Financial Times Mining Summit 2024

The mining industry has faced significant challenges in recent years due to geopolitics, protectionism, and nationalism. These issues have intensified, particularly following the end of China’s real estate supercycle, which has transformed demand dynamics in the mining sector.

As China’s real estate market declines, the mining sector – historically dependent on China as a primary consumer of raw materials—now contends with diminished demand for traditional commodities. Iron ore prices have plummeted to their lowest level in two years, driven by the ongoing crisis in China’s property sector. As of mid-August 2023, the price of iron ore cargoes with 62% iron content fell to $88 per metric ton, marking the lowest price since November 2022 and reflecting severely weakened steel demand in China.¹

The end of the Chinese Real Estate Supercycle has prompted a search for new economic engines, mainly focusing on the energy transition, which China aims to position as a global priority. According to UNCTAD, with two-thirds of the world’s processing capacity for essential minerals under its control,² China is positioning itself as a linchpin in the global supply chain .

However, the mining industry faces shortterm supply challenges exacerbated by geopolitical tensions and protectionist measures. The global divide – East versus West and North versus South – complicates securing reliable supply chains. The ongoing shortfall in critical minerals highlights the urgent need for strategic partnerships to navigate these complexities.

In light of increasing demand, supply shortages, and lengthy timelines for new projects, robust collaborations will be essential to overcome protectionism, nationalisation, and trade restrictions. Enter emerging players like Saudi Arabia, eyeing the opportunity to reshape the market. With plans to invest $32 billion in mining by 2035, the Kingdom is setting the stage for a new competitive landscape.³ Their strategic investments could disrupt existing supply chains and introduce new dynamics that legacy players must adapt to.

As the mining sector confronts these geopolitical shifts, adaptability and collaboration are not just buzzwords but survival strategies. The industry’s future hinges on its ability to transform these geopolitical challenges into avenues for growth. Will geopolitics be a barrier, or will it be an enabler? The answer lies in how swiftly the industry can innovate and forge robust partnerships .

"The industry’s future hinges on its ability to transform these geopolitical challenges into avenues for growth."

Copper has cemented its place as the cornerstone of the energy transition. Its unparalleled conductivity makes it indispensable for electrification, renewable energy infrastructure, and electric vehicles. The rising demand, driven by global electrification and Sustainable Development Goals (SDGs), has placed copper at the epicentre of industry and policy conversations. Flourishing activity in the electric vehicle, power infrastructure, AI, and automation sectors is projected to lead to at least 10 million metric tons of additional copper consumption over the next decade, as noted by industry experts. However, the current project pipeline does not meet projected needs, revealing a critical supply gap. In fact, By 2050, it’s projected that the global electric grid will need to double in capacity to meet the 86% increase in electricity demand.⁴

Shifting production to greener energy sources is expected to necessitate 427 million tonnes of copper by 2050. Last year, the mining industry only produced 22Mt.⁵

For strategic leaders, the challenge lies in accelerating copper production while navigating environmental and regulatory constraints. Fast-tracking permitting processes while upholding rigorous standards for responsible extraction will be essential to meeting demand and securing copper’s future role in the energy ecosystem. The mining industry must act decisively to ensure copper’s availability without compromising sustainability—a balance that will define its competitive edge.

"Shifting production to greener energy sources is expected to necessitate 427 million tonnes of copper by 2050"

The current investment climate for the mining sector presents significant challenges and strategic opportunities. Historical trends indicate that nearly 60% of mining projects fail to meet cost and time estimates, which affects investor confidence.⁶ Coupled with substantial capital requirements for the low-carbon transition, there is a pronounced gap between necessary funding and its availability.

To bridge this gap, mining companies must prioritise enhancing performance management and capital project execution. This focus is essential for attracting the investment needed to advance projects successfully. Companies can restore investor trust and draw in critical capital by demonstrating improved delivery metrics and operational efficiency.

Data-driven innovation and artificial intelligence are poised to revolutionise resource exploration, offering pathways to more efficient operations. However, optimising existing processes and maximising free cash flow is imperative. This operational focus will lay a solid foundation for future technological advancements.

While sovereign wealth funds are increasingly eyeing large-scale, high-quality assets, a wealth of untapped potential remains in mid-sized, growth-oriented assets and emerging development-stage projects. Leaders should consider these segments as they strategise for future growth, balancing their portfolios to include both established and emerging opportunities.

Companies must align their strategies with performance-driven criteria encompassing environmental sustainability and financial viability to attract investment effectively. By doing so, mining firms can position themselves as compelling investment destinations in an evolving landscape.

"Companies must align their strategies with performancedriven criteria encompassing environmental sustainability and financial viability to attract investment effectively."

The urgency to meet the world’s low-carbon goals is colliding with a significant challenge: the slow and often complex permitting process, which accounts for nearly 40% of mining delays.⁷

This bottleneck is the primary barrier to securing adequate critical minerals, ultimately obstructing progress toward greenhouse gas emissions targets in the coming years.

For mining companies, agility in obtaining permits for essential minerals, particularly copper, is crucial. The scale of demand is immense; the industry must produce copper on par with a new mining powerhouse like Chile. Copper production in Chile is expected to grow at a compound annual growth rate (CAGR) of over 3% from 2024 to 2030, driven by new mines and capacity expansions.⁸

To overcome these obstacles, strategic collaboration among governments, businesses, and local communities is essential. Streamlining regulatory processes without compromising social and environmental standards will be critical. Companies that can fast-track their projects while maintaining compliance will be ideally positioned to seize emerging opportunities.

Leaders must actively foster cross-sector alliances to navigate regulatory hurdles and ensure that infrastructure projects are delivered on schedule, thereby supporting the urgent climate objectives we face.

"Leaders must actively foster cross-sector alliances to navigate regulatory hurdles and ensure that infrastructure projects are delivered on schedule"

Beyond regulatory approval, obtaining a social license to operate is becoming increasingly complex and critical for the mining industry. This concept, first introduced in 1997 by Jim Cooney, a Placer Dome mining executive, emerged in response to the mining industry’s deteriorating public reputation and increasing social risk. Since then, the social license to operate (SLO) has gained significant traction globally, addressing community-company relationships in highimpact industries, notably mining.⁹

At the heart of obtaining an SLO is trust. Even when companies meet all legal standards, without trust, public opposition can derail projects. For mining companies, building this trust goes beyond mere compliance - it requires a deep commitment to responsible practices, especially safety. Eliminating serious injuries and fatalities (SIFs) isn’t just a goal; it is a critical foundation for gaining community support. The loss of life remains the greatest threat to trust, making a zero-harm policy non-negotiable for sustaining long-term relationships with stakeholders.

Yet, trust isn’t built on safety alone. Mining companies must engage with local communities through open, transparent dialogue. When communities see genuine efforts to prioritise their well-being, their support for operations grows stronger.

In addition to fostering dialogue, the mining industry must navigate the complexities introduced by today’s digital landscape, where misinformation poses a significant challenge. Social media can quickly amplify negative stories, eroding trust. Mining companies need to address this by strengthening communication efforts and working with local leaders and independent advocates to share the industry’s positive contributions, particularly regarding the energy transition. Companies must combine facts with empathy to counter misinformation effectively. They must acknowledge the emotional and financial concerns that shape public opinion and own past failures while highlighting the societal benefits of mining, such as artisanal mining and local economic growth.

Ultimately, mining leaders must take decisive action - not only to safeguard their businesses but also to benefit the communities they serve. This requires acknowledging past mistakes, committing to change, and advocating for recognition of the industry’s contributions. Above all, eliminating fatalities must remain a top priority, as no responsible practice can outweigh the irreversible loss of human life.

"Establishing legacy funds and investing in biodiversity restoration initiatives offer a pathway to redefine the industry’s role as a responsible steward of natural resources."

Sustainability is no longer a buzzword – it’s a business imperative. The sector’s environmental impact is under increased scrutiny, with investors, regulators, and the public demanding clear progress in reducing carbon footprints. Mining companies have a critical role to play in the energy transition, mainly as they pivot from coal to critical minerals such as copper, iron, and lithium. However, addressing the negative legacy of environmental damages remains an essential factor. Establishing legacy funds and investing in biodiversity restoration initiatives offer a pathway to redefine the industry’s role as a responsible steward of natural resources. Companies that demonstrate a commitment to sustainability and tangible progress will be better positioned to attract investment, maintain community trust, and secure a competitive advantage in the evolving market landscape.

"Establishing legacy funds and investing in biodiversity restoration initiatives offer a pathway to redefine the industry’s role as a responsible steward of natural resources."

Conclusion

The 2024 Financial Times Mining Summit solidified the sector’s crucial role in driving the global energy transition. However, it also highlighted the substantial challenges that must be overcome – ranging from geopolitical risks to operational inefficiencies and the need for heightened social and environmental responsibility. Copper may be the linchpin of the energy transition, but its availability will depend on mining companies’ ability to act with agility, execute effectively, and build trust within their ecosystems. Leaders who embrace a forward-thinking strategy, leveraging innovation, collaboration, and sustainability, will position their organisations as indispensable contributors to the low-carbon value chain.