China's graphite industry struggles to adapt: ICCSINO If you find something abusive or that does not comply with our terms or guidelines please flag it as inappropriate. We compare this overlap between mining and non-mining areas (using the latter as a baseline); between critical and other mining areas (to determine threats by renewable energy production); and among closed, operational and pre-operational areas (to indicate potential future trends). Costs and productivity have moved from 10th to fifth spot as inflation hits, and miners explore new ways to manage variability and unlock value. Manag. Discover how EY insights and services are helping to reframe the future of your industry. Anselin, L. Global Spatial Autocorrlation (1): Moran Scatter Plot and Spatial Correlogram GitHub: https://geodacenter.github.io/workbook/5b_global_adv/lab5b.html (2018). Building a purposeful brand and a greater focus on re-skilling can help overcome talent shortages. Further information on research design is available in theNature Research Reporting Summary linked to this article. Our critical mining areas should be considered as the sites potentially influenced by increasing demand for renewable energy technologies and infrastructure, rather than illustrative of the relative distribution of threats, which would be influenced by demand for other unrelated products (e.g. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Observed differences between Remaining Wilderness and Key Biodiversity Areas (i.e. Here, we map the global extent of areas potentially influenced by mining, according to 62,381 pre-operational, operational, and closed mining properties that target 40 commodities (Supplementary Table1). Nat. Digital innovation has dropped down the ranking as miners build confidence and capabilities in this area. While the results highlight ongoing volatility, we still see more opportunities than risks for . The top five mining risks 2021. Mining drives extensive deforestation in the Brazilian Amazon. S&P Global Market Intelligence (S&P, New York, 2018). More miners are setting net-zero ambitions, but pathways to achieve these are sometimes unclear. You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website. On the supply side, the situation is new, however. Soaring inflation and talent costs are significantly increasing mining costs, squeezing productivity and delaying expansion plans. Integrated life-cycle assessment of electricity-supply scenarios confirms global environmental benefit of low-carbon technologies. While compensation may help to overcome some of the expected biodiversity impacts of mining in some places39, rarely does this approach achieve No Net Loss outcomes universally39,40. Net-zero pathways are set, but achieving ambitions will require a realistic and balanced strategy. Luderer, G. et al. Top 10 risks for the mining industry By Dominic Ellis May 03, 2022 6 mins KPMG's Global Mining Outlook 2022 report outlines the key risks facing the mining industry and includes one new entry In the 12-year history of KPMG's global mining risks and opportunities research, 2022 marks quite a moment. Please refer to your advisors for specific advice. We use a 50km wide radius around each mining property to capture the potential influence of both direct and indirect impacts of mining on biodiversity, but also produced a conservative estimate of mining areas using a 10km radius (see Methods section). Biol. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. Cyber security considerations for the mining industry - PwC The fast-growing lithium-ion industry has resulted in robust expansion of capacity in China's anode sector in recent years, with the effective capacity in 2023 expected to reach 4.5 million tonnes, sources said. Nature 515, 6773 (2014). UNEP. Production infrastructure (e.g. LTO is increasingly complex one leader described community engagement as a big spaghetti bowl that is chaotic and challenging to unravel. The EWG reportentitled Proof of Problems: Bitcoin Mining's Pollution Toll on U.S. Communities profiles six case studies of adverse effects of the cryptocurrency mining process known as "proof-of-work." "This report vividly shows how proof-of-work crypto-mining operations are contributing to increased air, water, and noise pollution in . It is also possible that mineral exploration occurs less often within PAs and this, in turn, lowers the rate of mining in these areas. While governments, industries, and the wider society are working together to understand and address the challenges caused by the crisis to support patients, their families, and communities, the search is on for treatments and a vaccine. Sci. 2023Copyright owned by one or more of the KPMG International entities. New Probe Reveals 'Real-World Harm' of Crypto Mining Operations PubMed Central Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. Illegal mining threatens Indigenous land at foot of Philippines The oil price has declined by a smaller amount than seen in previous crises: year to date, it is down some 35 percent, whereas it plunged 77 percent in 2008 and it fell 76 percent in 201416. C.4 Industry Forecast D. Global Mining Industry: Porter's Five Forces Framework Analysis D.1 Introduction D.2 Bargaining Power of Buyer D.3 Bargaining Power of Suppliers D.4 Competitive. Sustainable cost reduction measures include, for example, switching to renewable energy, encouraging innovation to reduce costs in the longer term and creating strategic joint ventures to optimize economies of scale. At a recent trough of the crisis, the price-drop range was 5 to 25 percent across major commodities, and prices remain subdued in some cases. 3; Supplementary Data1). Iron ore and metallurgical and thermal coal are likely to be hit hard as construction demand falls along with power requirements, in line with lower levels of economic activity. Local conditions and policy design interact to determine whether ecological compensation can achieve No Net Loss of biodiversity and ecosystem services. To keep temperature increases below 2C, and halt associated biodiversity losses, 140 nations committed to the Paris Climate Change Accord to reduce anthropogenic greenhouse gas emissions by 90% (from 2010 levels) and reach carbon neutrality by 21003. PDF Cyber Threats to the Mining Industry - Trend Micro For example, metallurgical coal is down 21 percent and thermal coal is down 23 percent, while gold is up 19 percent and iron ore is up 18 percent (Exhibit 2). For more information about our organization, please visit ey.com. In fact, this was the motive for 96% of attackers. 9, 4621 (2018). we found more Key Biodiversity Areas than Remaining Wilderness overlapped with mining areas) likely reflected differences in the metrics used to identify these sites. 7, 302311 (2014). At the other end of the spectrum, metallurgical coal has seen limited supply disruptions, as Australia, which is responsible for more than 70 percent of the seaborne supply, has fared relatively well in the pandemic. These actions must also be supported by a significant research effort to overcome current knowledge deficits. Peer review information Nature Communications thanks Michael Harfoot and the other, anonymous, reviewer(s) for their contribution to the peer review of this work. Miners are maintaining their focus on capital discipline, but also exploring how to invest in growth and transformation. R. Soc. Energy Policy 119, 226241 (2018). We also develop and examine an index of mine density (i.e. We repeated this process for subsets of mining areas by development status (pre-operational, operational, closed; Supplementary Table3) and commodity type (critical areas only, other areas only, and areas targeting both commodity types; Supplementary Table1). ADS Mining threats to biodiversity will increase as more mines target materials for renewable energy production and, without strategic planning, these new threats to biodiversity may surpass those averted by climate change mitigation. But ESG is evolving, requiring miners to consider different issues and broaden their capabilities to manage them effectively. We discovered a greater proportion of pre-operational mines targeting materials needed for renewable energy production (83.9%) compared to operational mines targeting these materials (72.8%; Supplementary Table2), and that pre-operational mining areas targeting the materials critical for renewables also seem more dense than those targeting other materials (3.2 vs. 2.7; Supplementary Table2). Conserv. In the absence of an increase in quotas, the second half of the year could see a price decline. Environmental risks, including new regulations (No 7, 2020) Get the latest KPMG thought leadership directly to your individual personalized dashboard, Download a PDF version of this article Opens in a new window, View Print friendly version of this article Opens in a new window. How to address security threats to the mining industry Our team combines deep industry knowledge with advanced technological solutions to help companies build a strategic, staged pathway to digital transformation. To understand the implications for the mining sector, we have assessed the potential impact on industry-level revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA) under four scenariosA1, A2, A3, and A4that represent different shapes of economic recovery (Exhibit 6). Interestingly, companies now rank access to key talent as the number nine risk their own organizations face, perhaps reflecting restrictions in travel across the globe. Commun. This article was written by McKinseys Metals & Mining Practice. This energy-intensive industry's impact on our air quality is only worsening. 26, R1235R1237 (2016). Copper prices are already above precrisis levels, with supply squeezed by lockdowns in Peru, although demand should return with country-level stimulus packages and especially investments in renewables and new grid infrastructure. (International Energy Agency, Paris, 2015). Meanwhile, global conflict and resource nationalism have pushed geopolitics higher up the ranking, requiring miners to develop a deeper understanding of the impact of geopolitics on strategy. Necessary actions include strengthening policies to avoid negative consequences of mining in places fundamentally important for conservation outcomes, and developing necessary landscape plans that explicitly address current and future mining threats. The global focus on climate change across industries has seen miners set net-zero pathways, but achieving ambitions will require a realistic and balanced strategy. With the pandemic exposing weaknesses in the just-in-time model, we expect to see a mix of just-in-case and just-in-time supply strategies as miners find a way to balance supply chain resilience with costs. 11, 2072 (2020). remember settings), andPerformance cookies to measure the website's performance and improve your experience., and Marketing/Targeting cookies, which are set by third parties with whom we execute marketing campaigns and allow us to provide you with content relevant to you. This year's ranking of the top 10 mining and metals risks and opportunities (pdf) reflects the competing priorities for miners in a fast-changing, volatile world. In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services: Functional cookies to enhance your experience (e.g. World Bank Group. Ultimately, miners need to reframe LTO around long-term value creation, anchoring the brand to this positive impact. 7, 12558 (2016). The smaller decline in the current crisis is attributable in part to the oil prices lower starting point at the end of 2019, but 2020 has also been characterized by a dispute between Russia and Saudi Arabia that has created oil-price volatility not previously encountered. Lett. While we cannot yet quantify potential habitat losses associated with future mining for renewable energies (and compare this to any reduced risks of averting climate change), our results illustrate that associated habitat loss could be a major issue. A Cross-sector Guide for Implementing the Mitigation Hierarchy. 39, 748764 (2014). CAS The ability to access and replace reserves, economic uncertainty, political risk, community relations and social license to operate, and access to talent all rose in ranking, likely partly due to political and economic uncertainty driven by concerns over a global trade war. However, the ultimate impacts to biodiversity will depend on the mix of technologies used35, their mineral needs and methods used to mine them10,11, and the effectiveness ofefforts to manage their environmental impacts. . Thank you for visiting nature.com. Mining potentially influences 50 million km2 of Earths land surface, with 8% coinciding with Protected Areas, 7% with Key Biodiversity Areas, and 16% with Remaining Wilderness. Iron ore is a good example of that, with specific supply disruptions in Brazil playing a role in the current price rally. Opportunities and threats of the mining industry Global conservation efforts are often naive to the threats posed by significant growth in renewable energies. The broad footprint of climate change from genes to biomes to people. Risks that Have Remained Consistent for the Mining Industry We used GeoDa to produce correlograms47 quantifying correlation in mining density within 50km distance bands (with a random sample of 50,000 cells and 1 million cell pairs). Present and future biodiversity risks from fossil fuel exploitation. Get the most important science stories of the day, free in your inbox. ISSN 2041-1723 (online). Based on that assessment, we suggest that the mining industryrisks losing an estimated $30 billion to $120 billion in EBITDA in 2020 versus 2019 because of the COVID-19 crisis, despite an expected revenue loss of $90 billion to $200 billion. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. Mineral supply for sustainable development requires resource governance. Renew. 1) can be obtained by contacting the corresponding author. PubMed Central We are seeing price declines for many commodities, but the picture is more nuanced: we also observe some winners, such as gold and uranium. PubMed Not only are there accidents, but exposure to dust and toxins, along with stress from the working environment or managerial pressures, give rise to a range of diseases that affect miners. Each crisis progressed through a period of price shock, followed by demand shock, supply-and-demand equilibrium, and finally demand recovery and the next normal: In the COVID-19 crisis, we have seen phase one and are currently experiencing phases two and three. Mining can also trigger the formation of sinkholes. Google Scholar. Managing costs needs to be done with an eye on long-term value, as well as short-term gains. Correspondence to Review ourcookie policyfor more information. However, we also included the minerals required for other technologies6 (including carbon capture and storage installations, nuclear electricity generation installations, LED manufacturing, electric vehicle manufacturing, and lithium-Ion batteries) to get a better split between renewable and non-renewable energies. Curr. The greatest opportunities may lie in forging closer ties with government, increasing collaboration with stakeholders, including trade and sector groups, and exploring the potential of government incentives and co-investments. We mapped non-mining areas as any land (excluding Antarctica) outside mining influenced areas. We bring together extraordinary people, like you, to build a better working world. Global disruption will also put new pressure on costs, productivity and workforce, prompting companies to explore opportunities to reimagine business models and accelerate innovation. Current targets published by mining companies range from 0 to 30 percent by 2030, far below the Paris Agreement goals. Dinerstein, E. et al. B 285, 9 (2018). We sampled mining and non-mining areas at 100-cell (~100km) intervals (n=13,483), to remove potential issues with large sample sizes and the spatial autocorrelation created in our dataset by mapping mining areas using a 50-cell radius around each mining property. 6 Challenges that Mining Industry is Facing Now - Dynaway Summary. & Pailler, S. Protected area downgrading, downsizing, and degazettement (PADDD) and its conservation implications. Possingham, T.H. Sustain. When required commodities exist in biodiverse countries that lack strong resource governance, such as the worlds second largest untouched lithium reserve in Bolivias Salar de Uyuni salt pan5a biodiverse area currently untouched by mining14mining poses serious threats to species and ecosystems15. Miners are considering more innovative, sophisticated approaches to mitigating supply chain risk, including through stronger relationships with suppliers and collaborative contracting. The social risks driving conflict with the mining industry However, given that the magnitude of direct and indirect effects likely varies tremendously among mines42 (e.g. pre-operating, operating, closed), except for closed regions overlapping with Key Biodiversity Areas, which did not differ significantly between mining and non-mining areas (n=2, p=0.140). However, critical mining areas overlapping PAs were significantly more dense than the other mining areas that overlapped PAs (3.5 vs. 1.6; D=0.18, p=0.01; Supplementary Data3; although differences were not statistically significant when using a 10-cell radius to define mining areas, or when sampling at 300km intervals), despite other mining areas being (on average) more dense globally (Supplementary Table1). We found less overlap between pre-operational mining areas (where minerals are not yet confirmed economically viable) and PAs than non-mining areas and PAs (12.2%; chi-squared=55.54, p<0.001; Supplementary Data1), although pre-operational mining density did not differ significantly between areas overlapping PAs and areas not overlapping PAs (4.0 vs. 4.4 mining properties; Supplementary Data2). Cross Sector Biodiversity Initiative. Stakeholder expectations are higher than ever but as the world recovers from COVID and accelerates to carbon neutrality - so are the opportunities! Google Scholar. The fourth industrial revolution, which is known as Industry 4.0, IR 4.0, or 4IR, includes various platforms, e.g., data mining, AI, and circular economy. The global upheaval brought in 2020 has tested mining companies and while there remain significant challenges ahead the landscape presents abundant opportunities as well. ESG-related risks remain prominent, with community relations and social license to operate unchanged from its previous position of number four. The pace and complexity of the threats are growing . EY | Assurance | Consulting | Strategy and Transactions | Tax. H ow can mining and metals companies navigate immediate challenges, such as rising costs and supply chain disruption, while progressing their transformation into purpose-led, low-carbon, digitally enabled organizations?. Venter, O. et al. Bars depict the areal proportion of mining and non-mining areas that overlap with currently Protected Areas and conservation priorities (Key Biodiversity Areas and Remaining Wilderness). One of the many misconceptions regarding the "proof of work" crypto-mining industry is how it's powered. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. Top mining and metals risks and opportunities in 2023 - EY Note: Graphed proportions were calculated from full extent of mining and non-mining areas, whereas reported statistics were calculated using the 1km2 cells sampled at 100-cell intervals. By Jon Stojan. But while the ongoing impact of the pandemic will continue, the mining industry appears to be rapidly recalibrating. Lessons from the past: Informing the mining industrys trajectory to the next normal. Google Scholar. The mining industry is under threat from cyber attacks aimed at exploiting its strategic position in global supply chains. OT Network security Threat Landscape New reports indicate mining industry unprepared for cyber attacks October 19, 2020 In September, cybersecurity company Secolve released a report looking at how prepared Australian businesses are to face cyber attacks to critical industrial operating systems. 2 Mines theoretically can fully decarbonize (excluding fugitive methane) through operational efficiency, electrification, and renewable-energy use. PDF Risks and opportunities for mining - KPMG Lovejoy, T. E. Conservation biology: the importance of wilderness. Rehbein, J. As we head toward 2023, the mining and metals sector is responding with more fundamental shifts to business and operating models. PDF Top 10 business risks facing mining and metals - EY Allan, J. R., Venter, O. However, despite their larger spatial extent, critical mining areas are less dense than other mining areas (2.0 vs. 3.5 for operational mining properties; Supplementary Table2), due to differences in resource distributions and relative production costs. Lett. We distinguish areas targeting the materials that, among many other uses in society today, will be critical for renewable energy production (here referred to as critical mining areas) from those targeting other materials (e.g. Environmental, social and governance (ESG) remains the number one challenge, but one that is broadening in scope and complexity. Wanger, T. C. The Lithium futureresources, recycling, and the environment. EY report highlights 10 key risks to the mining industry - and chief among them ESG and decarbonisation Disruption is fast reshaping the mining and metals sector's perception of where the biggest challenges - and paths to growth - may lie, according to EY's annual review of risks and opportunities in the global mining sector. Cite this article. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Summary. Global disruption to trade is hitting the sector particularly hard, and in 2023, miners will be under pressure to fast-track the supply chain transformation that was underway before the COVID-19 pandemic. Google Scholar. 4, 202206 (2011). Global Energy Statistical Yearbook 2018: Coal and lignite Production (Enerdata, 2018). Mining areas were mapped using a 50-cell radius around 62,381 pre-operational, operational, and closed mining properties. PubMed Rufus Wright, CEO and Founder of Crypto Caverns is providing reliable crypto mining services that are at the forefront of making the industry trustworthy . et al. Results also hold when mapping mining areas using a 10-cell radius around mining properties and when sampling the data at 300km intervals. https://doi.org/10.1038/s41467-020-17928-5, DOI: https://doi.org/10.1038/s41467-020-17928-5. Other areas that are increasingly important for future conservation investment (such as Key Biodiversity Areas21), are not designed to consider the distribution of mineral resources and pressures to extract them, as they focus instead on the needs of biodiversity only. ESG remains the top risk and opportunity for mining and metals companies in 2023. This analysis shows that, although the extent of mining-influenced areas naturally decreases (49 million km2 using a 50-cell radius vs. 6.6 million km2 using a 10-cell radius; Supplementary Fig. Evidence of the impacts of metal mining and the effectiveness of mining Managing variability though modeling and digital twins can help miners unlock sustainable savings. Approximately 8% of the global area potentially influenced by mining overlapped with PAs (Fig. For mining areas created using 10-cell radius, correlation at 100km was 0.003 for others, 0.009 for critical, and 0 for both. At the local scale, minimizing these impacts will require effective environmental impact assessments and management. 2), indicating extensive threats to currently protected biodiversity. PAs cover various governance types (public, private, and indigenous/community areas) and management categories (from strict nature reserves to those permitting managed extraction) and are central to the Convention on Biological Diversitys Strategic Plan and meeting 2020 Aichi Targets45. Mining adversely affects the environment by inducing loss of biodiversity, soil erosion, and contamination of surface water, groundwater, and soil. Science 342, 425426 (2013). volume11, Articlenumber:4174 (2020) Nat. 05/29/23 AT 11:02 AM EDT. Google Scholar. Most mining areas (82%) target materials critical for renewable energy production (Supplementary Table2). The top risks - and opportunities - for global mining - AusIMM Thus, the world coal industry transports two orders of magnitude (100) more material than the copper industry. conceived the idea and designed the research; L.J.S. Proc. How have 12 months of unprecedented disruption and uncertainty changed this outlook? Long-standing challenges, such as strengthening Indigenous trust, require a more concerted effort. Commodities with resilient demand and significant supply disruptionsCOVID-19-crisis related or otherwisewill fare better, while those linked to severely affected end uses and limited supply corrections will see lower prices for longer. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. Yet, none of these potential tradeoffs are seriously considered in international climate policies3, nor are new mining threats addressed in global discussions around post-2020 United Nations Strategic Plan for Biodiversity28,41. extracting different minerals, with different methods), we also analyzed a more conservative radius of 10km. Aidan Davy Chief Operating Officer, International Council on Mining and Metals Our Impact What's the World Economic Forum doing to accelerate action on Mining and Metals? 51, 307338 (2012). Sovacool, B. K. et al. 21,24,25. Instead, out method examines whether the minerals critical to produce these technologies and infrastructure were present or absent. 23rd September 2021 Back to Reports & Resources Philip Buckingham Content Marketing Executive Identifying some of the biggest social risks to mining operations, and why Environmental, Social and Governance issues are one of the biggest threats that mining companies now face. US and EU officials developing guidelines for AI and other new tech but Anchoring the brand to long-term impact can strengthen LTO. To obtain School of Earth and Environmental Sciences, The University of Queensland, Brisbane, QLD, Australia, Laura J. Sonter,Marie C. Dade&James E. M. Watson, Centre for Biodiversity and Conservation Science, The University of Queensland, Brisbane, QLD, Australia, Gund Institute for Environment, University of Vermont, Burlington, VT, USA, Department of Geography, McGill University, Montreal, QC, Canada, Wildlife Conservation Society, Bronx, NY, USA, Sustainable Minerals Institute, The University of Queensland, Brisbane, QLD, Australia, You can also search for this author in
threats of mining industry