The global mining industry faced a challenge in 2023 that was both unprecedented and familiar. The financial performance of the world’s Top 40 mining companies was squeezed by falling commodity prices and rising costs which resulted in revenues falling more than 7% – this despite increases in the production of key commodities.
And this year promises a continuation of these trends, marking the first time since 2016 that industry revenues will fall for a second consecutive year. A mix of cyclical and structural issues now compels leading miners to invest for growth and transformation even as revenues and profit margins come under pressure.
George Arhin, PwC Ghana and West Africa mining leader, says: “The world’s top mining companies are helping to feed widespread global communities while lighting the way to a low-carbon future and providing materials for infrastructure development and consumer demand. They are a force for good and, to tell their story, mining companies need to measure their impact – both the good and bad.”
Arhin explains that a more accurate and insightful reading on this front has many advantages. “It provides investors with a useful gauge that goes beyond their returns, while capital allocation decisions can be directed where they will have maximum impact and be viewed through the prism of a broader lens,” he says. “On the other hand, other stakeholders – such as communities, unions, and the wider public – will be more informed regarding their views of the industry.”
Andries Rossouw, PwC Africa Energy, Utilities and Resources leader, adds: “In PwC’s newly launched Mine 2024 report, we focus on how the industry is planning for impact by retooling and reimagining itself to be a key contributor to growth. A core component of this means leaning into the vital role it plays in food production, food security and, essentially, how the world feeds itself. It means delving into the potential and challenges of the complementary industry of urban mining – that is recycling. It also means harnessing technology – including the revolutionary implications of AI – to advance productivity, sustainability and safety.”
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.
“On this front, sustainability factors and considerations are key to such transactions,” Rossouw says. “Investors are not interested only in the current bottom line, but want insight into how a company will perform and what it will look like in the future.”
In this vein, mining companies are increasingly forming alliances beyond traditional boundaries as they seek the technical skills they lack – and are also collaborating with governments to create these enabling environments.