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We recently attended the 2024 Financial Times Mining Summit in London, joining the sector’s leading voices exploring the latest trends, innovations, and challenges.
The energy transition promises to be costly. Insufficient capital flows in the mining sector, however, could affect the pace and efficacy of bringing needed mines online and deploying new technology. This reality, coupled with today’s market volatility and geopolitical instability, were widely discussed at the summit. Here are six takeaways our team observed:
1. Copper serves as a cornerstone
Even as everyone suffers from super-cycle fatigue copper prices continue to successfully achieve “higher lows” as capital remains readily available. However, with everyone wanting in, valuations for the best assets are rising to challenging levels.
2. Investment remains inadequate
Leaders commented that attracting investment to the wider sector, meanwhile, remains a challenge despite a strong commodities outlook for critical minerals. Sovereign wealth funds have made substantial investments, but -- in many cases – are limiting transactions to minority positions in Tier 1 assets or brownfield expansions.
3. Miners must improve execution
To better attract investment and remain competitive, industry leaders contend companies must improve project delivery, including meeting timelines and managing costs. Poor execution across lithium is a concern, as is the hard work required to ramp-up the world’s best (mega) projects.
AlixPartners estimates miners typically run more than 50% over capital budgets on mega projects.
4. Permit timelines remain too long
Permit challenges dominate the conversation. The industry typically endures 15-20 year timelines from discovery to production. Based on the acquisition premium being paid in copper vs. development -- we see significant assumed risk being associated with permitting and commissioning projects. To effectively manage the permitting process, some companies and jurisdictions are ensuring the latest technologies can be included at operational startup, rather than often outdated technology from when the permit was obtained.
5. Expect M&A activity to pick-up
Industry leaders discussed the need to examine internal capabilities to successfully execute M&A, and focus on partners who bring capabilities, not just capital, to the relationship. Participants spoke of how commodity volatility and capital shortages have prompted companies to seek strategic partnerships and consolidation opportunities.
6. Mining must improve its public perception
Mining faces a public perception challenge. Many still view the sector as environmentally damaging, despite its essential role in providing the raw materials needed for green technologies like electric vehicles and renewable energy infrastructure. Attendees agreed that to secure its place in the future economy, the industry must revamp its image, showcasing its strides in sustainability and its critical contribution to global progress.
Download our 6 key takeaways here:
