The global economy is at a critical crossroads. In 2022, the Deloitte Economics Institute published research which found that, if left unchecked, climate change could create US$178 trillion in global economic losses between 2021 and 2070.
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To reach net-zero by 2050 likely requires active support from governments, investors, corporate entities and an able workforce. However, research from the Deloitte Center for Sustainable Progress has also revealed that a quarter of the global workforce – approximately 800 million people – are vulnerable to climate extremes.
In contrast, a coordinated effort in climate change mitigation could deliver an additional 300 million jobs by 2050 and boost the economy by over US$43 trillion by 2070.
These numbers underline the urgency for climate action and an equitable energy transition. As providers of raw materials needed to create sustainable infrastructure, low-carbon technologies, and electrify transportation, mining and metals companies can play a central role in sustaining the global economy.
In the 2023 edition of Deloitte Global’s Tracking the trends publication, we explore three key areas that mining and metals companies can focus on to enable this.
Reflecting on the value of nature
According to the World Economic Forum, half of the world’s gross domestic product (GDP) - around US$44 trillion - is dependent upon nature. Without this, the other half of GDP could not be sustained. For example, battery manufacturing requires natural resources, such as metals.
Going forward, the mining and metals sector should holistically integrate nature into its environmental, social and governance (ESG) targets, strategies, operations, and project valuations. This could widen the pool of capital to which companies have access and change the narrative surrounding the industry, elevating it from a resource user to a resource steward.
Nature-based solutions are one way to achieve this. These address societal challenges through the conservation, protection, management, and restoration of natural ecosystems. For example, De Beers Group is investing US$2 million in Kelp Blue, a start-up growing and managing kelp forests off of the Namibian coast to help offset its CO2 footprint.
Seeking values-based collaborations with Indigenous communities is another way. These will likely enable organizations to grow their nature-based knowledge and reorient the industry's trajectory towards regeneration.
For example, in Ontario, the Webequie First Nation and Marten Falls First Nation led the environmental assessment for a new road connecting the Ring of Fire mining area to the highway. While there remains a need to consult with all First Nations impacted by the project, this collaboration could help unlock the area's mineral potential, provide economic benefits for local communities, and strengthen environmental protection.
Conscious circularity
Circular economy presents a framework for a global economy that is decoupled from finite materials. It's underpinned by the move to renewable energy and, given the mining industry’s seminal role in low-carbon technology value chains, these companies could be positioned to set the stage for greater circularity.
To encourage this, companies may consciously reconfigure their systems and processes to keep metals in their most valuable form, design out waste and maintain the health of physical environments. In doing so, there is a chance to create new value and retain it within the ecosystem.
For example, gold miner, Barrick, recently began reprocessing tailings — a by-product of the mining process — at its Golden Sunlight mine in the US to extract greater value. The operation could generate millions in tax revenue for the state of Montana over the next decade, while removing a possible source of pollution.
Collaborating to decarbonize economies
Mining and metals companies can also play an important role in decarbonizing critical metals. Research has shown from Cox et al., at the University of British Columbia that 90% of emissions from mining and metals originate from the manufacturing of iron and steel.
By embracing their potential as influencers, assembling players up and down the value chain and helping other organizations to lower their footprints, mining and metals companies can meet their own climate-change goals, create new jobs and attract younger generations who wish to work in a purposeful sector.
For example, metal solutions provider, Primetals Technologies, recently teamed up with Mitsubishi Corporation, iron-ore miner, Fortescue, and steel maker, voestalpine, to accelerate CO2-neutral steel production by 2050.
Moving from intention to action
To create strategies which support growth and competitiveness over the next decade, companies should take a systemic view of decarbonization, the circular economy, and their interactions with nature. The following steps can be used as a guide:
- Embed ESG goals into enterprise strategy and purpose: This could reduce stakeholder conflict and expedite critical projects.
- Build trust through credible actions: Combat distrust and help eliminate greenwashing by ensuring reported data is relevant and accurate.
- Empower the board: To help guide businesses to a more sustainable future, boards should understand the right questions to ask, and where to find solutions.
- Encourage stakeholder action: Leaders should empower their stakeholders and employees to act through greater involvement, training, and incentives.
- Consider the long-term opportunity: Temporary financial discomfort through investment in change will likely pay off long term as demand for sustainable products and services increases.
- Invest in technologies: Build a portfolio of technologies which can support sustainable systems today and tomorrow.
- Collaborate for systems-level change: System-wide engagement with industry peers could improve accountability and drive rapid behavioral change.
Most importantly, it’s vital that the world acts now to help secure a better tomorrow. As the Deloitte Economics Institute reminds us: “Time is no longer running out to act on climate change; it’s up. If the world acts now to achieve net-zero emissions by mid-century, the transformation of the economy would set the world up for stronger economic growth by 2070.”
