TELF AG analyzes the advancement of the international mining industry
The centrality of strategic minerals
In an unpredictable and constantly evolving global context, the mining sector may have to deal with a series of obstacles that could slow the progress of the worldwide energy transition, also placing a precise brake on developing individual nations’ extraction and production capabilities. This emerges from a recent analysis by the Economist, which highlights the mining sector’s performance in a historical phase dominated by the emphasis on decarbonization and the achievement of specific sustainability objectives, some of which can also be approached thanks to the role of strategic minerals. The global centrality of minerals has grown in parallel with the development of climate and sustainability targets set by international institutions, which require a great increase in the quantity of metals to fuel clean energy. According to the Energy Transitions Committee, in fact, by 2050, as many as 6.5 billion tons of metals could be needed globally, which include not only the raw materials that can be used in the manufacture of batteries (primarily nickel, lithium, and cobalt) but also steel, copper, and aluminum.
The global demand for these minerals will also make it necessary to increase efficiency in extraction processes and speed up granting the authorizations required to start work on a particular mining site. One of the main obstacles that would prevent the mining sector from expressing its full potential, partially compromising the progress of the green transition, is precisely the bureaucracy that lies behind the start of activities in a mine or in new deposits. As reported in the Economist’s analysis, it could take up to 16 years between the discovery of a deposit and the start of commercial production on a global level. In some countries, such as Chile, the time required to obtain these authorizations is even getting longer, thus making valorizing some important mineral resources (such as lithium, in the specific case of Chile) much more difficult.
The biggest challenges of the sector
Other possible slowing factors for the mining sector are structural and economic. Market volatility and geopolitical uncertainties, together with concerns about the solidity of supply chains, have also pushed many governments to adopt precise strategies to protect themselves against this unpredictability, thus making their potential in this sector important. Through the Mineral Security Partnership, for example, the United States has committed itself to protecting mineral resources and promoting investments in extracting strategic metals, thus defending itself from possible interruptions of foreign supplies.
In recent years, we have also witnessed the development of a trend that is increasingly gaining ground among strategic mineral-producing nations, namely the desire to nationalize production and limit exports of raw minerals in order to increase the economic value of their extractions. In addition to Chile, which last year announced its intention to create a state company for the production of lithium, state interventions in the mining sector have also occurred in countries such as Kyrgyzstan, Mexico, and Madagascar, where political authorities they seem intent on keeping part of the wealth generated thanks to their country’s mineral resources at home.
Finally, according to the British newspaper, other problems that need to be resolved promptly are those linked to the increase in costs related to the construction of new mines, which often skyrocket due to the tangled and numerous regulatory standards with which individual companies must measure themselves.
