Against the backdrop of record commodity prices and increasing pressure on miners to improve their ESG credentials, the sector is attempting to promote itself as a reliable partner in the battle against climate change.
FREMONT CA: Commodity prices soared as trillions of dollars in global stimulus spurred a resurgence in industrial and consumer demand, along with coal and natural gas, copper, iron ore, and lithium all set new highs. Miners were able to deliver record profits and send out bumper dividends to shareholders after years of restructuring firms and being extremely disciplined in bringing on the loss of historic aboriginal heritage sites in Australia. The issues regarding ESG will continue to be a significant danger to the sector in 2022, with 24 percent seeing it as the most serious threat, rising to over 40 percent when climate-related activism and legislation are included.
When it comes to ESG, the mining industry has been caught between two opposing concepts. On the 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 destruction of ancient aboriginal heritage sites in Australia. Other risks have increased since 2021, with resource nationalism increasing by 16 percent, supply chain instability, and a Chinese recession following.
BHP signed a nickel supply agreement with Tesla in 2021, stating that the two firms would work together to make the supply chain cleaner. Elon Musk, Tesla's CEO, has frequently asked for a reliable supply of the materials, with BHP forecasting a 500 percent increase in battery demand over the next decade. This pattern has been seen in the metals business. Rio Tinto aims to develop carbon-free aluminum in collaboration with customers such as Apple, while Glencore has a cobalt supply agreement with Tesla.
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. The biggest miners remain universally bullish on its prospects, with demand expected to surge this decade and new supplies looking increasingly scarce. Last year, the metal, which is a leading economic indicator and a critical component of the energy transition, reached new highs, surpassing
US$10,000 a ton. With demand likely to rise this decade and fresh supplies becoming increasingly rare, the top miners remain unanimously optimistic about its prospects.