The future of mining - Resources as a Service

Vast quantities of mineral resources are required for green transformation. However, mining is not going to be an easy task anywhere in the world. Mining is one of the few industrial sectors that has a steeply declining productivity. Decreasing ore grades and deeper mining makes the process costlier. The energy required for benefaction and processing is increasing. 

Mining low-grade ores increase the environmental footprint. Low ore grades also mean large quantities of wastes and tailings. Processing also requires a lot of freshwater, which will increase with lower grades. Land required for mining will also be substantial. Competing for land and water requirement is already creating a lot of tensions everywhere. The whole industry is ripe for a massive disruption.

Reducing mineral demand will not be easy given the increasing global population, growing urbanization and improving quality of life. The upper strata of the society consume more than 20 tonnes of raw material per capita, whereas the poorest about 2 tonnes. This disparity could level off with time, but providing more raw materials at affordable prices is an urgent requirement to bring people out of poverty. 

The challenge is to assure economic growth with efficient resource use. Decoupling resource use and economic growth will positively impact the environment and the carbon footprint. Innovative approaches are finding new ways to reduce resource intensity, energy intensity or carbon intensity of most of the products and services. This “dematerialization” will have far-reaching consequences. The manufacturing and other industries will squeeze more and more utility out of less and fewer resources. 

The trend towards “dematerialization” also will make Resource as a Service (RaaS) viable. Rather than producing and selling a commodity, the mining industry can sell the service that the utilization of that commodity delivers. The raw materials can remain in the company’s custody through the lifecycle of the product or service. 

The industry will have an incentive to be more resource-efficient and recycle the materials as much as possible. The stewardship of the material will remain with the company. It will have access to the material at the end of the life of the product. We can efficiently put the material back into the indefinite service of society. 

RaaS models currently exist in critical raw material space, such as platinum and uranium. Platinum and uranium are often leased to customers. After its productive use, it reprocessed and recycled back into the system again. Similar approaches can be used mainly for CRMs, especially when the products’ lifecycle is measured in a few years. Certain materials such as iron, steel or copper are locked up in use for a longer term. RaaS business models could be developed for scenarios spanning over an extended period.  

A significant challenge in achieving full recycling of materials is the quality issue with some recycled materials. Design for recycling could become viable in RaaS operations, making it easier to ensure recycled materials’ quality. The design can include modularity of devices, plan for collecting discarded products, classification, storage, and transport to recycling centres. Above all, information about the material flow should be available in real-time. Such information availability is being made more accessible by the new Internet of Things (IoT), blockchain and Digital Ledger Technologies (DLT).  

The development measure in the past was dominated by per capita energy or raw material consumption. As energy and material use efficiency replaces (or will be replacing) this metric, the reverse, the declining per capita consumption will be the measure of development and technological advancement. Materials and energy as commodities will diminish in the share of the value they represent in a product. The value will be influenced by the knowledge embedded into products, another indicator of double materiality’s economic impact. Such approaches will not only be cost competitive but also will have significant social returns. 

Resource use patterns will inevitably change.

Resource use patterns will inevitably change. For example, several major car or electronic manufacturers are moving into securing raw material supply. Some major car manufacturers have adopted a strategy of prioritizing the use of secondary resources. The vertically integrated industries will be more interested in resource efficiency than in the unwanted overuse of materials. If this trend becomes widespread, the current commodity models will become insignificant over time. Such changes could make the management of resource much more complex. 

The industry ecosystem will become more knowledge-hungry. Along with primary resource information, data on secondary resources will be essential. United Nations Resource Management System (UNRMS) could support the RaaS model. UNRMS could be the platform that could provide the necessary knowledge to manage such complex scenarios.  

The experience of the sharing economy is worth mentioning here. Business models such as car-sharing or space sharing happened because of mobile technology advances and their wide availability. Digital connectivity promoted quick online money transactions. Sellers and buyers could come into instant contact and transact deals. When the computer industry ventured into mobile music devices, which got transformed into smartphones, nobody imagined that this could fuel a sharing economy boom. Yet all this happened without centralized planning within a couple of years.

Similarly, RaaS is a possibility that we could foresee if we scan the horizon and consider the digital transformation happening today. It is the nature of such transformations to happen rather quickly. It pays rich dividends to be aware of the changes and be early adopters as opportunities open.  

[Adapted from the concept note Redefining resource management as a public good: The UNRMS as a transition vehicle to the circular economy]