Energy Outlook 2025: Mining and Minerals

Over the next year, the mining sector is poised to encounter both significant opportunities and challenges. We anticipate a continued rise in merger and acquisition (M&A) activity, leading to greater consolidation across supply chains.

This trend is partly driven by the growing recognition among mining companies of the need to invest in greenfield projects to meet the increasing demand for critical minerals. However, as these minerals are increasingly seen as materials of national significance and security by home nations, private business investments may face interruptions and constraints. Additionally, we believe that the integration of autonomous machinery and blockchain technologies will begin to modernise mining operations, enhancing transparency, efficiency, reliability, and safety.

M&A activity in the mining sector

There has been a sharp uptick in consolidation in the mining sector, with billion-dollar deals in the gold, lithium, copper and nickel sectors. A large aspect of the increase in M&A activity is strategic alignment of asset portfolios as investment markets recognised that the global energy transition needs more critical minerals. As a result, miners need to invest, through exploration or acquisitions, in new greenfield projects to meet growing demand. This demonstrates a shift away from the previous focus on operational efficiency. A snapshot of the latest deals include Anglogold Ashanti’s USD2.5 billion offer for UK-listed Centamin in September 2024, Rio Tinto’s acquisition of Arcaadium Lithium (which was formed last year by the merger of Allkem and Livent in an all-share) for USD6.7billion, as well as Livent’s USD10.6 billion acquisition of Australian lithium producer Allkem, creating one of the world’s largest lithium companies in early 2024. The increase in activity has been global and inter-continental, from Australia to the South Americas, and entails a host of considerations such as working in new regulatory environments, obtaining permits, and finding the correct personnel to execute projects. Another aspect of increased M&A activity is that consolidation allows for better financing deals to be struck as companies leverage their size to negotiate better rates as inflationary pressures, though declining, still put miners under pressure.

Critical minerals — continued focus on resource nationalism

Amidst a continued turbulent geopolitical background, governments globally continue to focus on the need for domestic supplies of materials, in particular critical raw materials such as copper, lithium, nickel and rare earth elements, amongst others. These are broadly considered to be crucial to the green energy transition and are critical to facilitate the manufacture of many fast-growing sources of energy such as wind turbines, electric vehicles and battery power.

1. The Western legislative agenda

This is reflected in a broad legislative agenda regionally and nationally amongst western countries, who have been trying to secure access to critical raw materials through limiting or conditioning mineral exports.

For example, the EU’s Critical Raw Materials Act (CRMA) entered into force in mid-2024 which sought to maintain and establish supply as well as consumption of a list of designated critical materials, which is subject to periodic review. The CMRA sets ambitious future targets, aiming that by 2030, 10% of the EU’s annual material consumption must be mined domestically, with 40% to be processed domestically, and that at least 25% of the EU’s annual consumption comes from domestic recycling, among other objectives. This is achieved through so-called Strategic Projects which, if they pass sustainability criteria, will allow for less red tape and may benefit from state support. Mining companies will welcome this fast-tracking approach to reduce the burden of red tape. However, these lofty goals are more likely to be achieved in some areas (such as recycling or supply diversification) over extraction or processing targets for certain critical materials.

The UK’s Critical Minerals Strategy, which was first published and refreshed in 2022-2023 under the previous Conservative government, also compiled a similar list of designated critical minerals. This strategy aims to secure supply chains of critical minerals through boosting domestic capabilities through the entire critical minerals supply chain, including through recycling and boosting domestic production. However, some have argued that the UK’s framework is too little, too late, with lack of clarity around process and direction, and relatively small funds committed to projects in reality. Perhaps with the change of government which has campaigned on its commitment to net zero and has in the past recognised the role of critical minerals in achieving it, this strategy may yet move in a more committed direction.

In mid-2023, Australia’s federal government also announced a Critical Minerals Strategy for 2023 – 2030 after extensive public consultation. Australia is an already important force in the mining industry and in the extraction of critical materials such as rare earth elements, tungsten and lithium. This strategy lists 26 critical minerals and provides for a dedicated A$500 million Northern Australia Infrastructure Facility (NAIF) fund.

It aims to diversify the supply chain, increase national capability in processing, utilise existing capabilities to become marketleading in renewable energy, and other goals. Australia has a number of large-scale projects which are focused on exploration of subsurface geology and the possible presence of critical minerals.

2. Growing discontentment in Western Africa

Over the last year we have seen more extreme resource nationalist policies unfolding in West Africa. Whilst West African countries have significant mining capabilities and have been limiting mineral exports, we have seen an increase in nations taking legal action against mining companies to strengthen their commercial position. This has been particularly obvious in countries that experienced military coups, such as Mali, Burkina Faso, and Guinea, but has also occurred in Senegal where there has been a political shift at the presidential elections towards a more nationalist party. Whilst there has not been major comprehensive legal reform, with the exception of a new mining code in Mali and the new Senegal law on local content, there has been an administrative and regulatory offensive from the authorities and in particular tax authorities, to force mining companies to renegotiate their mining agreements with the relevant States.

3. Rising export ban challenges

In Asia, Indonesia is continuously expanding the ban on any export of non-processed minerals, and such an approach has been taken to various degrees in several countries such as Namibia, Ghana, Zimbabwe, Chile and Argentina. We believe that this trend will only continue, making it even more challenging for importing countries, particularly in the West, to meet their import and related industrial goals.

Increased uptake for autonomous mining

Incorporating autonomous machines into mining fields will reduce the margin of human error, therefore increase productivity and decrease the emissions produced. While this will enable the industry to keep pace with the ever-growing global demand for the materials used in the energy transition, it will also reduce the polluting effects of the mining process.

Uptake of these technologies is growing – the market for autonomous mining technology is expected to be worth USD3.68 billion by 2028, while the number of autonomous haul trucks used in mines is predicted to increase by 80% by 2025 from the number used in 2022. The repetitive nature of mining, with vehicles travelling the same route and carrying out the same digging and loading patterns, makes for smoother integration of autonomous machinery into the system.

Autonomous equipment will empower the industry to address issues of labour shortages and employee safety. Mining companies can take human operators off the ground, where dust, fumes and noise pose risks, to a remote control centre which allows for enhanced coordination and oversight. Inspection drones are particularly useful in remote locations, able to alert on danger and any accidents more quickly. Sensors in automated hauling trucks limit the number of collisions. We expect, and the industry hopes, that the integration of autonomous machinery will attract more people to the sector, as the jobs offer greater safety and comfort and the opportunity to work with innovative technology.

Recent advancements in the technology include machinery that can operate around the clock, boosting output and profits for mining companies, which can then be reinvested in further efficient technology. AI is key to the efficiency of autonomous technology, as machine learning and smart data analytics enables equipment to learn from errors and improve operations. We also expect that the increased adoption of autonomous equipment will boost productivity in the sector at a lower cost.

Blockchain in mining

We expect increasing adoption of blockchain technologies in the mining sector as part of efforts to promote transparency in the supply chain and compliance with upcoming regulation. Mining companies have the potential to prevent significant cost wastage caused by inefficiencies in the paper-based processes, involving verification of the minerals by each stakeholder along the chain. Technology companies are addressing this issue by offering verification systems based on blockchain technology which automatically encrypts, stores, and verifies data on an immutable ledger. The security inherent to the blockchain will also help to eliminate fraud and human error, promoting greater efficiency across supply chains. 

Blockchain technology will become increasingly relevant for the traceability of raw materials. According to an amendment to the EU Battery Regulation, from 1 February 2027 all EV and industrial batteries over 2kWh require a battery passport to be sold into the EU market. These passports, accessible via a QR code affixed to the battery, will provide information including the carbon intensity of the manufacturing process, the origins of the minerals and the identity of each player in the supply chain. Already, companies are offering blockchain-supported battery passports for the mining sector which collect, share and validate information with relevant stakeholders. SQM, the world’s largest lithium producer based in Chile, has been working with software provider Circulor to offer end‑to‑en traceability of SQM lithium in Volvo’s electric vehicles. This year, the Global Battery Alliance launched its second wave of battery passport pilots, having previously collaborated with Glencore, LG Energy Solution and Tesla to map and trace the entire cobalt supply chain from Glencore’s mine in the DRC to the electric vehicle factory in China.

Mining companies need to begin preparations for adopting battery passports ahead of the regulatory change especially given the industry-wide desire to promote responsible and sustainable practices. The transparency offered by blockchain technology can help to identify and tackle mining companies’ inadvertent involvement in conflict minerals, child labour and environmental destruction. Not only will mining companies be empowered to avoid supporting such practices, but they will also be able to demonstrate the level of commitment to ESG that their investors’ and customers’ demand.