The condition of the mining and steel industry is gradually improving from one of its most difficult periods in decades. Market volatility and a downturn in commodity prices are commonplace because cost cuts, automation, and operational efficiency have their important role to play whereas industry-specific issues associated with regulation; legal limits on natural resource use, geopolitical risk, and public scrutiny have added additional challenges.
“While it is very likely that the demand for minerals will grow in the coming years, several trends will decide the future of these companies” as simply put by Socrates Vasiliades, the experienced professionals having more than 25 years of experience in the same industry.
The following three main driver trends will change the course of the mining and metals sector.
Shifting Over to a Low Carbon Economy
A low carbon economy is an economy based on low carbon emission power sources that result in the minimal output of greenhouse gas, particularly carbon dioxide emissions into the biosphere. Greenhouse gas emissions due to human activity are the main cause of global warming hence climate change since the mid-20th century. To avoid reaching temperatures that will have destructive consequences for the earth, we must decarbonize our energy systems. The transition provides an excellent opportunity for the sector because low-emission energy and transportation systems are more minerals intensive than fossil-fuel based resources.
Vasiliades stresses the importance of a low carbon economy by saying that the sector must have to reduce its emissions first because companies that use renewable energy, operate electric and integrate recycling in their value chains will help to reduce greenhouse gases especially carbon dioxide and hence will be best to sell low carbon-premium minerals.
Access to Resources
Companies need to venture into areas that have not been explored as yet because the world-class mineral resources in low-risk areas are getting exhausted; we must either master new technologies for extraction and processing or venture into areas where extraction is considered impractical. New technological breakthroughs are expected for venturing into places that can help to access more resources. Automation and digitization can help in more targeted and efficient mining which can be enhanced to a great extent by technological breakthroughs in different areas such in-situ leaching, that is a process used to recover minerals such as copper and uranium, block caving which uses gravity to exploit ore bodies located at a particular depth.
Novel Ways to Finance Mining
New financing and production models will likely become commonplace because companies want to limit risk to an appreciable extent. Because the first decade of the 21st century witnessed the commodity boom, hence prices collapsed and they were forced to concentrate on reducing debt ratios by improving their balance sheets. Different financing solutions were developed such as royalty and metal stream agreements that help to reduce the burden on the company’s balance sheets. They may likely think to develop joint ventures similar to the oil and gas sector to reduce their exposure to a particular jurisdiction.
The sector is gradually recovering from one of the most difficult phases in decades. Market volatility and a downturn in commodity prices are commonplace because cost cuts, automation, and operational efficiency have their important role to play. Different trends of the Mining Industry will be observed in the coming years and which will decide it’s future such as shifting over to a low carbon economy, finding different ways to access resources, novel ways to finance, etc. The leaders in the industry such as Socrates Vasiliades stress the importance of shifting over to a low carbon economy.