World’s low carbon aspiration requires mining firms to spend $1.7 trillion in next 15 years

THE world’s mining companies needed to invest $1.7 trillion in the next 15 years to help supply metals such as copper, cobalt, and nickel required to help bring about a low carbon world, said Reuters citing a report by Wood Mackenzie, a consultancy.

Public policy was increasingly switching towards the adoption of electric vehicles, storage for power generated from renewables, and electricity transmission. These technologies require industrial materials, such as lightweight aluminium and metals used in batteries such as cobalt and lithium, said Reuters.

However, mining firms were reticent to commit significant capital to growth projects especially given their experience in the supercycle when a race for market share stressed balance sheets when demand dried up.

“At an industry level, there seems to be reticence around investing sufficient capital to develop future supply at the pace and scale demanded by the energy transition (ET),” said Julian Kettle, an analyst for Wood Mackenzie.

Kettle also said governments would have to take into account greater jurisdictional risks that an increase in metal production would incur.

“Given the need to meet tough decarbonisation and ESG targets, Western governments, lenders, investors and consumers will need to get comfortable operating in jurisdictions where ESG issues are more complex,” Kettle said.

Kettle said government support was needed to help miners comply with ESG issues to ensure production from high-risk areas was conducted in an acceptable way to consumers.

“Then, and only then, will the West be able to secure sufficient volumes of the raw materials needed to pursue the energy transition in the timescales envisaged.”

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