Mining the Future

How megatrends will shape

the operating context
Mark Thompson
London School of
Mines

8 June 2016

The megatrends raise fundamental questions about the

future of the mining sector

Do we need a mining industry?

What will we be mining in the future?

What will the mine of the future look like?

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PwCs view on our changing world

We have identified five global megatrends that :
have a major influence on the economic and commercial landscape
permeate all sectors of the economy and society
fundamentally disrupt our industry and the way we do business

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Shift in global economic power

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Slide 6

Rapid urbanisation

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Demographic and social change

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Population imbalance
100

80

60

40

20

Egypt
Ages 14 and under
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Japan
Ages 15 - 64

Ages 65 and over

10

Technological breakthrough

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The sharing economy

Founded in March 2009, Uber has been valued at
an estimated $40bn. In the US alone, 55% of the
population is within 5 minutes of an Uber driver

Change in value since

the introduction of
the iPhone in 2007

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Founded August 2008, valued

higher than the Wyndam,
Hyatt & Intercontinental
hotel chains

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Climate change and resource scarcity

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A more populous, urbanised and prosperous world will

need more food, water and energy
Demands of the global population by 2030, compared to today

Water
40%
more water

35%
more food

Food

Energy
50%
more energy

Source: Global Trends 2030: Alternative Worlds, National Intelligence Council (2012)

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1 Insert Banner

Can we de-couple productivity from resource use?

Mining the Future How megatrends will

shape the operating context

Mark Thompson
PwC

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How will these megatrends

impact the mining sector?

The megatrends are changing demand for metals and

minerals

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May

April

March

Portfolio Decarbonisation Coalition

By December 2015, investors had committed to
decarbonising portfolios worth $600bn.

February

French Energy Transition Law

The draft legislation requires
institutional investors to disclose
climate risks associated with carbonintensive assets and opportunities in
low-carbon assets

January 2016

The Pensions Regulator Guidance

Guidance on Integrated Risk
Management includes reference to
climate change

December 2015

November

October

G7
G7 leaders agree to
phase out fossil fuel
use by end of century

September

August

July

G20
The G20 asks the FSB to
direct a public-private
enquiry into the stranded
asset problem and to
Montral Pledge
model the financial
Launched by PRI - now with 61
investors (including BNP Paribas) implications of a credible
2C target.
signed up committing them to
measuring and publicly disclosing
the carbon footprint

June

May

April

March

February

Bank of England
to examine financial
risks linked to fossil
fuels

January 2015

December 2014

November

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ING, BNP Paribas and Socite Gnral

Rockefeller Fund
Morgan Stanley
Citigroup
ING withdraws from financing new coal power and mining
Selling investments in
Morgan Stanley Closes
Citigroup to invest
projects and avoid financing any new clients generating more
the coal and Canadian
Issuance of Inaugural
$100bn in tackling
than 50% of their business from coal power or mining. BNP
oils sands industries
$500 Million Green
climate change
and SG commit to end financing of coal mine development
and reviewing
Bond
globally and coal-fired power in high income countries.
remaining fossil fuel
AXA
holdings
Deutsche Bank
Bank of
Pledge to sell
Deutsche Bank invests
Morgan Stanley &
America
500m of coal
EUR 1 billion in Green
Wells Fargo
$125 billion
assets.
Bond Portfolio
New commitments to
environmental
cut financing for the
Credit Agricole
business
Nordea Asset
global coal industry.
and Bank of
initiative
Management
MS in both lending &
America
Norways largest fund
underwriting.
No new coal
manager to blacklist 40
mining finance
coal companies

October

MARKET PRESSURE

BANKING SECTOR RESPONSE

Regulators and investors are tackling climate risk

starting with coal

The Pensions Regulator

Guidance
Guidance on investment
governance includes
reference to climate change
French government
To publish a report on climate change
risks by 31 December 2016, placing it
alongside other risks such as credit risk,
counterpart risk and excessive leverage.
Task Force Phase 1 Report
Report presented to the FSB describing
objectives and scope of work of the TCFD

Global Financial Stability Board

FSB Chair Mark Carney launches international Task Force
on Climate-related Financial Disclosures. The taskforce will
recommend how companies can provide effective
disclosures on climate-relative financial risk.

Investors are looking at climate risk to their portfolios

Revenue from mine Millions

Value at risk under different carbon policy scenarios

350
300
250
200
150
100
50

Business as usual

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Scenario 1

Scenario 2

Scenario 3

Scenario 4

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

Scenario 5

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The automotive industry focused on energy and

material efficiency

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Dematerialisation: have we reached peak stuff?

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The essence of the sharing economy is a triumph of access

over ownership
40 million
people use:
40+ million people
watch films on:

You can already listen to all the music you want without
buying a single track.

or watch all the films you want, without ever going to the
cinema.

15,000 UK home owners

now rent out their parking
space on:

You can park your car without a

parking space

In 2013, 810, 000 people

shared a car from:

and travel anywhere in the UK without owning

a car

300,000 spare rooms are available as short

term lets worldwide on.

or go on holiday without the

need for a hotel.

even borrow a Burberry bag to attend formal dinner.

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Social acceptability may impact demand for key

minerals
The Dodd-Frank Act requires SEC registrants
to publically disclose whether their products
contain conflict minerals originating from
Covered Countries in central Africa.

3TG =
tantalum, tin,
tungsten, gold
Covered
countries =
the nine
countries
bordering
DRC

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Can Bitcoin uber the Fed?

Throughout history metal has
been used for money because it
is durable, portable & easily
divisible
In the future, digital money
could be used as it is infinitely
durable, infinitely portable
& infinitely divisible

Gold gets dug out of the

ground, we melt it down, dig
another hole, bury it again and
pay people to stand around
guarding it Anyone watching
from Mars would be scratching
their head. Warren Buffet

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What will the mine of the

future look like?

How will the mine of the future be different?

Fewer employees
Less human
exposure at
production faces
Remote
working,
globally

IT based
workforce

Water neutral

Zero waste

Zero emissions

Carbon neutral

Big data

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Thank you

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