The global mining industry is poised to assume a central role in the years ahead as the world sets its sights on a greener and more sustainable future. The escalating demand for various metals, indispensable for renewable energy technologies, electric vehicles (EVs), and an array of modern sectors, reveal a trend that will only intensify. However, the certainty of an increase of demand is not enough for the industry to thrive, as challenges such as inadequate policy frameworks, protracted permit processes, and a pervasive negative public perception concerning environmental degradation seem to complicate its organic growth.
Copper has been at the forefront of the debate for quite some time due to elemental properties that offer remarkable versatility. Its excellent electrical conductivity, corrosion resistance, and heat transfer capabilities make it indispensable for numerous applications, from power generation to telecommunications and transportation systems. Yet, there seems to be growing concern over the shortage of copper, particularly in the context of the global green transition. The increasing demand for copper in renewable energy technologies, such as solar panels and electric vehicles, has put pressure on the existing supply chain and raised questions about the sustainability of meeting future needs. Mikko Keto, CEO of FLSmitdth, claims that “at the moment, the supply and demand ratio is quite balanced, but if we look at the rate of future development, it becomes clear there is not going to be enough copper, lithium, and other critical minerals.” This scarcity dilemma has further fueled discussions and calls for strategies to ensure an adequate - and environmentally responsible - supply of copper to support the anticipated surge in demand.
An example of the efforts to meet the incoming scale-up in demand is that of Deep South Resources, a Canadian company operating in the heart of Namibia in order to source copper for the economy, and that “seeks to proffer 1,000 metric tons of cathodes [today equivalent to $8 million] each year,” as CEO Pierre Leveille told us. Namibia is still a minor player in Africa’s copper industry, which is home to some of the bigger copper producers in the world; the DRC alone, for example, produces 1.9 million metric tonnes of copper annually, making it the world’s third biggest copper producer. However, Deep South’s efforts are an example of an intensifying trend - that of Western companies looking to produce overseas in order to meet the challenge of creating a safe copper supply chain.
Just like with copper, graphite’s significance reverberates across different sectors, spanning from renewable energy to advanced electronics. The CEO of Northern Graphite, Hugues Jacquemin, tells us that “the anode of an EV battery is composed almost entirely of graphite, as are the plates within the hydrogen fuel cells, and the temperature control sheets inside a cell phone. Graphite is also extremely useful in steel processing, and it is a strong material, five times more conductive than copper.” Graphite also serves as an invaluable component in “steel processing, in addition to boasting exceptional conductivity, surpassing even copper by a factor of five.”
However, the journey towards securing an adequate supply of graphite is not without its challenges. A mere decade ago, China held an iron grip over the graphite market, establishing an almost monopolistic dominance. Jacquemin says that "a decade ago, when I started my journey in this industry, China was aggressively investing in graphite mines, and companies like CATL had a 40% market share in the EV battery space. In this heavily monopolized setting, we are one of the three major producers outside of China. However, the Western graphite industry has long struggled to compete in such a fiercely competitive market and achieve profitability while operating in the shadow of Eastern powers." In a conversation with Dr. Dana Bennett, interim president of the Nevada Mining association, we learnt to what extent the West has been abandoning the industry: “Our state's cornerstone is this very industry that is today forsaken, but, in the past, if they did not live near a mine, Nevadans surely knew somebody who worked in mining.” Be it graphite, lithium, or any metal, China’s dominance and the West’s lagging behind is not without cause.
In response to China's dominance, there has been a concerted effort by European and Canadian policies to increase graphite production. The European Union, through the European Critical Raw Materials act, aims to “mitigate the risks for supply chains related to such strategic dependencies to enhance its economic resilience.” Ursula Von Der Leyen, President of the EU commission, emphasizes further, claiming that Europe is “strengthening our cooperation with reliable trading partners globally to reduce the EU's current dependencies on just one or a few countries.” The EU’s aim by 2030, is to have “not more than 65% of the Union's annual consumption of each strategic raw material at any relevant stage of processing from a single third country.” Canada echoes the EU preoccupations, having set The Canadian Critical Minerals Strategy in order to “increase the supply of responsibly sourced critical minerals and support the development of domestic and global value chains for the green and digital economy” as stated in their official declaration. By focusing on the high-end segment and leveraging Canada's abundant reserves of premium large graphite flakes, the country seeks to carve a niche within this fiercely competitive market. These efforts reflect a broader strategy to enhance global graphite production outside of China and ensure a more balanced and resilient supply for various industries, including electric vehicles and renewable energy technologies.
The Role of Gold
Within the precious metals sphere, gold continues to occupy an eminent position as an enduring symbol of wealth, security, and stability. Gold is not a crucial pillar of the green transition per se, but its growing importance as a secure deposit for wealth necessitates its sustainable sourcing. Amidst a challenging economic landscape fraught with uncertainty, the allure of gold as a haven for investment remains unparalleled. David Tait, CEO of the World Gold Council, says that in the last quarter “we have seen central developing banks persistently buying gold, showing a high degree of pragmatism that is producing a fundamental shift within the world.” CEO of Gold Fields, Luis Rivera, echoes Tait, claiming that “gold will remain a sought-after commodity as a way to save money as it is less risky than investing in something else, and countries will continue to buy gold as a way to demonstrate a strong economy.” Tait claims that the gold industry is committed to make the general public understand gold’s benefits for society: “In 2021, miners contributed $57 billion to host countries, with most locals being employed on the mining sites. Consequently, we are focusing on value distribution, trying to raise awareness about the positive impact of mining in local communities. We are using all tools available, including producing video content, like The Golden Thread that is already online or the upcoming documentary on mining, fronted by a Hollywood A-lister. “
A central problem in the gold industry is the disproportionate number of gold notes in circulation compared to the actual physical gold available. This disparity has created a potential problem wherein the demand for gold may outstrip the available supply if new sources of gold are not mined. With countries continuing to buy gold as a symbol of economic strength and stability, it becomes imperative for the mining industry to bridge this gap and ensure a sustainable extraction of gold to meet the demands of the global economy. By sourcing gold, the industry can mitigate the risk of a significant shortage in the future and maintain the balance between the supply of gold and the financial instruments tied to it.
The escalating demand for metals such as copper and graphite - just to mention two of several examples - coupled with the enduring allure of gold, underscores the indispensability of a resilient and sustainable mining sector. Although confronted by challenges ranging from policies to public perception, the industry seems to have resolved to address these concerns head-on. This is only one of several points that will determine whether the industry succeeds or not in delivering the incoming increase of demand that the green transition will require.
To read the full story about the global mining industry’s transformation, look for the next pre-releases and the final report published in November 2023 in Newsweek’s print and digital edition.