Executive summary

The world’s top mining companies have an important story to tell. They are helping feed the world while lighting the way to a low-carbon future and providing materials for infrastructure development and consumer demand. They are a force for good, critical to life in the 21st century as we know it. Yet this tale remains largely obscured, hidden from the view of the public and even investors. The industry is often accused of lacking transparency, and it could certainly be more open about its impacts.
Powerful trends are underpinning the demand that miners will need to supply if they are to remain profitable and competitive in a world where the pace of change is accelerating. One vein that the Top 40 mining companies in our report need to tap is urban mining, or recycling. This approach often produces commodities with a significantly reduced environmental footprint, which can command a green premium.
Technology must also be harnessed to maintain and grow productivity throughout the mine life cycle. Mining needs to unlock AI to advance productivity and extend the vast health and safety improvements the industry has already made. And without mining, there would be neither AI nor the game-changing impact the technology will have on other industries and society more widely. The semiconductor chips that AI applications require contain metals such as copper, zinc and gold.
Amid a new and ever-changing landscape, mergers and acquisitions (M&A) remain a crucial strategy for miners that want to maintain their competitive advantage even while the industry grows in new terrain in response to emerging demand. The percentage of completed mining deals involving the Top 40 that were focused on critical minerals rose to 40% in 2023 from 22% in 2019, underlining this seismic shift driving M&A activity. Copper and lithium dominated such deals, accounting for over 70% of them by volume, up marginally from 2022.
While attempting to navigate this changing and challenging field, the Top 40’s financial performance in 2023 was squeezed by falling commodity prices and rising costs. Revenues fell more than 7%, even as production of key commodities rose. But by using the emerging technical tools that are already available, the industry can achieve productivity gains that will contain costs, and, with an eye to an expected rebound in commodity prices, help position mining for the future.
A sustainable industry will be able to fulfil its vital role in providing critical minerals to sustain life. Earth’s endowment of natural resources is finite. There is no better time than now for the Top 40 to maximise their positive long-term impact while sharing gains with all stakeholders.

Demanding times

The global mining industry faced a challenge in 2023 that was at once unprecedented and familiar. The financial performance of the world’s Top 40 mining companies was squeezed by falling commodity prices and rising costs. Revenues fell more than 7%, despite increases in the production of key commodities, and profits shrunk, too; 2024 promises a continuation of these trends, marking the first time since 2016 that industry revenues will fall for a second consecutive year. And a mix of cyclical and structural issues compels leading miners to invest for growth and transformation even as revenues and profit margins come under pressure.

Financial metric are under pressure

Mining occupies a unique role among global industries. The world’s top mining companies are helping feed the world while lighting the path to a low-carbon future and providing materials for infrastructure development and consumer needs. These structural trends underpin the demand that miners will have to meet in a world where the pace of change and disruption is accelerating. As regulatory, economic and societal pressures increase, mining companies are busily reinventing their business models so they can create value in new ways while working more effectively as important players in burgeoning ecosystems.

When the cycle turns

In recent years, the industry has faced pressure to invest in sufficient mining capacity and production to meet the current and expected demand growth for metals supporting the energy transition. But markets aren’t always completely efficient. In 2023, the prices of lithium, copper, nickel and cobalt fell sharply, as portions of the lumpy supply response came on stream while demand growth was temporarily stunted. At the same time, the price of uranium rose—with demand driven by growth in the nuclear industry after a decade of virtually no investment in supply. The spot price of uranium soared from below US$50/lb in 2022 to more than US$100/lb in early 2024. Although commodity prices remain well above pre-covid price levels, inflation adjustments show that only coal and gold significantly exceed 2019 levels in real terms. The drop in prices for coal, lithium, copper and platinum group metals (PGMs) resulted in six companies falling out of the Top 40, while the rally in gold and uranium prices propelled six replacements into it.

Mining’s impact on food security

Mining plays a critical role in global food security and in reducing the impact of agricultural production on the environment, due to its direct link in supplying the raw materials necessary for a wide range of inputs and consumables required in agriculture. Improved crop yields support a reduction in deforestation—currently responsible for 20% of total global greenhouse gas emissions. Of the six core uses in which minerals and metals improve food security, fertiliser is the most important.
Improve food security viz. Fertilisers, Water treatment, Soil improvements, Micronutrient supplements, Pesticides & Herbicides and Animal feed supplements, Fertiliser is the most important.
To grow the agricultural products that feed the 1.9 billion additional people who will live on the planet by 2050, global annual production of phosphorus needs to increase by 55 million tonnes per year (25%) by 2050.

Recycling impact

Covid, restrictive trade policies, increased energy prices, and the Russian invasion of Ukraine have caused fertiliser prices to spike and supply to decline over the past several years. Given the disruptions, there is a greater need to source these minerals from elsewhere. At the same time, reasonably abundant new uses of phosphorus—for example, in lithium-iron-phosphate (LFP) batteries, which account for almost one-third of new electric vehicle (EV) supply—could increase competing demand for the available resources.

The impact of urban mining

Alternative methods can provide only a modest supplement to the supply of phosphorus and potassium. But in other areas, the recycling of minerals at scale is already common, and it’s a key adjunct to traditional mining. Urban mining, also known as recycling or secondary production, has evolved into a sophisticated, multibillion-dollar industry. In certain instances, recycled metals may command a ‘green premium,’ as they appeal to sustainability-minded consumers and industrial users who prioritise environmentally responsible production methods.
In theory, using more recycled materials could reduce the demand for mined materials. But given the rising populations and increasing industrial usage, demand is not a zero-sum game. Urban mining presents significant opportunities for traditional mining companies as they reinvent their business models and find new methods of value creation in the broader ecosystem (see chart, below). As regulatory requirements tighten, investing in circular economies will be key in achieving success.

Recycling offers the prospect of a more circular–and sustainable–mining value chain

Advantages in the recycling loop are indicated by a + sign. Disadvantages are shown by a – sign.

AI and mining: A mutually reinforcing relationship

AI systems depend on minerals and metals in several critical ways. Semiconductor chips are made from silicon, and they also contain such metals as copper, gold, tin, nickel, palladium and silver. Storage devices rely on metals such as platinum, palladium, and gold for their magnetic and conductive properties. Data centre facilities use vast amounts of metal in their construction. The demand for AI is contributing to an increased need for these metals. At the same time, integrating AI into urban mining will allow the industry to achieve higher efficiency, better material recovery rates, reduced costs and a lower environmental impact.
26% Proportion of platinum group metal (PGM) production that’s recycled today. In 2000, it was less than 5%.

Lithium expansion

Lithium producers are underrepresented in the Top 40, because they are often classified as chemical companies as a result of the focus on processing in the value chain. Given lithium’s critical role in the energy transition, we aggregated the publicly available financial statements from ten leading lithium miners. The steady production growth did not always translate into revenue growth, owing to volatile prices. Lithium investments are generally less capital intensive and have shorter repayment periods. The expected growth in lithium demand incentivizes significant growth in investment.

The productivity imperative

Urban mining is one of several key pillars in promoting productivity for the industry. But miners are caught between the pincers of two powerful trends. As noted, commodity prices have been falling. At the same time, in the last five years, mining production costs have increased by nearly 30%, making it urgent for companies to invest in cost-saving technology. In today’s increasingly complex mining landscape, expanding commitments to sustainability, rising production costs, declining ore grades, more dispersed reserves and a shortage of technology-savvy talent are all contributing to the imperative for the Top 40 mining companies to focus on productivity.
Over the past 20 years, through cycles of growth and retrenchment, the mining industry has been on a journey to improve productivity (see timeline, above). Looking ahead, miners have identified clear opportunities to enhance productivity while mitigating risks and maximising the positive impact in their business by leveraging technology, fostering innovation and adopting new ways of working. The World Economic Forum reports forecasts from technology solutions providers and business intelligence suppliers that the total internet of things (IOT) market and potential incremental value of technological advances in mining will be worth billions in US dollars by 2030. Progress can be seen in a range of activities:
In processes ranging from exploration to extraction, as well as in transportation and in management of key resources (e.g., energy and water), miners are thoroughly reviewing and optimising production and operation. In Chile, at the world’s largest copper mine, Escondida, BHP and Microsoft are collaborating. Using real- time data from concentrator plants and recommendations based on Microsoft’s Azure platform, concentrator operators at Escondida can adjust operating variables to improve ore processing and grade recovery. Freeport-McMoRan has made investments in artificial intelligence and data analytics to maximise copper extraction under the Americas’ Concentrator initiative, starting in Bagdad, Arizona, and expanding to other operations in the region.
With operations in remote areas, companies often face the prospect of interruption in power supplies even as they strive to decarbonise. Anglo American entered into a partnership in 2022 with EDF Renewables to develop a regional renewable energy ecosystem in South Africa, a country stricken by electricity shortages. Envusa Energy, the jointly owned company they formed, plans to develop at least 500 megawatts of solar and wind capacity, and has ambitions to increase capacity to three to five gigawatts by 2030.

With operations in remote areas, companies
often face the prospect of interruption in power supplies even as they strive to decarbonise. Anglo American
entered into a partnership in 2022 with EDF Renewables to develop a regional renewable energy ecosystem
in South Africa, a country stricken by electricity shortages. Envusa Energy, the jointly owned company they
formed, plans to develop at least 500 megawatts of solar and wind capacity, and has ambitions to increase
capacity to three to five gigawatts by 2030.
Chalcopyrite and low-grade primary sulphates pose challenges to the efficiency of copper mining. And the presence of clays and impurities in main orebodies affects productivity, owing to operational constraints. In 2023, BHP’s venture arm invested in Ceibo, a start-up that is developing a revolutionary process to leach low-grade primary copper sulphides.
Automation, robotics and advanced control systems can be fully integrated to enhance efficiency in mineral extraction and processing. Autonomous mining is on the rise, and such trucks and equipment are operating more safely with less human intervention. First Quantum Minerals utilises IOT technology for energy efficiency and process optimisation, and Barrick Gold is using predictive tools for gold production planning.
Health, safety and environment management systems enable proactive monitoring and managing of workplace safety. Ivanhoe Mines and Zijin Mining Group are using virtual reality and simulator training to provide accelerated opportunities for upskilling the local workforce at the Kamoa-Kakula copper mine in the Democratic Republic of Congo.

Sustainability

Sustainability considerations have been a pivotal element in transaction decisions. In their quest to decarbonise, mining companies are investing in renewable energy projects. Such projects bolster their sustainability profiles and help them gain greater control over one of their most significant operational costs.
Rio Tinto recently finalised the US$700 million acquisition of a 50% stake in the Giampaolo Group’s Matalco recycled aluminium business, with an aim of meeting increasing demand for low-carbon aluminium, a key material in the energy transition.
In March 2024, Vale moved to acquire the 45% of Aliança Energia shares that it didn’t already own, for approximately US$540 million. The deal brings hydroelectric and wind generation assets into Vale’s portfolio, strategically aligning the company’s investments with its environmental, social and governance (ESG) objectives.
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