Metals and Mining Insights 2022

Against the backdrop of record commodity prices and increasing pressure on miners to improve their ESG credentials, the sector is attempting to position itself as a reliable partner in the fight against climate change

FREMONT CA: The year 2021 will be recognized in the mining and metals industry for two distinct themes. First, there was the incredible recovery from the COVID-19 epidemic, which drove commodities prices skyrocketing to never-before-seen heights. Second, ESG has become a mainstream business component and will continue to be top-of-mind in boardrooms. Despite many issues still facing the sector, such as inflationary pressures, resource nationalism, and prolonged trade disruptions, it's evident that boards are concentrating on the global energy transition as an opportunity. Since the commodity crisis of 2015 and 2016, when some of the industry's biggest names were on the verge of going bankrupt, the mining sector has battled to restore favor with generalist investors. However, the industry demonstrated to investors in 2021 that it has two appealing offerings: exceptional financial returns and the capacity to position itself as a producer of minerals required to tackle climate change.

In 2021, the diversified miners sped up their transition. BHP declared it was abandoning oil and gas and moving away from thermal coal, while Anglo Americans announced it was exiting thermal coal entirely.

As part of its aim to become carbon-neutral by 2050 and lower one-third of its emissions by 2030, Vale also announced its pull-out from the coal market. In its stead, the world's largest miners have been aggressively investing in future-oriented commodities. Last year, nearly every major miner pledged to become carbon-neutral over the next two to three decades and, perhaps more crucially, provided details on how they plan to do so. Rio Tinto's vow to invest $7.5 billion by the end of the decade to reduce its emissions was the most eye-catching.

The emergence of hydrocarbons as an energy source is an example of how failing to proactively handle ESG issues in an energy supply chain can result in future problems that are more difficult to overcome than if addressed at the outset. So, the sector's potential is right here, right now, but it must first do this right. The Global Battery Alliance (GBA), which brings together more than 70 organizations to ensure that the entire battery value chain is socially and environmentally responsible, might provide a roadmap for best practice