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Mine 2022

A critical transition

Download the Mine 2022 report

Now’s the time to explore uncharted paths and discover new solutions

Miners need to create value amid market volatility, increasing demand and the race to net zero.

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What it means to be a miner is changing. Though the world’s Top 40 miners demonstrated stellar financial results in 2021, it’s unclear how long this record run will 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? 

Success will hinge on whether or not the Top 40 can take a leading role in the world’s clean energy transition and continue to generate significant stakeholder value. To do that, miners must utilise their strong current financial position to meet challenges including development timelines, price volatility, geopolitical risks, stakeholder expectations, economies of scale and economic resource scarcity. 

The rewards for those miners who emerge as leaders could be immense: the need for critical minerals is expected to grow over the next three decades, with some estimates suggesting that the annual demand from clean energy technologies will reach more than US$400bn by 2050.

Here are four of this year’s report’s most important takeaways for the world’s big miners.

Take a position on critical minerals

  • 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.

Net zero and the energy transition will drive demand for metals. Market capitalisations for critical minerals miners outperformed the Top 40 by49% to 147%
Revenues are up 32% Net profits are up 127% Market capitalisation is up 7% Dividends are up 130% Capital expenditures are up 18%

Take advantage of your financial strength

  • Leverage strong balance sheets and abundant cash flow.
  • Take advantage of expected strong short-term commodity prices to prepare for longer-term uncertainty.
  • Reposition towards long-term growth while balancing shareholder distributions.

Incumbent miners with strong balance sheets, available financing and abundant free cash flow are in the best possible shape to drive the direction of the industry for decades to come. But despite their size and financial advantages, the window to maximise growth opportunities and create value is closing; miners must make their move quickly.

Revisit deal strategy

  • Think carefully about your M&A strategy in the context of the fundamental changes affecting mining, the market for mining products and your long-term strategic position.
  • Consider the impact of high volatility in the short to medium term, increased geopolitical risks and competition from new players.

As deal activity heats up, the Top 40 are well placed to position themselves to take advantage of the rising demand for critical minerals. But with competition coming from multiple angles, they’ll need to think carefully about their next big moves.

Deal value increased by 200% Deal volume increased by 60% Gold is the largest deal driver in the Top 40, but critical minerals deals are gathering steam.
14%of mining and metals company CEOs have conducted scenario planning in response to Pillar 2 (global minimum tax).137member countries have agreed to the two Pillar solutions proposed by the OECD.83%of mining and metals CEOs see meeting customer expectations as an influential factor that supports meeting their net-zero commitment.

Double down on ESG

  • Establish strong social licences, and execute M&A responsibly.
  • Act now to prepare for the potential impact of the OECD’s Pillar 2 (global minimum tax).
  • Explore green premiums and ESG opportunities for a reduced cost of capital.

The mining industry is naturally competitive. But building trust in ‘brand mining’ cannot be done alone. Every miner is responsible for improving the trust that it builds with stakeholders and for strengthening mining’s social licence to operate. As leaders, the Top 40 play a crucial role.

ESG is no longer optional or a point of differentiation; it is the minimum operating standard. Stakeholders are increasing the pressure, and strong social licences, responsible divestitures and tax transparency will be important for success. 

ESG should be considered at the heart of what a miner is; this will lead to sustained outcomes that drive value and growth while strengthening our environment and societies.

‘It is only by developing and maintaining trust with a broad range of stakeholders that miners’ licence to operate is assured.’

Paul A. Bendall Global Mining Leader

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Contact us

Paul Bendall

Paul Bendall

Global Leader, Mining and Metals Partner, PwC Australia

Tel: +61 3 8603 3891

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