Over the past two decades, the mining industry has experienced substantial transformations, reshaping the sector and exerting profound effects on market dynamics, operational strategies, community relations, and workforce transitions. This article will review the most significant mining industry trends of the last 20 years.
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A Shifting Commodity Mix and Surging Demand for Rare Earth Minerals
One of the most pronounced trends in the mining industry is the diversification of its commodity portfolio—reducing reliance on coal while expanding into critical minerals extraction.
In 2012, almost half of the top 40 mining companies generated revenue from coal, but by 2022, only a quarter remained coal producers, primarily due to mounting climate change concerns.
There has been an exponential increase in the demand for minerals crucial to clean energy applications (such as lithium, cobalt, nickel, and copper) and rare earth elements essential for producing batteries, wind turbines, solar panels, and electric vehicles. This has prompted miners to shift their portfolios towards these "future-facing" minerals.
Prioritizing Sustainability Across Operations and Corporate Strategy
Environmental, social, and governance (ESG) initiatives now feature prominently across competitive strategies. Stakeholders demand evidence of comprehensive ESG standards as a mandatory condition for conducting business. This 'license to operate' has become an asset as essential as financial or human capital.
As highlighted in PwC's review, only 40% of the top 40 miners published standalone sustainability reports in 2007. However, within the last five years, 90% have published detailed emissions reduction targets and community development goals per GRI standards.
This remarkable shift indicates that ESG commitments have evolved from being perceived as a "nice to have" to a "must have" in mining.
Digital Transformation Picking Pace
Over the past two decades, remote and automated hauling technologies were virtually nonexistent in mining. However, mining companies are actively pursuing innovation in the current landscape by deploying next-gen solutions like autonomous trucks/drills, digital twins, integrated data platforms, and predictive maintenance.
Top miners recognize the necessity of productivity-enhancing technologies for global competitiveness. According to PwC, most of the top 40 miners had defined plans to integrate big data, IoT, and AI/ML in their operations by 2017.
These technologies have also proven to save substantial capital. For instance, Australia's Newcrest Mining uses data from 100,000 sensors to create digital twins and develop predictive maintenance models, resulting in estimated savings exceeding $50 million in 2018.
Acceleration in Industry Consolidation
The mining industry has witnessed relentless consolidation over the past 20 years, primarily driven by numerous big-ticket mergers. According to the PwC report, over a third of the top 40 miners from their 2004 ranking list have merged with rivals.
Recent examples include Newmont's $10 billion acquisition of Goldcorp in 2019, Barrick Gold's merger with Randgold Resources, and Pan American Silver's $4.8 billion acquisition of Yamana Gold in 2022. These deals augment portfolios and regional access while promising synergies by consolidating adjoining mines and unifying infrastructure like smelters and rail systems.
Industry analysts predict more upcoming megamergers as rising metal and mineral prices motivate smaller competitors to seek capital from potential investors.
Improved Capital Allocation
During the commodities super-cycle of the early 2000s, miners were obsessed with boosting production volumes and acquiring assets to meet China's insatiable demand rather than focusing on shareholder returns.
When commodity markets crashed post-financial crisis, miners were burdened with crushing debt loads and had to sell assets at bargain prices to survive. Since then, priorities have dramatically shifted towards repairing balance sheets, divesting non-core assets, cutting debt, and improving capital allocation.
While this capital discipline has strengthened miners' financial positions, some analysts argue it has come at the cost of expanding production volumes and replenishing reserves.
Mining Equipment and Transport Logistics
In 2019, the global mining equipment sector achieved a record market valuation of $144 billion. A Grand View report anticipates a consistent 5.1% compound annual growth rate until 2030 as mining equipment gets further enhanced.
Companies are already piloting increased size capacity for vehicles and pioneering technologies like electrification, automation, and semi-autonomous driving.
Additionally, mining leaders have adopted effective maintenance strategies for their costly equipment, ensuring peak efficiency and minimal disruptions. For instance, Rio Tinto's implementation of IoT-driven predictive maintenance, using 92 sensors on 900 trucks, has significantly reduced unplanned downtime, resulting in substantial daily cost savings of $2 million.
The mining industry is also witnessing a notable shift toward emission-free machinery. For example, Rio Tinto plans to test four battery-electric trains in the Pilbara in 2024, aiming to reduce carbon emissions by 50% by 2030. The locomotives, purchased from Wabtec Corporation, will recharge at stations and harness energy from their braking system for partial self-recharge during ore transportation.
Surging Innovation Levels Across the Mining Industry
The mining industry, often perceived as less innovative, has shown increasing innovation in recent years, evidenced by rising research and development (R&D) spending and patent filings.
Global mining-related R&D expenditure over the last decade is estimated at around $140 billion, with China, the United States, Australia, Canada, and Europe as major contributors.
Despite a recent slowdown, mining patents have outpaced overall patenting activity since 2004, indicating a significant surge in mining-specific innovations during the early 2000s.
Conclusion
The mining industry has undergone significant transformations in the last two decades, prompting miners to move beyond traditional practices and portfolios within this dynamic and competitive landscape.
Acknowledging the imperative for adaptation, miners strategically prioritize portfolio diversification, increased technology deployment, achieving net-zero goals, promoting inclusion, and fostering shared value with communities as crucial strategies for thriving in the upcoming decade.
References and Further Reading
Daly, A., Raffo, J., Valacchi, G. (2019). Recent trends of innovation in the mining sector. Global challenges for innovation and IP in the mining industries. Global Challenges in Mining Industries. https://doi.org/10.1017/9781108904209.003.
Gleeson, D. (2020). Revolutionizing operations through the 'Connected Mine' of the future. [Online] International Mining. Available at: https://im-mining.com/2020/09/17/revolutionising-operations-through-the-connected-mine-of-the-future/.
National Group. (2020). Global Trends in Mining Equipment and Transport Logistics. [Online] National Group. Available at: https://www.nationalgroup.co/global-trends-in-mining-equipment-and-transport-logistics/.
PerkinElmer. (2021). Modern Mining Trends and Challenges. [Online] PerkinElmer. Available at: https://resources.perkinelmer.com/corporate/pdfs/downloads/whp_mining-trends.pdf.
PWC. (2023).The era of reinvention. [Online] PWC. Available at: https://www.pwc.com/gx/en/issues/tla/content/PwC-Mine-Report-2023.pdf.
Rio Tinto. (2022). Rio Tinto purchases first battery-electric trains for the Pilbara. [Online} Rio Tinto. Available at: https://www.riotinto.com/news/releases/2022/Rio-Tinto-purchases-first-battery-electric-trains-for-the-Pilbara.
Roker, S. (2018). Top 10 trends facing the mining industry in 2018. [Online] Global Mining Review. Available at: https://www.globalminingreview.com/mining/07062018/top-10-trends-facing-the-mining-industry-in-2018/.
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