The Mining, Quarrying, and Oil and Gas Extraction sector comprises establishments that extract naturally occurring mineral solids, such as coal and ores; liquid minerals, such as crude petroleum; and gases, such as natural gas. The term mining is used broadly to include quarrying, well operations, beneficiation (e.g., crushing, screening, washing, and flotation), and other preparation activities performed at the mine site or as part of mining operations.
The outlook is promising for the world’s top miners. As a group, they have increased production, boosted cash flow, paid down debt, and provided near-record returns to shareholders. Moreover, there was still sufficient cash flow to increase capital expenditures for the first time in five years—all while delivering significant value to stakeholders and supplying the raw materials essential for global economic growth. Dividends to shareholders are at an all-time high, and balance sheets remain strong. However, trade wars, geopolitical crises, and climate change continue to contribute to industry volatility. Technology is poised to become as essential as oxygen for the industrial manufacturing sector.
Trends:
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High demand for minerals to support the energy transition
While fossil fuels have played a crucial role in improving global living standards since the 18th century, their associated greenhouse gas emissions have contributed to global warming. Because low-emission energy and transportation systems require more minerals than their fossil fuel-based counterparts, this transition presents a significant opportunity for the mining sector.
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Companies will need to explore frontier mining areas
As world-class mineral resources in low-risk regions become depleted, mining companies must either master new extraction and processing technologies or venture into frontier areas where extraction has previously been economically unfeasible. Automation and digitalization will enable more targeted and efficient mining, and technological breakthroughs could further enhance these processes.
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New financing and production models will become more prevalent as companies seek to limit risk
After China's demand for resources triggered a commodity boom in the early 21st century, prices collapsed, forcing mining companies to focus on reducing debt and strengthening their balance sheets. Alternative financing solutions, such as royalty and metal stream agreements, were developed to ease financial burdens. These financing solutions are likely to continue growing, helping companies mitigate the risks of capital-intensive projects. Additionally, mining companies may increasingly adopt joint ventures—similar to those in the oil and gas sector—to spread risk across projects and jurisdictions.
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Delivering tangible benefits to local communities will be crucial for new projects
Securing a "license to operate" from local communities has been a persistent challenge for the mining industry. Many proposed projects have been rejected, and protests have disrupted operations. Ensuring that local communities benefit from mining projects will be key to their success.
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Data transparency will improve stakeholder relations
As mining companies digitalize and automate their operations, collecting and analyzing vast amounts of data will become essential. Transparency in data reporting will help build trust with stakeholders.
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Workforce transformation will require open dialogue
As mining companies embrace new technologies and business models, employees will need to acquire new skills. The industry will face increasing competition from the IT sector in attracting top talent from universities to drive digitalization and automation efforts. Governments and companies must collaborate to retrain and transition workers who cannot be absorbed by an increasingly automated mining sector.
