Posted: 08 Jun. 2021 4 min. read

Seizing the moment: mining and the future of energy

On 24 June I’ll be moderating a panel about hard-to-abate industries at the Reuters Events Global Energy Transition summit. It’s a topic that has major implications not just for the resources industry in general, but for mining in particular. That’s because the transition to a cleaner energy future could be a once-in-a-lifetime chance for mining to redefine its role in the sustainability ecosystem.

There’s no denying that we are now in the midst of a great shift when it comes to the energy transition. Along with this shift comes the demand for a range of green and critical minerals to enable not just battery electric vehicles, but energy storage in general, along with more sustainable housing, infrastructure, and the components for a myriad of technology devices going forward.  Mining and mining supply chains are quite literally emerging as a critical piece in the decarbonization puzzle.

But this rise in mineral demand, and the opportunity that it presents for the industry, comes at a time when mining needs to overcome a trust deficit with respect to communities, governments, and society at large.  We wrote about this extensively in Deloitte’s  annual Mining trends report, Tracking the Trends. The report addresses the challenges that this poses, and how the industry can work to close the trust deficit.  While the temptation might be to simply communicate a better narrative, more importantly, it’s also about taking tangible collective action that will shape the industry’s reputation for decades.

There are some key actions the industry should consider in order to being viewed as a trusted supplier to the energy transition:

  • Building investor confidence through purposeful ESG:  While ESG is the vogue right now, there is a real danger that it becomes a box checking exercise that betrays the underlying transformation that it is intending to drive.  How management teams and boards commit to ESG through their decarbonization actions, social investment programs, and governance will be key.
  • Lowering the existing and future footprints: The advances in technology over the last few years are allowing mining companies to lower the impact and footprint they have in and around mine sites.  Rethinking traditional mine design, greater use of robotics, minimizing tailings, and other techniques need to be part of the shift in the narrative that mining companies will need to make.
  • Providing end consumers with surety of supply:  End consumers will over time demand surety of how the minerals that end up in their products were produced and whether it was done so sustainably.  In some cases, this may translate into a price premium (or discount) on the commodity. Time, and consumer demand, will ultimately dictate the price spread.
  • Rethinking supply chains: While traceability up and down the value chain will be important, it will require mining companies to be far more purposeful around the relationships they create upstream and downstream of their facilities.  This will be accelerated with requirements around Scope 3 emissions as stakeholders look at how those commodities are being used.  Relationships have always mattered; they will matter more in the world we are moving into.
  • Driving urban mining and the circular economy:  As the world demands more minerals for the transition, urban mining of landfills, recycling and other components of the circular economy will become key.  Very few miners have actively ventured into this area, bar for the reprocessing of tailings dams. Going forward though this will become an increasingly important area and the mining industry will need to decide if this represents both an investment opportunity but also a part of the broader narrative that it wants to tell the world.

Changing the overall narrative through purposeful action is something that will require industry collaboration. This is, of course, easier said than done. What it usually takes is some existential threat or burning platform. For example, safety. When dam management came to the forefront, the entire industry came together to develop stronger guidelines. Right now, climate change is the existential threat. Will this be the platform for the industry to come together, change the narrative, and close the trust deficit?

The fact is the transition to clean energy will happen whether miners choose to intentionally focus on this or not. But do miners want to squander this opportunity? Or do they want to come together and use this moment to rebuild trust with society as a supplier of ethically produced critical and green minerals? The choice is theirs and the moment is now.

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Andrew Swart

Andrew Swart

Global Sector Leader—Mining & Metals

Andrew is both the Global, and Canadian Leader of the Mining & Metals practice as well as the Global Leader for the sector. In his Global roles, Andrew leads a team from around the world and has the responsibility to set the strategic direction and go-to-market strategy for the global practice. With 20 years of industry and consulting experience, Andrew has a passion for client service, having worked across many major Mining & Metals geographies including Canada, Chile, Ukraine, Kazakhstan, Brazil, Germany, India, South Africa, UK, and the US. Andrew’s areas of expertise include corporate and competitive strategy engagements, digital and innovation systems and large organizational transformation programs.