Recently, the renowned accounting firm Deloitte released “2022 Mining Trends Tracker,” a report that outlines 10 key trends in the mining industry’s development for 2022.

Trend 1: Incorporating ESG into capital allocation considerations.

　　Over the past five years, several mining companies have set ambitious decarbonization targets. For these companies, the current challenge lies in identifying the best approach to achieving those targets. Businesses are adopting strategies to prioritize different projects and allocate capital expenditures across their assets, aiming to either secure or solidify their competitive advantages over the next decade. It’s entirely reasonable that many companies are proceeding with caution.

　　As global giants consider their next steps, the mid-market is catching up fast. Many mid-market players have now set net-zero emissions targets and are planning initiatives to be implemented in both the short and long term. Mid-market players will need to act more swiftly than their early adopters to keep pace with stakeholders’ and markets’ rapidly rising expectations regarding environmental, social, and governance (ESG) performance.

　　Addressing climate change and decarbonization is an urgent priority. Therefore, companies must urgently take a comprehensive approach and ensure that their capital allocation decisions reflect their ESG commitments. By establishing strategically sound, value-creating, resilient, and sustainable businesses, plans, and projects, companies can minimize risks in the face of significant future uncertainties and enhance the overall value of their equity holdings over time.

　　Trend 2: Reconstructing the Traditional Value Chain

　　As the green energy transition gains momentum, calls for greater accountability and transparency in metal supply are growing louder, driving the industry to restructure its value chains, realign investment portfolios, and foster the creation of entirely new business models. Although shifts in demand from consumers, suppliers, and investors are partly responsible for this disruption, it is also expected that shortages of green and critical minerals will have a significant impact.

　　Looking ahead, mining and metals companies should also consider the impact of their operations and products across the entire value chain—and how this impact will evolve as we transition from a linear to a circular economic model. Successfully integrating circular practices such as metal reprocessing, recycling, or urban mining into their portfolios may require mining companies to develop new capabilities and skills that differ from their existing business models. The key question is: How much value do investors believe these transformations will deliver?

　　We’ve found that the traditional value chain is being restructured in some intriguing ways—through portfolio realignments, new types of alliances being forged, new entrants into the value chain, and entirely new circular business models currently being developed.

　　Trend 3: Operating in the New Supercycle

In 2021, commodity prices in the mining and metals industry surged, signaling the potential onset of a new supercycle. By June 2021, metal prices had risen by 72% compared to pre-pandemic levels, with prices of many metals—including aluminum, copper, iron ore, and nickel—reaching multi-year highs in the third quarter. Driven by the transition toward green energy, demand for critical metals remains strong, prompting some analysts to predict the arrival of a new supercycle—a cycle during which commodity prices are expected to rise at a faster pace than the long-term (10- to 35-year) trend.

　　This is good news for mining companies, but it also presents certain challenges. As cyclical prices rise, governments are demanding a larger share of mineral resources. As many countries begin to recover from the economic downturn caused by the pandemic, the mining industry has formulated and implemented a series of regulatory measures—and various forms of resource nationalism—targeting the period from 2020 to 2021.

　　Resource nationalism takes various forms—some are obvious, while others are more subtle. Traditional measures include the expropriation and nationalization of strategic assets, as well as state intervention in business operations through the review of pre-agreed terms and the introduction of new tax regimes.

　　Trend 4: Companies Embracing ESG Principles

　　Mining and metals companies are facing mounting pressure: they not only need to meet environmental compliance requirements but also make high-level commitments in the public sphere on environmental, social, and governance (ESG) issues that will shape the future of the industry.

　　Although commitments to goals and standards on issues such as climate change or tailings management often stem from well-intentioned visions, companies will find it extremely difficult to make meaningful progress toward these goals and standards without having appropriate internal structures in place. When questioned by investors and rating agencies about how they are fulfilling their commitments—from the boardroom all the way to the mine site—companies may also face the risk of being unable to substantiate their claims.

　　To turn commitments into action, mining and metals companies must establish new functions to identify, address, and manage ESG-related opportunities, challenges, and risks. In practice, this requires developing operational models that enhance visibility, accountability, and collaboration across departments, as well as establishing clear governance structures. To ensure that ESG commitments are properly implemented at the operational level, information must flow freely throughout the company’s organizational structure. Leaders must be able to take a holistic view of the business, verify that their publicly stated commitments are understood, and ensure that these commitments are reflected in day-to-day business practices. As ESG principles begin to permeate corporate strategy, they should also be integrated into the company’s functional strategies and plans, as well as into the specific functions of each department.

　　Trend 5: The operating environment for the mining industry is constantly evolving.

　　Like many industries, the mining sector has been profoundly affected by the COVID-19 pandemic. Over the past several months, a large number of employees have resigned during the “Great Resignation,” seeking opportunities that better meet their needs and aspirations. This has placed additional pressure on companies, compelling them to step up their recruitment and retention efforts, reassess their value propositions for employees, and transform their working methods.

　　Digitalization and remote work have driven a fundamental shift in how employees approach their work. Faced with an increasingly competitive labor market, mining and metals companies need to position themselves as attractive organizations and employers to align with evolving top priorities.

　　For decades, mining companies have been grappling with a shortage of skilled talent. However, challenges such as the COVID-19 pandemic have only exacerbated this issue. If mining companies fail to continuously evolve in alignment with two key societal imperatives—adapting to the green energy transition and enhancing diversity, equity, and inclusion in the workplace—they will be unable to fully unlock the potential of their human capital.

　　In the future of work, human potential will be closely intertwined with technology. By intentionally designing new innovations that focus on optimizing the connection between humans and work-related technologies, organizations can reshape work to create sustainable value. As the mining industry enters a “new normal,” leaders are facing ever-increasing pressure to avoid reverting to traditional ways of working. To achieve this transformation, leaders must develop entirely new business models, challenge conventional definitions of productivity, foster a culture of trust, replace hierarchical management with empowered collaboration, and effectively manage the cultural and communication aspects associated with long-term remote work.

　　Trend 6: A New Paradigm for Building Relationships with Indigenous Peoples will be established.

　　Public attention to indigenous rights and the various relationships that corporate entities establish with traditional landowners continues to grow. Mining companies are facing multifaceted pressures to rethink their strategies and lay the foundation for future relationships, thereby achieving shared economic and social prosperity.

　　Today, indigenous communities around the world clearly no longer wish to be positioned merely as stakeholders in transactional relationships; rather, they seek to establish a new kind of connection and understanding of environmental responsibility with all entities that are integrated into their environments—including mining companies.

　　It is precisely because of this connection to the land that, in recent years, indigenous participation has been integrated into mining companies’ environmental, social, and governance (ESG) agendas. While strengthening collaboration with indigenous communities offers numerous opportunities in this regard, it is crucial to explore how enhancing these foundational relationships can benefit all functional areas within mining companies and how ESG strategies can better serve traditional landowners.

　　Looking ahead, the mining industry has tremendous potential to collaborate closely with indigenous peoples in various countries to advance its business strategies and objectives—particularly in areas rich in major mineral deposits. However, before this can be realized, it is essential to establish a new paradigm for indigenous participation in the mining sector.

　　Trend 7: Continue to develop into innovative enterprises.

　　Innovation is a recurring theme in “Trend Tracking.” For a long time, this issue has been on the agenda of mining companies; yet for most companies, integrating the innovation process with their core business functions and operations remains a significant challenge. Fundamentally, this is because traditional mining companies and their process designs are geared toward maintaining stability rather than embracing change and reaping its benefits.

　　So, why is this issue being raised now? Recently, several factors have converged to encourage executives to embrace innovation and support their companies in fostering it: The COVID-19 pandemic has driven the global adoption of digital and remote working practices, fundamentally transforming the business world; if mining companies are to achieve their decarbonization goals, they must innovate within their core processes; and with commodity prices soaring and the industry benefiting from a supercycle, investing in innovation has become even easier.

　　Therefore, innovation in the mining industry often focuses on equipment or technology, and equipment or technology innovation projects take time to bear fruit. However, it’s important to note that this alone is far from sufficient; we also need to drive innovation through innovative processes, policies, or institutional frameworks in order to boost efficiency more rapidly and achieve innovation goals more effectively.

　　Trend 8: Unlocking Value Through Integrated Operations

　　Mining and metals companies are committed to driving greater awareness and efficiency across their organizations. Digital transformation has contributed to this by enabling real-time visibility from mine sites all the way to markets; however, many mining companies still fail to reap the benefits of digitalization.

　　The reason for the above-mentioned situation is that companies typically focus too much on technology itself, while paying insufficient attention to how enterprises interact with technology and leverage it to drive effective, integrated decision-making—thereby optimizing the entire system rather than just individual functions.

　　To enhance the company’s overall efficiency and unlock value, we must next leverage the insights mentioned above to transform decision-making processes at all levels. Initiatives that benefit the entire enterprise—rather than just specific departments or functional units—will enable the company to become more agile in responding to changes in operational and business environments and will create greater value.

　　The current heightened focus on environmental, social, and governance (ESG) initiatives is placing greater pressure on businesses to ensure that they not only manage their own operational environment but also address social and regulatory challenges. This calls for companies to proactively adopt corresponding measures and empower their employees to make relevant decisions.

　　For traditional business structures, this poses certain challenges for two main reasons. First, many roles lack the appropriate authority. For example, even if an operator responsible for the real-time execution of processes identifies that their product is likely to have a negative impact on community sentiment downstream in the value chain—and knows how to address this situation—often, the power to make relevant decisions still rests with leaders at level three or four and above within the company. Second, there’s a lack of emphasis; companies typically do not incorporate qualitative metrics into their operational decision-making processes.

　　In both of the above cases, it is essential to restructure the business architecture to support decision-making that is more comprehensively beneficial to the enterprise.

　　Trend 9: Addressing Vulnerabilities in Information Technology and Operational Technology

　　Over the past five years, as the integration of digitalization in mining, information technology (IT), and operational technology (OT) has accelerated, along with the consolidation of value chains, mining efficiency has reached new heights, mining companies have reduced costs, and exciting new business opportunities have emerged. However, these opportunities also come with risks: for many companies, security measures have failed to keep pace with digital transformation, and the gap between risks and control measures continues to widen.

　　According to data from computer security firm McAfee, global cybercrime currently causes losses exceeding one trillion U.S. dollars, with monetary losses amounting to 954 billion U.S. dollars. In recent years, higher metal prices and the strategic importance of certain metals have drawn the attention of criminals to the mining sector. As a result, many companies—including metal producers and mining equipment, technology, and services (METS) firms—have found themselves falling victim to security breaches.

　　Mining companies have historically placed great emphasis on safeguarding the data and system security of functional departments such as finance and human resources, but they have paid insufficient attention to on-site safety in mining areas. However, the level of integration between information technology and operational technology is steadily increasing, and the number of connected devices has grown significantly compared to the past—yet in some cases, adequate security due diligence has not been conducted. As a result, the industry is now facing several cyber vulnerabilities related to operational technology, industrial control systems (ICS), and the industrial Internet of Things (IIoT).

　　Trend 10: Be Operationally Prepared to Tackle Climate Change

　　So far, although decarbonization has been the primary focus for most mining companies in terms of meeting climate change-related goals and attracting investments, mitigation efforts have fallen significantly short. In addition to these initiatives, companies also need to adopt a forward-looking mindset and build climate-change resilience into their business and operations.

　　The physical risks posed by climate change may be driven by events (acute) or by long-term shifts in climate patterns (chronic). Both types of risks can have economic impacts on businesses, including direct losses to assets as well as indirect effects stemming from supply-chain disruptions.

　　Some Tier-1 companies have already begun taking the above-mentioned steps, using UN climate models and digital risk management tools to quantify both physical risks and transition risks associated with new and existing mines. In some cases, these measures have even extended to identifying the risk profiles of suppliers. However, for most mid- and junior-level mining companies—especially those located in geographic regions where climate impacts have so far been limited—this remains an uncharted territory.

　　However, as time goes on, the impacts of climate change will affect businesses across all industries—regardless of their size or stage of development. Today, the transparency and integration within mining supply chains mean that companies have the opportunity not only to prepare their own operations but also to help suppliers and customers brace for any operational impacts that climate change may bring. (Deloitte)