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Four ESG trends in the mining and metals industry

Shifts in global climate, geopolitics, capital and workforce are transforming the mining and metals industry, presenting risks and opportunities.

In brief

  • Long-term mining projects must consider the impact on local climate and communities, balancing the bottom line with societal value.
  • ESG-driven business models mean embracing big data, supply chain automation and AI, as well as learning from other industry sectors.
  • Struggling to attract new talent to a legacy industry, mining companies look to technology and environmental stewardship.

The imperatives of energy transition continue to unsettle long-term value creation in the mining and metals sector. Whether the industry is on the verge of a new energy cycle or is already in it, a cavalcade of forces – geopolitical, technological, capital  and human – is already reshaping the current tableau of potential risks and incentives.


Considering climate and communities

Mining and metals leaders seek to adopt a do-no-harm model – toward people and ecology.

Metals and minerals are key to decarbonization. But mining them has always had an impact on local communities and ecologies. “If people find dust in their homes, you have lost the game,” says Luciano Siani Pires, Executive Vice President of Finance and Investor Relations of Vale S.A. A global leader in nickel and iron ore mining, Vale has adopted a do-no-harm mindset: engaging in dialogue in parts of the world where mines operate and will be exhausted, especially in areas around Amazon forests – home to a number of indigenous communities.

“Long-term mining interests must consider the needs of countries and host governments,” says Kathleen L. Quirk, President & Chief Financial Officer of Freeport-McMoran Inc., a key ingredient in the energy transition. In areas of the world that don’t receive many resources or benefit from their value, mining companies will have to master the balance of financial objectives and societal aspirations.

That ongoing local engagement, both during mining operations and in the recovery phases, will have to be set in ESG benchmarks. Approaches will vary, and different commodities players will adopt different strategies. Some will align their operations with UN standards for environmental change. Others will engage directly with local governments and stakeholders. But the goals are the same: fostering transparency, finding common ground and integrating processes across mutually beneficial frameworks for decarbonization.

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Addressing geopolitics

Critical metals, like lithium and cobalt, are still sourced in politically unstable parts of the globe.

Achieving that level of openness and cooperation is an uphill battle when mining operations, battery procurement and supply chains are concentrated in nations that are not considered to always be amenable to addressing climate and sustainability challenges. Nowadays, as we’ve seen in Glasgow, better compromises are being reached more often than not.

For example, on the EV side, to get to net zero, batteries must get better, which requires more material for increased density. “The most ideal areas for sourcing and processing lithium may be the Americas, but battery production and supply chains are primarily based in Asia – an unstable business model,” says Michael Maten, Senior Strategist for EV and Energy Policy at GM – one that makes removing all emissions from cars by 2035 a highly ambitious goal. 

Cobalt, another metal that is critical to battery manufacturing, is currently sourced from the Democratic Republic of Congo, a nation that draws mixed opinions about political stability. When it comes to supporting the growth of EVs, the true challenge is that supply is not consistent with demand. Moreover, the demand side seems to have neglected the supply imperatives for many years, so it will need to either catch up (which is a daunting task given the timelines) or address the geopolitical misalignment that is stemming from the gaps in ESG interests in the corresponding supply nations. Pires and Isobel Sheldon, Chief Strategy Officer at Britishvolt, believe that it will take nothing less than automakers engineering their way out of cobalt reliance and reimagining battery design. And that, in turn, means recapturing advance expertise and attracting fresh talent to a legacy industry.

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Optimizing from market to mine

The global pandemic has accelerated an industry shift to data, automation and AI.

The mining and metals sector needs to overcome stubborn resistance to modernization by embracing cross-functional collaboration, integration of big data and, above all, charting a proper path to experimentation and rapid innovation. If mining and metals companies are to survive and thrive in a new energy world, they must embrace digital to optimize productivity from market to mine.

It is believed that the global pandemic has accelerated this shift, especially in supply chain optimization and automation, enabling miners to operate at higher-than-expected productivity rates using remote operating centers (ROCs). These and other digital innovations have also allowed companies to reduce their carbon footprints and improve reporting transparency. They have also helped to empower miners willing to adjust to increasingly hi-tech, ESG-driven business models.

If mining and metals companies are to survive and thrive in a new energy world, they must embrace digital to optimize productivity from market to mine.

“Ongoing volatility in a market is impacted by the COVID-19 pandemic,” explains Paul Mitchell, EY Global Mining & Metals Leader. “Still, we see more opportunities than risks for miners willing to make the transformational changes that can drive long-term value for organizations and the communities they serve.”


“Cross-sector thinking also means borrowing digital know-how from nonparallel industries,” says Iliya Garkov, MD, Vice President and Managing Director of Dundee Precious Metals, “industries like air traffic control and even electronic gaming, where the use of advance cameras and AI can boost safety, transparency and sustainability while reducing cost.” 


Companies may at first become overwhelmed by the flood of data. But transparency reforms, particularly on ESG, coupled with the evolving internet of things, are going to streamline processing.

“In the long run, we get to full digital twin modeling, where the mines are instrumented, monitored and interpreted in real time,” says Priscilla Nelson, Professor of Mining Engineering at Colorado School of Mines, betting on “integrated, holistic understanding with agile processing for tailings management and for mineral processing itself, and more remote operations.”


These and other technologies, like low-cobalt chemistry, sequestration (mines capturing their own emissions), and cathode and anode midstream processing, will ultimately extend across supply chains and improve the performance of electric vehicles. Other innovations, such as converting iron ore production to hydrogen power, are also on the table. But decarbonization of the mining sector will ultimately be driven by consumer demand and capital investment – an area where there is currently a disconnect between capital markets and industry needs.


“Investors are demanding returns, but on the other side you have a huge need for capital to provide the minerals and metals the world needs,” Pires explains, adding that the industry needs an estimated $1 trillion in investment to meet global demand for metals, about twice the investment of the last supercycle. “That is a dilemma that has not yet been resolved.”

… the industry needs an estimated $1 trillion in investment to meet global demand for metals, about twice the investment of the last supercycle.


Inspiring new talent

Mining and metals, a legacy industry, could use a reputational facelift to stem brain drain.

Still, the most significant challenge to a legacy industry in the throes of a major shift is the human factor. Despite attractive six-figure salaries and a call for more mining jobs, companies are having trouble meeting their needs, in both labor and expertise.

“The Canadian mining industry has a demand for over 100,000 new mine workers over the next 10 years,” says Don Duval, CEO of NORCAT. “And enrollment in mining courses in Canadian colleges and universities has halved.”

Duval believes that companies working on exciting new technologies – AI, robotics, virtual reality, autonomous vehicles – must do a better job of inspiring students from an early age, starting in elementary schools. That means that educational curricula have to change to meet the complexity of increasingly data-driven mining and processing operations. That way, by the time students are in high school, the professional path for young people is both clear and exciting to meet the opportunity for success.

The mining industry, seen traditionally as a resource hog, could also use a reputational facelift.

“We have to rebrand ourselves as stewards of the earth’s resources,” says Pricilla Nelson. “It is a calling, a noble purpose to become an engineer in the field of mining.” The message to young people should be this: You have to be part of the industry to effect environmental change. This, Nelson believes, will grow professionals with peripheral vision, those who can see technology as an integral part of not just a mining operation, but a larger sustainability effort.

We have to rebrand ourselves as stewards of the earth’s resources.

But the brain drain is both a challenge and an opportunity, notes Ilya Garkov; it is a chance to fill knowledge gaps in mining companies through hiring from other professions while looking closer at the talent in their own ranks. “Hire young, hire outside the industry,” Garkov explains, but also advance existing agents of successful change. “How are individual jobs impacted by these transitions? This transformation calls for building trust with employees on personal bases, one by one, face to face. We must empower leaders who ask these questions.”

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The journey toward sustainable mining has no maps. ESG is a moving target, and every company starts from a different place. Developing a cogent framework and setting an individual pace for adopting digital change are only the beginning. Mining and metals, an industry that works on the scale of decades, must chart future disruptions through collaboration, openness, and trust in technology and people.

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