The mining industry... The key to the energy transition fails to overcome challenges (report) - Energy

The mining industry faces several challenges that hinder it from exercising its vital role in the energy transition and the success of global carbon neutrality goals.

The industry is largely at an inflection point, as its raw materials are the basis for the transition from fossil fuels to clean energy, but it does not seem to convince the rest of the world of this situation.

In an article published by Reuters, writer Clyde Russell noted that the mining industry faces many issues that need to be addressed, but it still appears to be grappling with how to get its message across.

He stressed that the challenges appear urgent, given the huge quantities of copper, lithium, cobalt, nickel, zinc, manganese and graphite required, and the limited plans to develop new mines to produce the necessary minerals.

Mining Industry Challenges

In his article, Russell explained that these issues include how to convince investors that the real action in mitigating climate change should be at the beginning of the process, that is, the production of raw materials, rather than the end, that is, the manufacture of electric cars and things like solar panels.

Once persuaded, the battle then becomes to have investors put capital into new mines, which are often located in difficult jurisdictions, and will take several years to turn a profit.

Even if you manage to get this far, the process of dealing with governments is very difficult, even in advanced mining countries, such as Australia.

Russell noted that there are myriad development and environmental approvals to be secured, communities to be consulted and persuaded, and transportation and logistical issues to be overcome.

And even if you manage to make it to this point, the cost of developing new mines rises faster than the price of the goods you produce.

In other words, just because copper traded this year at a record high of over $10,000 a ton, that doesn’t mean building a new copper mine is necessarily a no-brainer, according to the author.

Finally, the mining industry has to combat the problem of the largely negative image, and its ongoing association with the climate specter of coal miners.

clean energy - minerals

Lack of support and funding

The writer stated that it appears that commodity prices must remain historically high – and less volatile – in order to convince those who own the capital that returns are viable.

Governments will have to do a lot to speed up environmental permitting and approvals, and those with an interest in achieving carbon neutrality by 2050 will have to overcome their innate aversion to mining.

He stressed that the overwhelming message from miners and investors at two major South African mining conferences this week is that the situation is urgent and getting worse.

Speakers at the 121st Mining Conference – which took place in Cape Town this week – lamented the lack of government urgency, the lack of interest among major mining companies to build new mines, the reluctance of banks to fund projects, and the poor image of mining among green energy investors. , although metals would be vital to the energy transfer.

The message may be starting to emerge, as South African President Cyril Ramaphosa delivered a mining-friendly speech at the Mining Indaba on Tuesday, pledging that his government would reform transport and power infrastructure, while facilitating exploration and building mines. .

metal demand

“We have to completely change the image of the mining industry,” said TCTMT CEO Brian Minnell during the mining conference, adding that this would attract investors who focus on environmental, social and governance issues.

Quora Capital Chairman Lloyd Bingley stressed that there is a “quantum leap in demand” coming for battery metals, and the industry is not in a position to meet it.

Taking graphite as an example, Bingelli said, the current global market for the battery component was about 1 million tons per year, of which about 650,000 tons were controlled by China.

This would need to double to 2 million tons within 5 years in order to meet the demand for the battery, but there are only a few graphite projects in development, and even if all of them continue – which is unlikely – it still does not meet the expected demand.

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