Metals and minerals are the building blocks of development and play a crucial role in the growth of any economy. The mining industry — comprising mineral, metallic mineral, and non-metallic mineral mining — has been among the fastest-growing sectors after the 2008 recession. However, mining has never been easy. The industry encounters countless challenges, such as the need for highly skilled labor and the associated cost, regulatory frameworks, high production cost, lack of standardization, and high equipment cost.
Mineral and precious metals are available in areas that are home to either endangered flora and fauna or extinct human tribes. In addition to this, mining activities are a repetitive process, and the conditions of the mining areas are dynamic, and there is no textbook solution. The cyclic nature of the industry, long term mining operations, and the different circumstances in various geographies are likely to be a challenge—the negotiations for which can be done by hiring skilled human resources personnel.
The cyclic nature of the industry, long-term mining operations, and culturally specific circumstances are factors industry needs to compete to retain or hire highly skilled human resources.
Mining is a capital-intensive industry, which is one of the foremost challenges for players. The high capital required to operate in the sector deters investments and, in turn, deploys advanced technologies.
Developing economies struggle withinadequate infrastructure and the lack of technological advancements to augment the output from underground mines. Moreover, resource nationalism, which refers to the regulations and policies imposed by a nation’s government to assert control over the resources while maximizing the gains from its natural resources, restricts maximum extraction from the available resources. In addition to this, these policies limit the intensity of mining by private players hindering mining activities and mineral availability.
The U.S. – China trade war has adversely affected global supply chains and the minerals and metals industry as well. Trade disputes between these two economies, which are among the world's leading trade partners, lead to dumping of resources and materials on marketplaces such as India, Canada, Mexico, and other economies. This has led to a significant reduction in prices, severely affecting the profit margins of several players. In addition to this, local consumers preferred buying metals and minerals dumped by China or the U.S. at lower prices while significantly affecting the domestic industries. At the same time, these materials were unavailable or in smaller quantities for the above two countries, which resulted in a supply-demand gap for minerals and metals, affecting the global mining sector.
The U.S. – Chinatrade war has also adversely impacted the industry as both economies are vital consumers of minerals and metals.These trade tensions disrupted the supply-demand gap for metals and minerals, ultimately affecting the global mining sector.
Digitization is expected to disrupt businesses in several industries, and mining is no exception. Intelligent mining is changing the way companies operate, including data-drivendecisions, skills requirements and developments, and energy consumption optimization. Integrating technologies into core and support processeshas the potential to simplify business operations significantly. The focus on worker health and safety and the environment and the shortage of skilled labor is expected to upsurge the adoption of smart mining technologies in the upcoming years.
The global economy is undergoing a green transition,and the mining sector is not far behind. Most mining companies are taking steps to reduce greenhouse gas emissions. Although the capital costs involved in modifying and setting up the infrastructure to support the green revolution are high, the adoption of renewable energy sources and advanced technology is likely to optimize the total operational cost.
Clean energy-driven transportation systems are relatively more mineral intensive as compared to their conventional fossil fuel-driven counterparts. It is the same with clean energy infrastructures such as solar cells and wind energy, which require silica and copper for their functioning. In addition to this, the need for accelerating the development of infrastructure to support clean energy is likely to support the growth of mining sectors.
Furthermore, combining different industries is likely to boost the demand for minerals, which ultimately supports the growth of the mining sectors. For instance, clean-energy driven transportation systems are relatively more mineral-intensive than their conventional fossil fuel-driven counterparts.
In the mining, minerals, and metals industry, our offerings focus on helping clients identify and gauge the key trends that are expected to influence markets.
Our research reports are customized to meet each client's individual needs.One of our clients, the investor of a critical steel company, was looking for insights into the Steel Market. After understanding their requirements, we created a report covering the geopolitical trade scenarios and regulatory policies expected to impact the market in the short- and long-term. The report also included growth estimates for the various end-users of steel. In another example, a company engaged in Metal Hydrides was unsure about the new market it sought to expand in. Our report analyzed the regional scenario and identified potential suppliers and distributors to help the company with its expansion strategy.
The COVID-19 pandemic has adversely impacted businesses across sectors, and the mining, minerals, and metals industry is no exception. At present, the industry is impeded by supply chain disruptions, lack of workforce, limited access to mine sites and manufacturing facilities, and restricted transportation and logistics efficiency. Players in the industry face the challenge of dwindling inventories, such as chemicals, machine components, and other such materials, from their upstream suppliers. The latter is undergoing disruptions in the value chain.The supply-demand ratio has shattered as upstream and downstream stakeholders are primarily affected due to the pandemic.
Unavailability of Human Resources
Human resources are the lifeblood of business operations in any industry and empower safe and economical operations across the value chain. To ensure their protection, companies are restricting their employees and extended ecosystem of contractors and suppliers from accessing offices, manufacturing facilities, and mining sites, severely affecting organizations from an economic standpoint. Moreover, mining operations are carried out in confined spaces and require on-site jobs that can't be performed remotely.
Production Flexibility and Financial Losses
The mining, minerals and metals industry lacks operational flexibility, unlike other sectors, and cannotamend production as swiftly as it might be required in such a crisis. This leads to unstable and non-optimal operations and increased costs.
Supply-demand interruptions cause volatility in prices, which may disrupt the economic flow of the industry. Around 17% of the world's copper mines and 20% of zinc mines are on standby mode or curtailed production capacity, which is likely to bolster prices as the demand collapses. The rapid global transmission of COVID-19is leading a global economic downturn and likely to impede the mining industry as in the 2008 crash. The prices of commodities, such as triuranium octoxide, palladium, rhodium, and gold, are expected to increase while the prices of commodities such as iron ore, copper, lead, and zinc, among others, are expected todecline during the recession. For instance, during the 2008 recession, gold prices exponentially rose from USD 989 per ounce in December 2007 to USD 1,172 per ounce in March 2008, and again in October 2008, the prices collapsed to USD 872. The price change in the current situation is likely to replicate the same trends as in the 2008 crash.
Table: Gold Price, November 2019 – March 2020 (USD/Ounce)
Source: World Gold Council
Table: Gold Price, January 2007–December 2008 (USD/Ounce)
Source: World Gold Council
To reduce the threat to the companies sustenanceresulting from the lack of demand from downstream consumers, mining companies are compelled to curtail production to some extent. Below are some of the companies that recently announced disruptions in operations during the COVID-19 crisis.
Increasing Prevalence of COVID-19
Around the globe, thousands of COVID-19 cases are added everyday, of which several are associated with the mining sector. Associations in the global mining, minerals, and metals industry are working with local governments to prevent the spread of the infection among mine workers. For instance, the Association of Mineworkers and Construction Union, a vital labor union in South Africa, is working closely with government officials to identify who is infected with COVID-19 and draw up a new code of practice for COVID-19. Human resources are the lifeblood of the industry, and such global situations can take a toll on the worldwide industry. In the past, several epidemics, including H1N1 and Ebola, have significantly affected the industry.
Concerns Regarding Occupational Safety
Apart from the pandemic, occupational accidents and workforce safety have been critical issues for the mining, minerals, and metals industry overthe last several decades. According to the annual reports of a few top miners globally – Vale, Rio Tinto, Anglo American, BHP, and Glencore–more than 260 mining-related deaths were reported between 2013 and 2018. Contract workers and casual workers, which are reasonably inexperienced about the industry's know-how, were involved in most severe accidents.
Table: Safety Performance Data, 2012–2018
Source: International Council on Mining and Metals (ICMM)
Table: Safety Performance Data by Country, 2018
Source: International Council on Mining and Metals (ICMM)
Most of the accidents have occurred in Africa, Asia, and South America, and these regions are known as late adopters of advanced technologies. On the other hand, North America, Europe, and Australia, where automation is an essential part of the industry, have registered fewer accidents. Concerns regarding occupational safety, combined with frequent incidents of epidemics,are likely to trigger the adoption of fast-track automation in the mining, minerals, and metals industry.
The COVID-19 outbreak may trigger demand for automated solutions to condense the human workforce during mining operations. As stated earlier, developed nations are ahead in terms of adopting automation in the mining sector. For instance, Perth, Australia, is the center of Rio Tinto's Pilbara mines' remote operations. Rio Tinto operates autonomous mining vehicles in mining sites in Pilbara, which is 1200 km away from Perth.
Rising collaborations of mining companies with technological companies are bolstering automation in the industry. For instance, Sociêtê des Mines de Syama (SOMISY), a Resolute Mining (RML) subsidiary, has closely worked with the Swedish technological company Sandvik AB to develop the world's first fully automated mine, Syama Gold Mine. Depending on several macro and micro factors, the mining, minerals, and metals industry could observe significant moves towards autonomous mining operations.
The Chinese economy has been thriving as a global manufacturing powerhouse forthe last two decades. Lower wages, business ecosystems, supportive taxation systems, export-oriented business policies, and vast industrial clusters are a few of the factors that have made China the world's factory. As per Wordbank statistics, the added value of China's manufacturing industry exceeded that of the U.S. in 2010, and China became the world's largest manufacturing industry. The added benefit of China's manufacturing sector accounted for approximately 28% of the global manufacturing industry in 2018. Among the world’smajor 500 products, China's manufacturing sector ranked first in 225 of them. Whether it's automobile or electronics, China dominates sales and innovations, and the mining, minerals, and metals industry is no exception in this scenario.
China is the largest producer and consumer of many essential metals, including steel and aluminum. Thus, disruptions in China'smining, minerals, and metals industry directly impact the global supply chain. Further, in response to COVID-19, several end-use sectors of metals and minerals, including automotive and construction, have either halted operations or curtailed production, which is negatively affecting the mining, minerals, and metals industry. The globalsteel production was pegged at 147.7 million tons in March 2020, 6% lower than that in March 2019, which can be primarily attributed to the COVID-19 outbreak. However, recovering business activities in China are likely to create business opportunities in the global mining, minerals, and metals industry.