The latest edition of the KPMG Global Mining Outlook Report 2023 – Executive insights on Decarbonisation highlights the confidence sector executives have about their ability to deliver on both growth and decarbonisation objectives.
The report looks at areas of opportunity, with technology and innovation key amongst those called out.
A key finding is the ability of the industry to maintain a strong growth outlook while integrating ESG objectives and achieving net-zero targets.
“The global mining sector knows there is a great deal of heavy lifting ahead to achieve net zero targets – and that time is of the essence,” said Trevor Hart, KPMG Global Mining Leader.
“Our report shows metals and mining company executives understand that to succeed in reconciling ambitious growth targets with stringent carbon-reduction objectives, they will have to design their operating model to accommodate both objectives.
“Achieving net-zero carbon emissions by 2040 or 2050 may seem a long way off, but now is the time to integrate those ambitions into enterprise strategy.”
He said demand for materials used in the transition to a greener planet will rise dramatically over the next 10 to 20 years.
The report shows that 53% of executives surveyed are confident and 26% very confident that the metals and mining industry can meet that increasing demand.
“One of the reasons mining and metals executives are confident about the future is that they regard decarbonisation plans as a growth opportunity not just as a cost of doing business,” Trevor Hart said.
“The specific opportunity over the next five years is to transform the carbon footprint of their operations through technology investments. That’s about embracing innovation – 26% said they were very confident and 49% confident they could deliver on that objective.”
Mr Hart said that the global challenge was about achieving a balance between expansion and ESG: “The report shows the mining and metals industry as a whole is confident it can reconcile rapid output growth with sustainability goals. It can meet growing global demand without compromising its own ESG and net-zero objectives.”
Nick Harridge, Mining and Metals leader at KPMG Australia said that technological changes were the most important factor affecting the five-year demand projections of executives surveyed. These were focused on advances in exploration and extraction technology, AI, 5G networks, and Internet of Things (IoT).
The findings indicate these are the technologies that will have the most impact on mineral supplies. In particular, 41% said their biggest opportunities over the next five years lay in operational cost efficiency through technology investments, while 43% called out transforming the carbon footprint through technology.
In addition, 54% saw changes in technology as the most important factor affecting their company’s range of demand projections over the next five years. Transforming the cost-efficiency of operations through technology investments comes a close second.
Looking at the technologies likely to have the most impact on increasing mineral supplies over the next five years, 26% said 5G technologies while 24% called out advances in exploration techniques and technology, IoT, and new extraction technology all in equal second place.
Thinking about the two technologies likely to have the most impact on increasing metal supplies over the next five years, 48% said Artificial Intelligence while 42% identified Data and Analytics.
Other key findings
Improving energy efficiency – The rapid progress mining companies are already making to reduce carbon emissions is encouraging them to invest more in efforts to decarbonise. The survey shows that improving energy consumption efficiency is the highest priority for tackling the environmental challenges from mining and metals processing.
Achieving growth and net-zero – Mining and metals executives are confident the industry can increase production without compromising its own objectives for a net-zero future and respond to environmental, social and governance (ESG) concerns. The ratio of optimists to pessimists is nearly 10 to one.
Focus on ESG goals – While mining and metals companies invest heavily in reducing their carbon footprint, they are also focusing on ESG goals. Executives consider that the highest priority for tackling the social impact of mining and metals processing is to provide its workforce with healthcare, paid leave and retirement benefits.
Environmental impacts – 41% said curbing carbon emissions through improvements in the efficiency of current types of energy consumption was the highest priority for tackling the environmental impact of mineral and metal processing. 36% named exploring alternative low-emission technologies (such as closed-loop carbon recycling for steel).
Social impacts – 44% said providing non-salary benefits such as healthcare benefits, paid leave and pensions was the highest priority for tackling the social impact of the development of mineral and mineral/metal processing.
Net-zero objectives – 46% said ensuring their company communicates clearly and fully to its stakeholders about the net-zero objective and progress to meet it was the most effective strategy closely followed by 45% who said that ensuring the CEO and the Board of Directors were committed to net-zero objectives.
Scope 3 emissions reductions – 33% said they has a plan to reduce and eventually eliminate Scope 3 emissions by 2040 while 39% said they would eliminate these emissions by 2050.
Trevor Hart concluded that the KPMG Global Mining Outlook report analysis highlights one of the greatest conundrums facing global businesses: “How does the mining industry pivot rapidly toward carbon-free solutions without harming the environment, while, at the same time, develop a strategy that aligns the interests of shareholders, workers, communities, consumers, and governments. It’s encouraging the sector is confident it can deliver on growth and net zero but we’re not saying it will be easy.”
