Challenges and opportunities lie ahead for mining industry
In its annual report on mining, “Mine 2022, A Critical Transition” PwC writes that in a changing environment for mining companies the top 40 companies realized steal financial results in 2021 but that it is unclear how long that run can continue.
“The global mining industry is experiencing unprecedented change — demand for ‘critical minerals’ continues to surge, operating environments are getting more challenging, and new players are emerging. So, the key question is: can the Top 40 transform themselves quickly enough to thrive and earn trust for the future?” the report asks.
The authors of the report said the top companies must take a leading role in the world’s clean energy transition and continue to generate significant stakeholder value. To do that, miners must utilize their strong current financial position to meet challenges including development timelines, price volatility, geopolitical risks, stakeholder expectations, economies of scale and economic resource scarcity.
PwC writes that according to some estimates the annual demand from clean energy technologies will reach more than US$400 billion by 2050, presenting immense opportunity for the companies working in that sector.
“In turn, mining companies, particularly the Top 40 referred to in this report, must continue to develop strategies wherein trust is seen as a precious commodity,” Paul A. Bendall, Global Mining Leader, PwC wrote in the executive summary of the report. “Only by developing and maintaining trust with a broad range of stakeholders will miners’ social license to operate be assured. The successful development and execution of environmental, social and governance (ESG) strategies will go a long way to securing that trust.”
The report offers four takeaway for the mining industry.
• Review your exposure to critical minerals and other materials necessary for the energy transition.
• Evaluate opportunities to own more of the supply chain or to partner directly with original equipment manufacturers (OEMs).
• Incorporate low-emissions technologies into operations.
• Evaluate development models around shared infrastructure solutions.
The shift to net zero will require more mining, not less. But resourcing the energy transition is not simply a matter of mining more of the same materials in the same way. Instead, the world will need more critical minerals and raw materials to power the global economy of the future—and these resources will need to be mined sustainably, said PwC.
The miners that can successfully address these challenges will be best positioned not only to navigate the changing market dynamics but also to create value and to benefit from the rapidly increasing demand for critical minerals and the energy transition.
The report can be found here.