There remain opportunities in the market, particularly in nickel and lithium and industries focussed on the clean energy transition. One executive predicted the clean energy transition would likely fuel mergers and acquisitions activity in the copper sector. Electrical vehicles require four times as much copper as comparable models using internal combustion engines, and copper is also used in renewable energy infrastructure and energy storage systems. A high profile example of increased activity in the copper industry already occurring is BHP's attempted takeover bid for Anglo-American. Read more about key lessons from this and other failed M&A deals in our 2024 M&A Meltdowns report.
Equity fundraising is heavily dependent on share price and therefore on the underlying commodity prices of the business involved. For many commodities, the current subdued pricing means that equity fundraising is not on the radar.
Executives working for explorers noted that it was still a challenge to raise funds, largely because of the risks involved and the length of time before there is a return on the investment. This is exacerbated by the delays in obtaining approvals.
The importance of ESG
There was a clear sense that ESG was no longer a 'nice to have' and that these issues are being taken seriously by the sector. ESG issues were variously described as "non-negotiable and a priority consideration", "critical", "more and more important", and "good for everyone in the world".
Often, executives remarked that ESG issues had a direct financial impact on their companies. This could be in the form of, for example, attracting and retaining top talent, attracting capital from large funds, and cost savings (e.g., using renewable energy sources to reduce energy costs).
Some executives cautioned that ESG issues should not fall back in boards' priorities in a more depressed economic environment. They emphasised the importance of setting realistic ESG expectations and targets so they would not be the first areas to be cut back if harder times were to hit.
There were also notes of caution about the use of renewable energy in mining projects, both in relation to establishing it and the amount of power it was capable of generating.
How AI is impacting mining
Some executives were already integrating AI into their company's operations. One executive noted that his company used "intelligent CCTV" to monitor operations and reduce risk.
Most executives did not currently use AI in their companies but saw the opportunities for the mining sector and economy generally. "AI is about the most transformative thing that will hit society in the next 36 months", one executive commented. A few executives foresaw that AI could be used to interpret geological data or land forms in the search for minerals and other resources, with obvious cost saving consequences. Another executive predicted that AI could be used to anticipate (and therefore avoid) safety incidents.
In mine planning the ability to optimise pattern recognition is such a big thing. When you look at geology, a lot of it is assumptions. Using AI to start to work on that is really significant and that's been something which the exploration industry has been trying to do for decades. I think AI will take that to a new level”
Mining Executive
Interestingly, one executive saw the growth of AI as a specific revenue opportunity for his company, a uranium producer. He noted that AI software required an incredible amount of power, and that it had been estimated that an AI search used ten times more power than a Google search. In this context, he noted that Amazon had recently purchased a nuclear-powered data centre and that Google and Microsoft had similarly expressed an interest to "go nuclear" with their data centres.
The outlook and clean energy transition
Despite their concerns, overall, executives were positive about the outlook for the mining sector. As one executive put it, "Aussies are good miners. We always see through adversity. We are ever optimistic."
On commodities, gold was seen as the star performer due to geopolitical issues, although one executive thought it might suffer if crypto-currency also became a safe haven. Iron ore was recognised to be remaining strong although unlikely to hit previous peaks as global supply improved. Critical minerals were seen as being in a slump presently, generally volatile but over the long term, bound to improve because of the underlying fundamentals. Copper was seen to be in high demand and likely to remain strong over the long term, although the cost of extracting copper in Australia is high. Uranium also raised comments. There was a consensus that it was likely to improve but there were no strong predications as to when and how much. Politics would obviously play a big part in this.
Executives were excited about the opportunities presented by the clean energy transition. Indeed, one compared this to the transition that occurred at the turn of the 20th century, when the world moved from horses and carts to internal combustion engines.
In short, mining investment has steadily increased over the last four years and the sentiment was that the world's demand for commodities was not going to reduce. Prices might fluctuate but the market as a whole was sound and would remain that way.