As 2024 unfolds, the mining and metals industry finds itself navigating a complex landscape of challenges and opportunities.
The sector is critical to the energy transition and global industrialisation, facing pressing issues such as a projected copper supply deficit of 9.9 million tonnes by 2035.
Amid evolving value chains and external pressures, the industry is adopting innovative strategies to enhance efficiency, meet environmental, social and governance (ESG) expectations, and tackle productivity issues.
Deloitte Global's 16th edition of 'Tracking the Trends' offers insights into these challenges, providing practical ideas to help the sector capitalise on emerging opportunities and sustain growth.
#TrackingTheTrends2024 is out now! Are you ready to navigate through global challenges and maximize opportunities in the #Mining and #Metals industry? Explore more. https://t.co/AzThi6opq7 pic.twitter.com/GvjCWQoooS— Deloitte (@Deloitte) January 30, 2024
Trend 1: Putting purpose at the heart of mining and metals – Creating social momentum
This trend highlights a crucial shift in the mining and metals industry towards a purpose-driven approach.
Despite efforts over the past decade to enhance transparency and responsible mining methods, the industry still faces challenges in being valued for its societal contributions.
The demand for critical metals, which is expected to exceed supply in the near term, necessitates expansion into new regions, increasing the need for mining companies to build trust and demonstrate a genuine commitment to societal and environmental goals.
This development underscores the importance of mining companies not only adopting purpose-led strategies but also living them authentically, to foster deeper connections with all stakeholders and drive sustainable growth.
Trend 2: Navigating global uncertainty – Building capacity to thrive in the face of disruption
Due to the shift in global geo-political landscapes, there is an emphasis on the heightened level of uncertainty facing the mining and metals sector due to various factors including geopolitical tensions, climate change and technological advancements.
The ongoing Russia-Ukraine conflict and instability in the Middle East have significantly disrupted commodity markets, affecting global supplies of crucial materials.
Concurrently, the sector is grappling with the challenges and opportunities presented by generative AI and the urgent need to progress towards net-zero goals.
This complex landscape requires dynamic strategising, increased supply chain resilience and a focus on workforce upskilling to navigate the uncertainties effectively and maintain industry growth and stability.
Trend 3: Dealmaking for future-focused growth – Rethinking minerals and metals investments
The trend highlights the strategic shifts in the mining and metals industry as it adapts to the evolving demands of the energy transition.
Companies are increasingly engaging in mergers and acquisitions (M&A) to secure access to critical minerals and metals like nickel and copper, essential for sustainable growth.
Consequently, this is evidenced by significant deals, such as BHP (ASX:BHP)'s acquisition of OZ Minerals and Rio Tinto (ASX:RIO)'s expansion into tellurium production.
Additionally, firms are exploring organic growth and restructuring to align with net-zero emission targets, making greenhouse gas (GHG) emissions statements a crucial investment criterion.
The surge in M&A activity underscores the industry's focus on securing long-term, environmentally responsible growth through strategic investments and partnerships.
Trend 4: Working toward net-zero – Building capacity and futureproofing ESG strategies for a credible transition
The trend underscores the mining and metals sector's role in combating climate change and achieving a sustainable future.
Despite global efforts, current climate pledges are insufficient to limit global temperature rise to 1.5°C, with potentially severe economic and environmental consequences.
Mining and metals companies, as key providers of raw materials for sustainable infrastructure and low-carbon technologies, are uniquely positioned to lead in this transition.
Deloitte's insights suggest that effective climate transition planning involves a comprehensive approach, integrating science-based net-zero targets into corporate strategies and operational decisions.
This holistic strategy encompasses understanding stakeholder perspectives, evaluating climate-related risks and opportunities, and implementing credible, responsible and equitable transition plans to achieve transformative success and enhanced resilience.
Trend 5: Collaborating with governments to rethink regulation – Unlocking critical resources through permitting
Regulatory environments play a crucial role in the mining and metals industry and are pivotal for global socioeconomic growth and decarbonisation.
While there are sufficient geological resources to support the net-zero transition, the challenge lies in ramping up supply quickly and sustainably.
Permitting processes worldwide are lengthy and complex, often hindering the development of local supply chains for critical minerals.
Deloitte suggests that a collaborative approach between governments, industry and communities is essential for regulatory reform. This collaboration could streamline permitting processes, align project prioritisation with critical metals and decarbonisation targets, and balance risk and opportunity, thereby accelerating economic growth and investment in communities.
Trend 6: Going back to grassroots – Nourishing growth through investments in exploration
There is a dichotomy observed in the mining and metals industry's approach to exploration.
While investment in battery metals like lithium has surged, resulting in a significant increase in exploration and development spending, investments in copper exploration have been more conservative, focusing on expanding existing high-grade assets rather than developing new projects.
This trend has led to a dwindling pipeline for copper, risking a supply deficit shortly.
The industry's historical fluctuation in exploration investment, often driven by commodity prices, has led to a shift away from grassroots exploration towards safer, brownfield sites.
Despite recent increases in exploration spending, there has not been a corresponding rise in major discoveries, particularly in commodities like copper, where most new supply comes from older discoveries.
This trend suggests a need for a balanced investment strategy that includes both exploration and mergers and acquisitions to ensure sustainable growth and market capital replenishment in the mining and metals sector.
Trend 7: Addressing workforce challenges through a skills-based approach – Equipping mining and metals companies for the future
This trend addresses the pressing issue of skills shortages and the ageing workforce in the mining and metals industry.
The sector struggles to attract younger generations due to perceptions and a lack of alignment with their values, such as environmental concerns.
To tackle this, there's a need for a shift in education and training approaches, including collaboration between industry and educational institutions to develop relevant curricula and micro-credentialing, which can accelerate talent entry and appeal to diverse groups.
Additionally, the industry must focus on diversity, equity and inclusion (DEI), moving beyond mere numbers to create inclusive systems and practices.
Embracing a skills-based approach rather than traditional job roles can broaden the talent pool, improve retention and ensure workers have the necessary skills for the future.
Trend 8: Unlocking new value in existing assets – Balancing complex priorities and meeting supply demand through operational optimisation
There is increasing pressure on mining and metals companies to meet soaring demand for metals and minerals.
With declining ore grades and rising operating costs, organisations are turning to operational efficiency and productivity improvement initiatives, leveraging data-led insights and digital technologies.
Establishing a solid data foundation and using techniques like simulation, optimisation and automated decision-making are key.
These strategies enable companies to make informed decisions, balance productivity with sustainability and optimise maintenance practices, thereby enhancing asset performance and meeting complex supply and environmental demands.
Trend 9: Bringing generative AI into mining and metals – Capitalising on current and future opportunities.
The trend marks a significant shift in the mining and metals industry with the integration of generative AI (gen AI).
2022 witnessed groundbreaking advancements in AI with the emergence of tools like ChatGPT, introducing new possibilities for industrial applications.
In mining and metals, gen AI offers opportunities for energy security, operational efficiency, profitability and emissions reduction.
While the sector traditionally adopts a conservative approach towards new technologies, the unique data mining and metals companies possess can be leveraged to fine-tune gen AI models for specific, value-driving use cases.
This trend could transform various aspects of the industry, from exploration to mine design, and play a central role in optimising operations and mitigating health and safety risks.
Trend 10: Third-party delivery models – Gaining agility and competitive advantage through next-gen approaches to outsourcing
There is a shift in organisational strategies in response to global risks, sustainability focus and regulatory demands.
Companies, particularly in the mining and metals sector, are increasingly adopting third-party delivery models (TPDMs) for key business functions like cybersecurity, data analytics and environmental, social and governance (ESG) reporting.
These models offer flexibility and agility, allowing companies to adjust activities according to demand and commodity prices without compromising quality.
TPDMs also enable the testing of emerging technologies, like generative AI, cost-effectively before full integration into business operations.
Additionally, outsourcing through TPDMs addresses challenges in talent acquisition and retention, allowing companies to focus more on core operations while accessing specialised expertise and cutting-edge technology.