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There is rising demand for the metals that can be found in every smartphone, every car battery, and in the many products that enable the expansion of renewable energy technologies. But as demand for these materials increases, the mining sector faces shortages of critical minerals, environmental concerns, and the need to adopt more sustainable practices. Supply chain disruptions in the metals sector and geopolitical tensions have led to increased interest in reshoring and securing local supply chains.
By using smarter technologies, adopting eco-friendly methods, and focusing on recycling, mining & metals companies aim to close the gap in critical materials while protecting the environment. Through investing in innovation and in new ways to create value, the sector is not just meeting today’s needs—it’s building a more sustainable future for everyone. At PwC, we provide mining solutions to suit your needs, delivering value through innovation.
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A report that brings together insights and perspectives on the disruptive forces that could transform the mining sector
The mining and metals sector is currently experiencing significant advancements, particularly in the areas of sustainability and technology. Companies are increasingly focusing on enhancing operational efficiency through the use of generative artificial intelligence and other emerging technologies. Additionally, there is a strong emphasis on meeting environmental, social, and governance (ESG) expectations, which includes improving safety standards and engaging in circular economy practices. These efforts are crucial as the demand for critical minerals continues to rise, driven by the global energy transition and the need for sustainable infrastructure.
Clean energy technologies critical in the global transition to net zero will require more mineral inputs. The International Energy Agency predicts that the world will need six times as much of those minerals by 2040 (source 3) to achieve net zero by the mid-century. Some minerals will require even greater increases in production. For example, demand for lithium for electric vehicles and other batteries is projected to grow more than 40-fold by 2040. Other high-demand minerals include graphite, cobalt, nickel and copper. For miners, the exploration and development of sites for these mineral groups will pose both a challenge and an opportunity.
Strong balance sheets, record commodity prices and prudent capital management have helped the mining and metals sector to deliver outstanding results well ahead of forecasts. This leaves miners in an enviable position. However, there remains a choice on how they can make best use of the cash generated. Do they double down on their existing asset base by relying on the abundance of cheap debt and free cash flow? Or will they take a strategic step to shift towards decarbonisation and an ESG agenda, adding assets that will put them ahead of the next mining boom?
Mining companies that embrace ESG as a core part of their business strategy will enjoy the greatest opportunities for sustainable growth, long-term value creation and maintaining a social licence to operate. We have seen companies with higher ESG ratings show better market performance and outperform the broader market, delivering shareholder returns that averaged 10% higher than the general market index. In addition, improved sustainability provides a way to differentiate operations and products on the market – for example, low-carbon aluminium can command a premium price. Finally, with a growing number of investors prioritising ESG, high-scoring mining companies can gain better and lower-priced access to capital.
For many mining companies, the taxes they pay can be the largest contribution they make to ESG. While 39% of industry CEOs are concerned about tax policy uncertainty, only 30% of the top 40 companies adopted tax transparency reporting in 2020. Increasing tax transparency provides mining companies with an opportunity to reap significant benefits. For example, a company can build its reputation in the communities where it operates by highlighting the social benefits that its taxes help to support. Organisations that are open about their tax strategies and governance also have greater appeal to ESG-focused investors. Tax transparency can even give companies the opportunity to have more say in developing local and regional tax policies.
Mining companies have an opportunity to build value by viewing mergers and acquisitions opportunities through an ESG lens. This means looking for assets that not only meet traditional industry benchmarks but feature low-carbon footprints, have links with government and support local communities. Such assets can help companies meet their net zero goals and provide solid returns on investment by strengthening their position in expanding markets for green technologies. Organisations also have room to grow through looking for deals involving battery minerals and rare earth elements, which are seeing rising demand.