How Is the Decarbonisation Megatrend Disrupting Mining Investment?
Fossil fuels have assisted in improving living standards around the world, but their associated greenhouse gas emissions have worsened global warming. In order to avoid reaching a point where catastrophic consequences arise, countries must decarbonise their energy systems.
While the transition to a low-carbon economy does present new opportunities for South Africa’s extractive industries through strategic advantage in the clean technology space, the mining and metals sector are set to see drastic change in the shift out to 2030.
With many of these changes already underway, and set to accelerate in the years to come, the transition to a low carbon economy will not be a cheap one. Market Analyst Fitch Solutions explains that in order to lessen emissions and increase exposure to new growth markets, the transition will require handsome investments.
As said by Fitch:
“It will also disrupt industry trends for almost all sub-sectors, dooming the coal industry, reviving copper and green steel, and prompting the emergence of new sectors including lithium. As such, it poses key risks and opportunities to the entire mining and metals sector.”
Opportunities on the Horizon for Mining and Metal Industry
Although the decarbonisation megatrend will bring risks to the sector, the shift also brings about a few opportunities for the mining and metal industry.
Fitch predicts that larger players will likely benefit from having the ability to rely on stronger investment capacity and sturdy risk management functions, which could assist in the quest of gaining market share.
Metal players that strive for innovation in the development of new technologies to produce low-carbon products, and those that have significantly reduced their emissions, are likely to be able to command a price premium.
In lieu of the above, many companies have already started positioning themselves to invest from these trends.
How Can the Mining Industry Meet Its Decarbonisation Goals?
A report compiled by Weir Group calculated mining’s share of global energy consumption and identified ways the industry can aid in the transition to net-zero emissions. The report analyses mine energy data from more than 40 published studies.
The report showed that the total amount of power used by the mining industry is equal to 3.5% of global energy use.
The report concluded that there are 2 main ways the mining industry can meet its decarbonisation goals:
Improved energy efficiency in comminution
The report notes that comminution – the process of crushing and grinding materials – is the single largest contributor to energy usage at mine sites (about 25% of mining’s final energy consumption).
Weir suggests that small improvements in comminution technologies can lead to large savings in both energy consumption and greenhouse gas emissions.
A 5% incremental improvement in efficiency across comminution could potentially result in a greenhouse gas emissions reduction of more than 30 million tons of C02.
Big data, AI, and optimisation
Another significant opportunity identified by the report for reducing mining’s energy consumption include artificial intelligence, AI, and optimisation.
If zero-emissions energy sources (renewable energy, alternative fuels, and energy storage) are deployed for mining equipment, the industry may very well be able to achieve zero emissions.