In recent years, the demand for various minerals, such as copper, lithium, nickel, cobalt, and rare earth elements, has significantly increased. This is due to their crucial uses in providing clean energy, electric vehicles, and high-tech manufacturing, leading to a substantial rise in the prices of rare earth metals, especially amidst supply constraints. Despite the significant challenges faced by the global mining industry in 2023, including erratic exchange rates in many countries and rising handling and shipping costs, the sector managed to develop and grow due to advancements in technology and digitization. However, ongoing challenges related to climate change and geopolitical shifts remain the primary challenges for the mining sector in 2024, necessitating adaptive strategies and innovative solutions from producing countries to ensure long-term environmental compatibility of the industry.
Currently, China dominates many mineral supply chains. Conversely, there is Western competition for producing rare terrestrial and marine minerals, with emerging trends pushing for increased regional production across North America, Australia, and the Copperbelt region in Zambia, Africa. This competitive landscape requires mining industry leaders to not only rely on traditional practices and trends but also to innovate to ensure the sector’s continuity and sustainability.
Key Trends
Several key trends are anticipated for the mining industry in 2024:
Expected Role of Mining in Energy Transition:
The demand for “green” minerals is expected to increase in 2024, potentially reshaping the global mining map, considering the critical role mining plays in energy transition and its contribution to renewable infrastructure, such as electric vehicle batteries and wind turbines, as well as fertilizers for crops. According to a report by Forbes, copper and aluminum markets are central to the global move towards green energy and electricity, with many government bodies setting bold targets to move away from fossil fuels. Hence, 2024 is expected to see positive steps in promoting the role of mining in energy transition.
Potential Increase in Demand for Base Metals:
Fitch Ratings Agency predicts growth in demand for base metals in 2024, supported by ongoing stimulus policies in China and industrial recovery in advanced markets. Expectations indicate stable demand for iron ore and metallurgical coal in 2024.
Expected Growth in Mineral-Rich Mines:
According to Global Data, nearly 100 mines worldwide are expected to commence operations in 2024, with major mines likely focusing on iron ore, gold, and copper production. Some of these projects have been under development for years, with operators and owners investing millions in feasibility studies, mining licenses, and environmental permits, sometimes engaging in legal battles to start mining operations expected to launch in 2024.
Intensive Efforts to Explore New Areas:
Mining companies are likely to intensify exploration activities in search of new areas, potentially opening more mines and presenting fruitful opportunities to maintain industry stability and meet growing demand. Additionally, the pace of extracting critical minerals is expected to increase as mining companies look to improve current operations’ efficiency.
Increasing Use of Artificial Intelligence in Mining:
Given AI’s positive role in mineral exploration in recent years, technology and emerging technical services are expected to provide real value in exploring, processing, and refining critical minerals in 2024. AI will also help transition minerals through the value chain to complex chemical compositions, improving environmental, social governance outcomes, and capital and operational expenditures.
Continued Chinese Monopoly on Rare Earth Elements:
China remains the undisputed leader in rare earth metal production, holding over 60% market share and dominating salt, phosphate, nitrogen, and potash production globally. China is self-sufficient in most mineral commodities, except oil and metallurgical coal. Despite challenges like economic recession in China in 2024, it’s unlikely that China will relinquish its leadership in this sector, which is a cornerstone of its trade war against the US. However, issues like illegal mining, high costs, and unethical practices are expected to continue affecting China’s mining sector in 2024.
Saudi Arabia’s Ambitions to Become a Hub for Green Mining Technologies:
In line with Vision 2030 goals for economic diversification, Saudi Arabia aims to become a global center for advanced green mining technologies. The Kingdom supports mineral exploration, evidenced by launching a $182 million incentive program. Increased efforts from the Saudi government to expand the mining sector are anticipated, highlighted by Energy Minister Prince Abdulaziz bin Salman’s January 10, 2024, statement at the International Mining Conference in Riyadh that Saudi Arabia is committed to addressing climate change and becoming an energy producer in various forms, not just oil.
Increased Mergers and Acquisitions in Australia’s Mining Sector:
The mining industry is expected to witness more mergers and acquisitions, exemplified by Coolabah Metal’s acquisition of the Cannington project, the highest-valued deal in 2023 globally. According to Global Data, gold saw the most sector deals in 2023, with 235 transactions, followed by copper (163 deals), silver (67 deals), nickel (53 deals), and coal (50 deals). With global sector mergers and acquisitions growing, expansion in Australia and other leading countries is expected in 2024.
US Moves to Expand Uranium Extraction Investment:
The Ukraine war led the EU and US to quickly sanction Russian oil and gas imports, but nuclear export sanctions were milder due to the difficulty in finding alternatives. However, in December 2023, the US House of Representatives passed a bill banning Russian low-enriched uranium imports until 2040, prompting a new wave of uranium extraction projects in the US, including in Texas, Arizona, and Utah, indicating a broad American direction to compete with Russia in uranium extraction, crucial for nuclear energy production.
Expansion of Deep-Sea Mining in Norway:
In 2024, an expansion in maritime mining, which has faced criticism due to its negative impact on marine life, is expected. Norway’s parliament voted to allow deep-sea mining in the Norwegian Sea, despite scientists’ and environmentalists’ warnings about its environmental impact. In 2024, Norway’s maritime directorate plans to invite companies to bid for exploration licenses, targeting minerals like magnesium, cobalt, copper, nickel, and rare earth elements in manganese crusts and hydrothermal vent deposits, viewing deep-sea mining as crucial for their “green transition.”
Current Challenges
2024 is expected to see several pressures in the global mining sector as the world transitions to new energy sources:
Infrastructure and Services Challenges: Developing new and emerging minerals in areas lacking energy, water, or stable and large quantities of resources poses a significant challenge. Mining companies’ ability to complete mining operations amid these constraints varies due to factors like high costs from mine size and complexity, extended infrastructure, carbon reduction needs, geological challenges, and supply chain price volatility.
Maintenance Capabilities for On-Site Equipment: The ability of skilled labor to maintain on-site equipment is a significant challenge. Lack of maintenance capabilities can lead to mine closures, making it essential for mining companies to equip skilled labor with technical capabilities and provide self-driving trucks in 2024.
Ongoing Inflationary Pressures on Mining: Post-COVID-19 inflationary pressures have affected mining companies’ ability to intensify work and labor due to increased labor costs, steel prices for equipment parts, higher wages for skilled tech labor, and rising prices of all necessary spare parts and general goods for equipment development and operation maintenance. This has led to significantly higher costs over the past three to four years, potentially eroding profit margins and affecting companies’ ability to raise capital in 2024.
Potential for Escalating Conflicts in Mining Areas: While parts of Africa have a competitive advantage due to rich mineral resources, the continent faces many challenges threatening mining companies. In addition to inadequate water, energy, and basic infrastructure, some African mining areas risk escalating conflicts, making the working environment unstable and fraught with security risks.
Safety Risks and Mine License Revocation: Safety risks are among the most significant challenges for the mining industry in 2024. Intensive labor, heavy lifting equipment, and complex operations increase worker injury risks, including explosions, harmful gases, heat, dust, and poor ventilation, which can result in worker fatalities. This challenge could lead to mine closures or license revocation, as seen in 2023 when large copper mines in Peru and Panama faced significant production cuts due to lost social licenses to operate.
Resource and Mine Nationalization Policies: Risks of resource nationalization threaten the mining industry in 2024, as seen in parts of Central America and Africa. Governments aim to exert greater control over crucial decision-making regarding minerals, potentially reducing investor confidence in the industry.
Key Requirements
Mining companies and industry-leading countries need to address current challenges and overcome them to advance the mining industry and meet the growing global demand for rare earth minerals. Key requirements include enhancing recycling efforts to increase production in line with circular economy and sustainable development goals, ensuring resource efficiency, minimizing environmental impacts, and achieving greater value with fewer inputs. Additionally, industry leaders need to ensure supply chain resilience by employing AI and machine learning for risk analysis at every supply chain level and strategic planning, focusing on prevention rather than crisis management.
Moreover, a renewed focus on employee welfare is crucial. Creating a safe work environment where workers feel respected, supported, and safe, regardless of cultural identity, ensures continued production and quality enhancement.
Finally, as a highly energy-intensive industry, mining companies are exploring new methods like alternative fuels, asset electrification, and reducing material consumption and waste generation. Investing in these solutions can meet booming economic demands while minimizing environmental impacts.
