IIR Webinar: Geopolitics, Resource Nationalism, ESG Initiatives Affect Mining Spending

In this week's webinar on the outlook for the global mining sector, Industrial Info's industry experts discussed the trends, drivers and headwinds facing the industry. In recent years, the mining sector has been affected by such things as resource nationalism, government stimulus and the energy transition. Also driving spending are environmental, social and governance (ESG)-related projects, which account for about $28 billion worth of mining projects. Industrial Info is tracking about $258 billion worth of mining projects presently under construction throughout the world, with another $281.2 billion worth of projects planned to kick off through 2024, although not all of these will proceed as planned. In the webinar, Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry, discussed what will drive this future spending.

Overall, this year's construction activity in the mining sector is down 3.9% from last year. Govreau said, "I think this highlights a weakening around what is actually reaching the construction stage this year when compared to last and reflects a general downgrade in economic conditions... This doesn't mean that projects are being cancelled. We're finding that projects are robust and active but are not being executed according to schedule, with some delays and slippage in execution."

While activity is down globally, it varies by region. Spending activity for mining projects in the U.S. and Canada is up 25%, thanks largely to government stimulus initiatives. Latin America is showing a 20% decline in spending from last year and has been on a multi-year decline in activity recently. Many governments in Latin America have implemented stricter regulations to protect the environment and ensure responsible mining practices. In addition, resource nationalism has made some companies turn away from certain projects in the region.

Also driving spending in the mining sector are ESG-related projects. Of the $28 billion in ESG-related mining projects being tracked by Industrial Info, $18.4 billion are for renewable energy projects, mostly involving the implementation of solar and wind power.?Anglo American?(London, England), for example, plans to add 3 to 5 gigawatts of renewable energy to its mines in the coming years. Another $5.6 billion worth of ESG projects take the form of greenhouse gas reduction, often involving the electrification of mining equipment.

Govreau also delved deeper into specific mined commodities. While the use of coal is diminishing in the West, coal-mining projects lead the world in spending, with approximately $61.9 billion in projects planned to kick off through 2024. China and India account for 78% of this spending. Rounding out the top three mined commodities are copper ore (accounting for $47.4 billion in planned spending through next year) and silver and gold ($39.7 billion).

Merger and acquisition activity also is affecting project spending. The $19.5 billion merger between?Newmont Corporation?(NYSE:NEM) (Denver, Colorado) and?Newcrest Mining Limited?(Melbourne, Australia) is expected to close in the fourth quarter of this year, accounting for about $15.5 billion in combined project spending. As a result of the merger, Newmont has deferred the final investment decision for its $2.5 billion Yanacocha Sulfides gold-copper project project in Peru for two years, pushing the approval date to the second half of 2026. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can?click here?for more details on the project.

On the whole, the mining sector will continue to be affected by drivers such as the energy transition. Various government stimuli regarding critical mineral supplies, especially in the U.S. and Canada, have resulted in increased reshoring and friend-shoring (establishing production in an allied country). ESG initiatives will continue to play a significant role in mining spending, led both by countries wanting to diminish the environmental impact of mines within their borders and mining companies meeting their own environmental goals.

If you missed this webinar or would like to listen to it again, the presentation will soon be available in Industrial Info's?On-Demand Webinar Library.

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