While the mining sector proved astonishingly resilient to the pandemic's initial shock, it was also well positioned to profit from the worldwide recovery in 2021
FREMONT, CA: The year 2021 is recognized in the mining and metals industry for two distinct factors. First, there was the incredible recovery from the COVID-19 pandemic, which drove commodities prices skyrocketing to never-seen-before heights. Secondly, environmental, social, and governance (ESG) has become a mainstream component of business and will continue to be a priority in boardrooms.
While the business proved astonishingly resilient to the pandemic's initial shock, it was also well positioned to profit from the worldwide recovery in 2021. Commodity prices soared as trillions of dollars in global stimulus spurred a resurgence in both industrial and consumer demand. Along with coal and natural gas, copper, iron ore, and lithium all set new highs. After years of simplifying operations and being disciplined in getting on new supply, miners delivered record profits and bumper dividends to shareholders.
Despite the record prices, it became evident that ESG, which has been gaining traction in our last two polls, is now critical in attracting investors and maintaining a social license to operate. Companies who have focused on their environmental, social, and governance (ESG) performance are reaping the rewards.
When it comes to ESG, the mining industry has been caught between two opposing concepts. On one hand, there is the ongoing pressure from fossil fuel mining, as well as recent tragedies that have tarnished the entire industry's image, such as the catastrophic dam collapse in Brazil and the loss of historic aboriginal heritage sites in Australia.
More positively, the industry has grown more proficient at arguing that it is becoming a significantly cleaner—and more sustainable—sector, and that with this enhanced ESG performance, it can be a trustworthy partner in mining the commodities that will enable the green transition. If individual players can verify their ESG credentials, this shift provides fresh chances for the business in the future.