Millennials, a battery metals scarcity and automation are just some of the trends that are expected to shape mining in Africa in 2020.
These are just some of the hot topics that will be discussed in detail at this year’s Investing in African Mining Indaba. Here are six key issues the African mining industry will likely come up against in the next 12 months and beyond, as reported by the event.
Getting Millennials to come to the party
In its 2019 trend report, Deloitte’s Tracking the trends 2019: The top 10 issues transforming the future of mining highlighted an issue that many in mining will already be familiar with – the industry is struggling with a perception problem among younger people looking to choose a career path.
This article first appeared in Mining Review Africa Issue 1, 2020
“Right now,” says Deloitte, the mining industry is not attracting sufficient numbers of diverse candidates to truly move the dial on its diversity and inclusion strategies. To shift this balance, companies will need to change their talent attraction and retention policies.”
Out of Deloitte’s 2019 Millennial Survey, results from the South African cohort reflected the desire millennials have to work in fields that create social impact and positive change.
“As miners grapple with the challenge of rebuilding their skill base and developing a workforce capable of bringing the industry along the technology pathway it needs to remain competitive, they must find new ways to motivate their workforce,” says the report.
As we enter 2020, the African mining industry – as well as the industry at a global scale – will continue to grapple with the generational shift of the workforce and understanding how to attract and retain millennial workers.
Tackling youth unemployment in South Africa
“We are very much alive to the fact that youth unemployment is indeed a national crisis,” said South African President Cyril Ramaphosa on National Youth Day in June.
With unemployment rates inching up to 27.6% in the first quarter of 2019, 2020 will be an interesting time to see how President Ramaphosa’s government can use the mining industry to help ease the severe unemployment rates for South Africa’s youth population.
According to Stats SA, almost two-thirds of those who are jobless in South Africa are in the 15-34 age group; around four out of 10 young people do not have a job.
The impending scarcity of battery metals
As the demand for electric vehicles (EV) grows and their rate of manufacturing increases, companies including Tesla say we are likely to face a shortage of the key metals required for EVs and struggle to keep up with this mounting demand.
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From the Democratic Republic of Congo’s (DRC) cobalt supplies to the copper reserves they and Zambia have on offer, it’s no wonder they are being tapped for their battery metals.
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Despite the demand for EVs, investment in the companies carrying out the mining of these battery metals is lagging, with a burgeoning risk of a global shortage in the minerals growing more likely.
Tesla’s global supply manager for battery metals, Sarah Maryssael, as well as carmakers including Ford Motor, Toyota and BMW have said that the auto industry needs to start investing directly in battery metal mines to make sure supplies are secure for the coming three to five years.
To combat the potential scarcity, companies like Ford – which is looking to launch EVs in the coming year – and Samsung and looking at ways to reduce the amount of cobalt used in their rechargeable batteries and make EVs that are more affordable and less at risk of the battery metal shortage.
Brand values matter
Like many of the more traditional sectors, the mining industry has taken a cursory approach to brand and reputation until recently. In 2020, we’ll continue to see the mining industry, particularly the big players, take more of a pointed look at how they are perceived not only by shareholders, but also by wider society.
Richard Haigh, head of mining practice at consultancy Brand Finance, states, “As with many other traditional sectors, the mining industry is having to embrace the global shifts that are taking place, notably the rise of technology, environmental issues and new entrants to the market. In order to combat these shifts, and to ensure brands stay ahead of their competitors, companies within the resources sector are embracing global branding matters.”
In July 2019, BHP CEO, Andrew Mackenzie talked openly at a business breakfast in London about the need for drastic action – beyond carbon pricing – to be taken to combat global warming. “Use of emissions intensive products from the resource industry have contributed significantly to global warming said Mackenzie.
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He announced that BHP was spending $US400m on developing a climate investment programme with the aim to reduce emissions from its own operations and those of its resources. The short-term goal for the company is to cap its 2022 emissions at its levels from 2017, with a longer-term goal to achieve net-zero emissions by 2050.
After the success of BHP’s re-branding and ‘Think Big’ marketing campaign, there’s no doubt we’ll continue to see other brands in the mining industry follow suit to help combat what Mackenzie described as an “indisputable” emerging crisis.
Uncertainty over the DRC
With global risk consultancy Verisk Maplecroft’s 2019 Resource Nationalism Index (RNI) report seeing 30 countries registering a significant increase in resource nationalism metrics last year, the Democratic Republic of Congo (DRC) was one of the more notable on the list.
The RNI measures the risk of expropriation, the imposition of more stringent fiscal regimes, and the pressure for companies to source goods and services from local providers.
For the DRC, its place on the list is most likely a result of the new Mining Code, which allows for more government interventions and oppressive fiscal terms – this could result in the government taking even greater control of natural resources.
With resource nationalism creeping to the forefront in the DRC, investors are being squeezed from all directions. Since the new Mining Code came into place in June 2018, the government has been attempting to block commercial asset transfers, trying to seize operators as a way to get more profit, and preventing exports from a cobalt mine.
As well as the DRC, there are seven other countries with the ‘extreme risk’ rating – Venezuela, Tanzania, Russia, North Korea, Zimbabwe, Swaziland and Papa New Guinea.
Electrification and mine design innovations
In a bid to improve the potential sustainability of their operations and contributions, many mining companies around the world are looking at ways to electrify and/or automate their mines.
While electrification is not exclusive to the African mining industry, it is something that will become more pertinent globally with the potential it offers to reduce the energy costs of mining, as well as making it more sustainable and safer as an industry.
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Whether it involves switching from diesel-powered engines to electric, or hiring workers with stronger data processing and digital literacy skills, the industry is ripe for change.
This is not a change we will see overnight, or come to fruition in 2020, but something that will require a fundamental shift from the industry as a whole, at a global scale. Moving from conventional ways of working to the use of electric equipment will require upskilling, collaboration with equipment manufacturers, and an overall rethinking of how mines are designed.