Omnia is keeping a close eye on changing sea temperatures as climate change makes it harder to predict weather patterns and commodity prices.
The group, which provides blasting solutions to mining companies and fertiliser to commercial and small-scale farmers, said on Tuesday that extreme and unpredictable weather events pose a growing threat to the global mining and agriculture sectors in which it operates.
“Climate change remains a key structural risk, with erratic weather patterns disrupting agricultural cycles, infrastructure resilience and water resource availability,” the company warned in its latest annual report.
Omnia, valued at R12.86bn on the JSE, is a player in SA’s most climate-exposed industries. The Johannesburg-based group has been servicing the local mining and farming sectors for 70 years and now operates across Africa, Australasia and Brazil.
Earlier this year, however, the group’s financial performance was marred by excessive rainfall in SA, which disrupted a number of mining companies’ operations in particular.
Climate change remains a key structural risk, with erratic weather patterns disrupting agricultural cycles, infrastructure resilience and water resource availability.
— Omnia
Major platinum group metal (PGM) and gold producers reported lower output as a result of unusually intense rainfall in the first three months of the year and the mining sector’s weak economic contribution, one of the main culprits behind SA’s sluggish growth in the first quarter, came partly because of flooding in Gauteng and Limpopo.
Tharisa blamed rainfall for a slump in its second-quarter earnings, while heavy flooding in Limpopo forced Valterra Platinum to suspend operations at its Amandelbult mines, resulting in an 8% drop in the firm’s first-quarter PGM output.
DRDGold has also warned it might miss this financial year’s annual production guidance after heavy rains disrupted its Gauteng gold mining operations.
According to Omnia, erratic weather conditions also took their toll on the global agricultural industry this year, resulting in turbulent commodity prices and operational disruptions in SA, Australia and Brazil.
“Omnia is exposed to longer-term climate change phenomena, like El Niño (rising sea temperatures) and La Niña (falling sea temperatures), as well as short-term climate variability, which poses risk to both the agriculture and mining segments,” said the company.
“Extreme weather conditions, such as excessive rain, droughts or severe storms disrupt crop planting windows and mine blasting schedules (particularly open-pit operations).”
Reflecting on a challenging year, Omnia said it had increased its use of scenario analysis techniques to keep an eye on extreme weather patterns. It was working on developing ways to respond to rising climate variability, which makes demand forecasting and inventory management a growing challenge for farmers and miners alike.
On top of “ongoing climate change monitoring for primary markets”, the holding company said it had put in place disaster recovery and response plans for this financial year, as climate variability continues to constrain its customers’ growth plans.
The group was developing a new “Climate Scenario Analysis Framework” to assess potential vulnerabilities in its infrastructure to severe weather events.
Beyond this, the company’s approach to managing climate risks hinges on renewable energy investment. It hopes that easing its reliance on fossil fuels will enable a speedier recovery from future disruptions.
Across all its operations, Omnia’s use of renewables (namely, solar) increased by 55% to just more than 20,000MWh in the year to end-March. Another 10,000MWh of renewable energy capacity is in the works, it said.
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