Global mining industry balancing environmental risk with increasing demand

KPMG Global Mining Outlook 2022

• 62% of respondents confident in the growth prospects for their organization over the next 12 months
• More than 6 in 10 respondents agree that mining companies need to embrace new business models such as strategic partnerships, private equity and public-private partnerships
• 72% of respondents expect disruption in the mining sector due to ESG in the next three years
• Almost half (46%) of respondents expect major technological innovation to disrupt the mining industry in the next three years, while 84% believe technological disruption will be an opportunity versus a threat

A global shift towards decarbonization is continuing to drive growth and optimism in the world’s mining sector, according to KPMG International’s Global Mining Outlook 2022.

The annual report, now in its 12th year, draws on the insight and experience of KPMG professionals at member firms around the world, in addition to survey analysis from more than 300 sector executives in 23 key markets.

In the latest report, 62% of respondents revealed they were confident in the growth prospects for their organization over the next 24 months. While the figure is down slightly from last year’s survey (66%), it reaffirms that volatility in commodity pricing, combined with wider geopolitical and COVID-19 uncertainty, isn’t dampening optimism in the market. Despite significant fluctuations, commodity prices remain at near all-time highs, driven by enormous growth in demand for minerals, including lithium, cobalt and graphite — all essential components in the global decarbonization journey.  

While some of the impact from the COVID-19 pandemic has receded, it’s notable the top risks facing then mining industry continue to come from outside the sector, rather than within.

Commodity prices, permitting risks and access to reserves are still key issues for executives, but environmental and geopolitical factors are increasingly taking up boardroom time. The top-ranked risk identified by respondents was environmental risks, including new regulations. Last year, environmental, social and governance (ESG) only ranked fifth among top risks.

Following the climate commitments of COP26, it shouldn’t come as a surprise that almost three quarters (72%) of mining leaders questioned for the report anticipated that the wide array of ESG factors would create disruption in the industry over the next three years.

The sector faces increased scrutiny and investor pressure as the world looks to tackle the growing climate emergency, but for many leaders, a lack of clarity, inconsistencies in rules across different territories and ever-changing regulations could stymie otherwise optimistic growth prospects. More than half (55%) of respondents said they did not believe ESG issues were clearly understood and consistent across the market.

Despite the uncertainty, there are signs that industry leaders are using the current period of growth to reinvest and commit to a greener, more sustainable future.

One important way of reducing carbon footprint is through the adoption of new technologies — with 87 percent of executives believing that technology has a key role to play in solving ESG challenges. Nearly half of executives (46 percent) believe that technological innovation will be a source of major disruption in the industry over the coming three years, and nearly everyone is determined to jump on this as an opportunity rather than a threat.

One striking note from this year’s research was the impact of COVID-19 completely disappearing from the top 10 risks identified by executives. The industry, like most others, has adapted to the “new norm” from the pandemic, with some of the lasting effects remaining problematic for the sector, including increased global demand and supply chain issues. However, the world is now looking towards an economic recovery and has developed a growing acceptance that more chronic international issues, including ESG, need to be tackled more proactively.

The full report can be downloaded here.

Brian O’Neill, Senior Manager, Global External Communications
T: +44 7823 668 689
E: Brian.O’Neill@kpmg.co.uk 

The Global Mining Outlook 2022 provides deep insights into the current views of 301 mining executives from around the world. The latest research is part of KPMG’s Global Mining Risk series, which offers a unique perspective into the evolving risks facing global mining organizations and the mining industry. In addition to this survey, which took place in January and February 2022, we also conducted qualitative interviews in March 2022.

The January/February 2022 survey included leaders from 23 key markets (Argentina, Australia, Bolivia, Brazil, Canada, Chile, China, Colombia, Greece, Hong Kong (SAR), China, India, Japan, Luxemburg, Mexico, Norway, Panama, Peru, Portugal, Russia, South Africa, Sweden, the UK and the US) and three key mining sectors (producing mining companies, mining service providers, and exploration and development stage miners).

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