A capital investment of $5.4 trillion will be required to sustain and expand global mining and processing facilities, nearly the equivalent of the combined GDP of Japan and Spain, stated Ali Al-Mutairi, executive director of the Future Minerals Forum (FMF) recently.
This came in the latest Future Minerals Forum Report: Shaping the Future of Minerals which offers critical insights into creating shared value across the mining ecosystem. The report also provides authoritative content that tackles the tough issues facing the supply of minerals and aims to spark debate on the way forward at the forum in January 2025.
Capital flows shift to emerging markets
In the Future Minerals Forum report, experts explored the contribution of minerals to society, the value proposition of the sector for supplier countries, resource depletion, and the need for significant investment to achieve development and the energy transition.
According to the report, capital investment needs have risen by $500 billion compared to the previous decade to sustain and expand mining and processing facilities. The report also reveals that over 70 percent of this capital will need to go to coal, iron ore, copper, and gold, with roughly 75 percent of it going to sustaining existing assets. The steel value chain alone will also require about $1.6 trillion in sustaining capital expenditure.
For some critical minerals, the mining phase generates the most value for countries. For example, 70 percent of the value generated from cobalt is in mining compared to 68 percent for graphite and 54 percent for lithium.
The Future Minerals Forum report also revealed that regions like Asia Pacific, India, Latin America and Sub-Saharan Africa will require over 40 percent of total capital investment, reflecting a shift in capital flows to emerging markets. In addition, the production of cathode materials, battery cells and battery recycling could produce around $800 billion in annual revenue by 2040.
Key policies for value addition
The Future Minerals Forum report also highlights the importance of GDP growth, job creation and export enhancement policies as essential for countries aiming to boost value addition in the minerals industry.
“Value addition can provide countries with a range of well-known benefits: increased GDP, more fiscal revenue from a larger tax base, increased export earnings from higher-value products, and creation of direct and indirect jobs. But countries cannot afford to proceed blindly. Their plans have to take into account the real market dynamics, costs and benefits if they want to compete for investment and actually realize value,” stated Patrick Barnes, head of metals and mining consulting at Wood Mackenzie.
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Prioritizing shared prosperity
To date, the minerals industry has not prioritized shared prosperity effectively, resulting in a breakdown of trust between governments and local communities, explained Peter Bryant, co-founder and board chair of Development Partner Institute and board chair of Clareo.
However, the industry is at a turning point. Companies are taking on the responsibility of creating shared value and collaborating with new partners at a deeper level. Bryant added that the government plays a key role in creating shared value by providing the springboards to investment and not being overly prescriptive.
For his part, Dr. Michelle Michot Foss, fellow in energy and minerals, Baker Institute, Rice University, also emphasized the role of government in building shared value. “While the mining industry can do much to help build and boost local and regional benefits, responsibilities lie with government jurisdictions to ensure that benefits linked to economic rents – revenue streams from taxes and royalties – are allocated in ways that build trust,” he stated.
In his comments ahead of the Future Minerals Forum, Global AI Corporation CEO Richard Rothenberg said that as the demand for critical minerals continues to grow, policymakers and investors should prioritize sustainable practices, community engagement and transparent governance to ensure long-term success and positive public perception.
Riyadh will host the fourth edition of the Future Minerals Forum (FMF) from January 14 to 16, 2025, under the theme “Delivering Impact”, with the participation of high-level officials representing governments, mining companies, financial institutions, research centers, and universities.
