Decarbonization efforts deliver operational excellence says, KPMG Global Metals and Mining Outlook

• 61 percent more confident about growth prospects now versus two years ago.

• 57 percent see integration of decarbonization goals into corporate strategy as key.

• 47 percent say skill shortages is the most important challenge to overcome in technology implementation.

• 66 percent say more volatile output prices have heightened business risk.

• 47 percent said their biggest opportunity of the next five years is transforming cost-efficiency through technology investments.

London, Tuesday 1st October 2024: Decarbonization is key to achieving operational excellence for metals and mining companies, according to the latest KPMG Metals and Mining Outlook.

453 C-level executives from across 20 counties and in the metals and mining sector were surveyed as part of the report. The report findings reveal that there is an intensifying focus on decarbonization in the industry and that the acceleration of work being done to reduce the carbon footprint of companies is the priority for leaders for the year ahead.

As commodity prices remain front of mind for the metals and mining sector, the report shows that commodity-price volatility has increased over the past 10 years, driven by various new risks. Sixty-six percent of the executives surveyed said the volatility of output prices had increased in the past two years and 53 percent said input-price volatility has also increased.

According to the World Bank study, “Commodity price cycles: Causes and consequences” (January 2022), since 1996, commodity price shifts have been driven by macroeconomic shocks rather than changes specific to particular commodity markets.

Trevor added: “The last time there were such elevated levels was prior to the global financial crisis of 2008-09, when increased capital expenditure and higher cost structures led to subsequent asset write-downs. Much of the past decade has been spent rebuilding balance sheets and executives should bear this in mind as they invest in new technology and decarbonization projects.

“Our report highlights the levers necessary to sustain increased volatility and succeed through the cycles for a long term, sustainable business.  A focus on productivity gains, technology deployment and funding strength are more important than ever.”

With clean energy technologies surging, global demand for critical minerals is set to double by 2040, and could even quadruple under sustainable development scenarios, according to the International Energy Agency report “The Role of Critical Minerals in Clean Energy Transitions” (May 2021). This includes low-carbon power generation like solar, wind, nuclear, electric vehicles, battery storage and hydrogen for electrolysis and fuel cells.

The report findings show that metals and mining industries must accelerate the reduction in their carbon emissions while striving to meet the growing demands of customers that are decarbonizing their operations. This is the complex challenge, but there is a significant payoff. It reports that 75 percent of companies in both sectors have set net-zero objectives, with forty percent aiming to achieve this by 2040, and 29 percent intending to do so by 2025.

47 percent of metals and mining leaders highlighted skills shortages as a significant challenge to overcome. At the same time, 55 percent of executives say that the most-effective method of attaining net-zero emissions is to invest in relevant, new technologies, such as those that reduce the carbon emitted in steel production.

Implementing digital IT systems to measure and report decarbonization KPIs for executives and the board of directors was the highest priority over the past two years for metals and mining companies said 43 percent, especially to meet decarbonization goals. In the next two years, it will become even more important according to 48 percent of respondents. This reflects the urgent need to move faster.

Ugo added: “New technologies require new talent and there is a skills gap in meeting decarbonization goals. Yet, metals and mining companies are finding that improved ESG practices help attract the best and brightest, and increasingly, companies are building alliances with educational institutions in the countries where they operate to attract such talent. The sector should understand what skills are needed and have a plan on how to acquire them. This is one of the key challenges globally over the next five years.”

The Metals and Mining Outlook draws from the insights of 453 C-level executives and interviews with leading industry thinkers. Additionally, it features perspectives from six senior industry executives and four top KPMG specialists.

The report can be found at KPMG Global Metals and Mining Outlook

KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services. “KPMG” is used to refer to individual member firms within the KPMG organization or to one or more member firms collectively. 

KPMG firms operate in 143 countries and territories with more than 273,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Each KPMG member firm is responsible for its own obligations and liabilities. 

KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.  For more detail about our structure, please visit kpmg.com/governance