanding the pain points for your operation is so critical.”
Pilgrim also emphasised the misconception between routine losses versus catastrophic losses.
“Clients tend to understand routine losses well, but it’s the rare events that might only occur once or twice in the life of an operation that are less understood,” he said. “It could involve the catastrophic failure of a girth gear on a SAG or ball mill, or a fault in a main transformer.
“It’s something that’s going to have a significant impact on production, and it’s going to take a long time to procure a replacement if you don’t have a spare.”
Risks are a constant on mine sites, and understanding their potential impact helps prevent major operational setbacks.
FM’s unique engineering approach helps operators identify vulnerabilities early and prioritise the right interventions, reducing the likelihood of costly failures and improving long-term resilience.
This feature appeared in the June 2025 issue of Australian Mining.
