The mining and metals sector remains critical to the green energy transition

By Nicki Ivory, National Lead Partner for Mining & Metals, Deloitte Australia

In an uncertain global market, it is more than clear that mining and metals companies are playing, and will continue to play, a critical role in the green energy transition in 2024. 

It’s well known that the energy transition – both here in Australia and around the world – is a minerals‑intensive one. Miners must continue to advocate for the critical role that minerals play in addressing climate change challenges, and lead the way to a sustainable future.

With global uncertainty and critical mineral shortages presenting challenges for the industry across multiple fronts, it will be critical for miners over the next 12 months to work to address supply shortages, and environmental, social and governance (ESG) challenges; and to adopt emerging technologies.

Unlocking critical resources through permitting, addressing workforce challenges, and working with governments to rethink regulation are critical issues facing Australian miners. Effectively harnessing generative artificial intelligence (genAI) will also help to address energy security and improve profitability, generate operational efficiencies and resilience, and reduce emissions.

Each year, Deloitte produces a detailed report covering key trends that our experts in Australia and across other markets believe should be top of mind for industry players. The 2024 edition of ‘Tracking the Trends’ looks at 10 key trends that will impact the mining industry over the next 12 months – each of which has a role to play in guiding companies to success as they seek to capture and convey the value that the industry generates.

Four trends are especially relevant to operators in Australia.

Working toward net zero: Building capacity and futureproofing ESG strategies for a credible transition

According to the United Nations, while global greenhouse gas emissions are trending downward, countries’ efforts remain insufficient to help limit a global temperature rise to 1.5 degrees Celsius by the end of the century.

Research by the Deloitte Economics Institute has found that if left unchecked, climate change could create US$178 trillion in global economic losses between 2021 and 2070. In contrast, a coordinated effort in climate change mitigation could deliver an additional 300 million jobs by 2050, and boost the economy by more than US$43 trillion by 2070.

As providers of the raw materials needed to create sustainable infrastructure, low-carbon technologies and to electrify transportation, mining and metals companies should be positioned to lead the way, and organisations that act swiftly could be rewarded through enhanced resilience and value generation opportunities.

A climate-related transition plan (CTAP), which the International Sustainability Standards Board describes as an ‘aspect of an entity’s overall strategy that lays out the entity’s targets, actions or resources for its transition towards a lower-carbon economy’, can provide an architecture for this. Good CTAPs feature science-based net zero targets supported by goals over short-, medium- and long-term time horizons. These should be informed by achievable decarbonisation pathways with steep emissions reductions in the near term, supported by enabling capital allocation frameworks, operational and organisational impacts, and portfolio optimisation.

Additionally, miners will need to understand evolving external regulatory frameworks and socio‑environmental shifts in the jurisdictions in which their organisations operate, and adapt accordingly.

Collaborating with governments to rethink regulation: Unlocking critical resources through permitting

According to the Energy Transitions Commission, there’s no fundamental shortage of raw materials needed to support the global transition to a net zero economy – geological resources exceed the total projected cumulative demand from 2022–50 for key materials. The challenge is in ramping up supply fast enough to decarbonise economies before crucial climate tipping points are exceeded, and ensuring that mining occurs in a sustainable and responsible way.

In many parts of the world, permitting processes for mines span years, even decades. While it’s important that projects receive proper scrutiny and approval from relevant parties, there’s consensus that a new approach is needed to enable the creation of local supply chains for critical minerals within a time frame that reflects 2050 net zero goals.

Rather than introducing new measures to resolve existing regulatory challenges created by complex systems, governments could consider a collaborative approach by consulting with the mining and metals industry, and other stakeholders to revise regulations or policies for greater suitability and sustainability.

Areas that might benefit from attention include sequencing (identifying which projects to build, where and in which order, with a view to balancing risk and opportunity); the integration and amalgamation of review processes into a single, streamlined application; establishing clear leadership; and working collaboratively with local and Indigenous communities rather than in parallel to them. By coming together, government and industry can identify and prioritise critical projects for urgent acceleration.

Addressing workforce challenges through a skills-based approach: Equipping mining and metals companies for the future

Skills shortages; an aging workforce; and diversity, equity and inclusion remain challenging realities for the industry in 2024 – and are indicative of the need for broader change in the way the industry values and treats talent to become a more desirable place to work.

The mining industry faces difficulty in appealing to talent, particularly younger generations. In a time when the best and brightest talent is needed to safeguard the future of the industry, potential future employees appear to be turning away from mining. Despite considerable progress in environmental and social commitments, the industry still has a way to go to appeal to the next generation of workers. Gen Zs and millennials are values-driven and concerned about the environment, so sustained positive performance over time could be critical to change the industry’s image and in linking mining to clean energy, global food security, and development.

Gen Z is also the most ethnically and racially diverse generation in history. While the mining and metals workforce is slowly becoming more diverse, it’s vital that companies move beyond numbers and targets, and address the systems that sit around diverse talent. Wiring organisations and their systems to support intersectional diversity is central to workforce wellbeing. This is essential – not only in attracting and retaining skilled talent, but also in creating organisations that can adapt to change.

Prospecting for a future pipeline of talent is important, but so, too, is filling the vacancies that exist in the mining and metals workforce today. One way to broaden the talent pool and help to ensure that individuals have the knowledge needed for the future is to switch the focus throughout the industry from roles to skills. Mining and metals organisations, like most others, are structured around jobs and hierarchies; however, with workplace agility and flexibility growing in importance, separating some work from job descriptions, and workers from being seen as job holders, could allow organisations to tap into a wider range of workers’ capabilities and find new ways of working. That said, there are certain mining and metals jobs that are legislated, so there is a balance to be struck with a skills-based approach in this industry.

Bringing genAI into mining and metals: Capitalising on current and future opportunities

2022 was a landmark year for genAI. While early traction for these technologies was mainly in consumer-facing industries, genAI also holds huge potential in industrial and enterprise applications.

In the mining and metals industry, adopting genAI presents a range of attractive opportunities, including addressing energy security; improving profitability, operational efficiencies and resilience; and reducing emissions. Mining and metals organisations have an inherent advantage in this domain, as most possess exclusive and proprietary data that can be used to finely calibrate genAI models for specific requirements and value-driving use cases.

In the near term, genAI will likely have an impact on mining and metals organisations mostly through workforce productivity and efficiency. For instance, in the back office, employees are beginning to use artificial intelligence tools to handle emails, schedule meetings, and write documents. Developers could also use genAI to enhance their efficiency when writing code, ensure its compliance with various standards, and reduce cybersecurity risk.

Conclusion

Meeting the critical and growing demand for the metals and minerals that will underpin a decarbonised future is a story worth telling. In 2024, miners must lead the way to a sustainable future by adopting emerging technologies, attracting talent to the industry, and addressing supply shortages and climate challenges. 

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