INSIGHT
of nations and businesses are looking to circularity as a
viable pivot.
This requires companies and economies to completely re-engineer
their value and supply chains in accordance with a circular
economic model that keeps resources in use for as long as possible
by taking end-of-life products and pushing them back into the
economy to build economic, natural and social capital.
While certain nations and various industry verticals such as the
consumer goods, retail and automotive sectors have emerged
as first movers in this regard, greater urgency is required within
industries that are most vulnerable to this disruption.
A recently-released Accenture report titled Mining New Value from
the Circular Economy, highlights the major challenges facing global
mining and metals companies in this context.
Safeguard market share
As economies seek to tap into the USD4.5-trillion opportunity
from eliminating waste through the circular economy, established
mining and metals companies need to safeguard their market
share while also tapping into a rich new value source.
A failure to get to grips with the circular economy puts mining
and metals companies at risk because companies further down
the materials supply chain that embrace circular models are
increasingly driving downstream innovation in the extraction and
use of precious metals and recycled materials.
Manufacturers, for example, are getting better at recovering
their investment in natural resources in ‘closed-loop’ cycles, while
these new circular business models are disrupting historical links
between ownership and sales growth.
For instance, ride-sharing models are changing the automotive
sector. By 2035, passenger vehicles in use globally may be 25%
less than historical models initially suggested, which would
significantly reduce primary demand for the metals and other
resources used in the vehicle production process.
Furthermore, as waste and material losses are eliminated over time,
for example, as we move to additive manufacturing, the knock-on
effect on primary demand will likely rise in significance.
And these tectonic shifts are happening against the backdrop of
potentially slowing demand for many metals as economies move
to a post-industrial model. China, for instance, is pivoting from
infrastructure and manufacturing toward services and consumer
spending. Some emerging economies may leapfrog the resource-
intensive stage of industrialisation altogether. Consequently, we’ll
likely reach peak demand for steel earlier than past trajectories of
the mature economies’ development paths would suggest.
Despite the urgent need to adapt, examples of circular innovation
are comparatively scarce in the mining and metals sectors. Industry
attention to date has largely focused on the circular economy as
a route to operational efficiency, in the form of recycling water or
monetising waste streams such as slag or used tyres, as examples.
However, mining and metal companies are not always well
positioned to monetise the recycling flow. As such, the bigger
question – and opportunity – of how to drive value from changing
market demand, remains largely untapped.
Mining and metals companies must, therefore, adapt fast and
embrace change to transition to a circular economic model if they
hope to remain relevant.
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By taking the right steps today, mining and metals companies
can reposition for success by building long-term resilience and
generating new sustainable business and economic opportunities,
while also creating environmental and societal benefits.
For example, new opportunities will likely emerge from demand
for a wide range of base and precious metals required in the new
technologies that define the fourth industrial revolution. According
to the World Bank, the transition to a low-carbon economy will also
see increased demand for these commodities as countries shift to
clean energy production and storage.
Mining and metals companies must, therefore, determine where
best to focus in this shifting marketplace and how best to take
advantage of both the circular economy and clean-tech trends.
In response, mining and metals companies must reposition
operations and act fast to keep pace with the growing cohort
of innovative first-mover industry front-runners and the
downstream disruptors.
In this regard, these industry players must review their portfolios
to assess where the risks of decreased demand or substitution
loom largest, understand which materials can be recovered most
effectively, and where new downstream circular business models
could present threats or opportunities.
These companies must then reimagine their business models
to accelerate their transition to the circular economy. According
to the Accenture report, this three-step process offers an
advantageous starting point:
1. Develop circular operations
Start by accelerating circular initiatives across mining and
metals operations by partnering with suppliers to extend
the life of capital equipment through real-time monitoring,
analytics and predictive maintenance; selling production
waste to other industries; and sharing ownership of heavy-
duty equipment with low utilisation rates.
2. Innovate new circular products and services
Engage with downstream material users to co-create
innovative circular products and services. These models might
include leasing materials, enabled by advanced track-and-
trace systems; supporting customer product certification
to enable reuse and easy remanufacturing; or improving
processes for scrap recovery, reprocessing and reuse.
3. Collaborate with customers and build a circular partners’
ecosystem
By proactively collaborating up and down supply chains,
mining and metals companies can create industry momentum
by working to create favourable regulatory regimes for
improved circularity; establishing cross-industry partnerships
to develop the mining and metals roadmap to extend product
life and retain ownership; and developing cross-industry
standards to validate the integrity of products or materials for
end-of-life take-back and repurposing.
With the mining and metals sector poised for epic disruption,
companies in this sector can no longer afford to be followers.
Those that embrace the circular economy at speed can take the
lead and reshape the future of the industry on their terms, with
the potential to build closed-loop systems, lock-in downstream
ecosystems and drive sustainable value, competitive advantage
and future growth.
By Dr Gargi Mishra is the senior mining innovation principal for
Accenture in Africa.
African Mining
African Mining October 2019
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