The metals and mining industry is an industry dedicated to identifying and extracting metal and mineral reserves across the world. Global reserves of metals and minerals are mined profitably and used in jewellery manufacturing, industrial applications, and investment.
Metals can be divided into two categories. Precious metals and industrial metals. Precious metals include gold, platinum, and silver. They are considered rare and have high economic value. Precious metals also derive their value from what they are used for, such as gold, which is considered a haven in times of economic uncertainty. Some precious metals are also used in industrial and manufacturing processes. Palladium is used in electronic devices, for example. Industrial and base metals are used in the construction, manufacturing, and technical industries and include copper, aluminium, steel, and zinc. Copper and steel are heavily used in manufacturing, especially in China and India.
Mining is the extraction of minerals such as coal and gems. Coal is one of the key mining products and is produced in large quantities around the world. This mineral supplies about 38% of the world's energy and are extremely necessary for power generation. Environmental concerns have reduced coal production in some countries, but many developers rely heavily on coal production to maintain continued economic growth.
Key Trends that are driving the growth of the Mining industry
1. Low Carbon Economy - To avoid reaching catastrophic temperatures for the planet, countries must decarbonize their energy systems by the middle of the century. Given how low-emission energy and transportation systems are more mineral-intensive than fossil fuel-based systems, this transition presents tremendous opportunities for the mining sector. A mining company that operates on renewable energy operates a fleet of electric or hydrogen-powered trucks, and integrates recycling into its value chain will have a competitive advantage over its competitors.
2. Access to Resources - Due to the depletion of world-class mineral resources in low-risk areas, mining companies need to learn new extraction and processing techniques or move into frontier areas where mining was previously not economically viable. Automation and digitization enable more targeted and efficient mining. This can be possible with technological innovations such as on-site leaching (a mining process used to recover minerals such as copper and uranium from boreholes drilled in a deposit) and cave digging (a mining process drilled in a deposit). It may further be strengthened through Block Caving (Underground mining methods that use gravity to extract deep ore bodies) or biomining (a technique that uses fungi to extract metals from ores and other solid materials).
3. Social Contract - Bringing real benefits to the community near the mining site is the key to the success of a new project. In recent years, the challenge in the mining industry has been to obtain an "operation license" from the local community. Many planned projects were rejected, and activities were interrupted by protests. A record number of mines have reached the end of their life and are not fully funded for rehabilitation. With the increase in water stress and extreme weather caused by climate change, local opposition to the mining and metal industry may increase unless new business models are developed that benefit the affected communities.
4. Big Data - Collecting and processing large amounts of data is crucial for mining companies to digitize and automate their operations. What data needs to be shared and made transparent remains a major discussion topic. Affected communities are particularly interested in accessing data that captures the affected externalities. Organizations need to work with other stakeholders to understand what types of data can be made available, and what appropriate format that data disclosure should take to ensure standardization, usefulness, and impact.
Impact of COVID-19
Compared to many other industries, the metals and mining industry has successfully survived the COVID-19 pandemic. The sector has moved out of the pandemic with stronger balance sheets and available free cash flow due to higher commodity prices. The next few years will be critical to the industry as it continues to support global energy transformations and respond to stakeholder calls to integrate ESG into its business strategy. How the industry responds helps build trust and drive business growth. Companies that do this right are in the best position to make a successful transition to net zero.
Conclusion
The mining and metals industry is demonstrating its ability to achieve record levels of profitability and growth. Now, as the world enters a covid-normal phase, miners will be faced with a renewed stakeholder focus: it's not just about how you mine, but what you mine, how it's processed, and how it's used further down the supply chain. Mining is a global and profitable industry, and stakeholders are increasingly expecting ESG (Environmental, social, and Governance) transparency and reporting. Organizations that can build trust through ESG are more likely to gain market share and access to finance.
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