The World Bank presents mining industry outlook at PDAC 2024 Convention

Tens of thousands of mining professionals flocked to the Prospectors & Developers Association of Canada’s PDAC 2024 Convention in Toronto in March to gain insights into the metals and minerals sector.

One of the highlights of the event was the Mining Industry Outlook presented by Michael Stanley, mining lead for The World Bank. Stanley has almost 40 years of experience in the sector spanning across North and South America, Europe and Central Asia, Africa, South Asia, and the East Asia/Pacific regions.

Stanley discussed the mining outlook up to the year 2050 with additional focus on the year 2035. He focused on the factors that are expected to cause the biggest impacts to the mining sector, starting with the world’s growing population and urbanization rate.

Sometime within the next 25 years, the world’s population is expected to grow over 10 billion people, and most of those people will live in cities.

“The global population is urbanizing at an unprecedented rate, and by the year 2050, seven of 10 people, 7 billion people, will live in these urban centres,” Stanley told the crowd. “We are going through a transition that started in 1760 with the advent of the Industrial Revolution.”

With the world’s populations continuing to flock to large urban centres to gain access to better employment opportunities and infrastructure, this presents significant opportunities and challenges for the mining and energy sectors.

“The key to growth and economic opportunity starts with energy. Energy is the kingpin to ensure that we move forward as a society. It allows us to improve our places of work, our housing, our hospitals. It allows for better delivery of education. It all starts with energy. And it also, in the urban environment, allows governments to deliver health, education, care for children and elderly,” Stanley said.

As urban areas grow at fast rates in their early years, their demand for metals and minerals is great.

“They have fantastic consumption of metals and minerals, think of Shanghai, China… across the globe, we have more and more cities coming up crossing the 10- and 20-million mark. And so, the intensity of use is very important,” Stanley said.

The second major disruptor taking place is the energy transition.

“This is very important, because the world is now challenged to replace the electric systems and the energy systems that for the last 150 years have underpinned all economic development. They have underpinned infrastructure development, roads, rail, ports, have been tied to the energy system, and particularly coal. And it will all be replaced, but between now and 2050,” Stanley said.

The combination of poverty reduction and urbanization with the energy transition is creating a tipping point in the minerals industry, where the balance between supply and demand is suddenly tipping very heavily towards demand, he told the crowd.

The demand for copper is expected to grow exponentially between 2021 and 2050.

“The demand for copper is likely to grow by 2.3 times in the next 25 years, fantastic growth. That’s three- to three-and-a-half per cent compound annual growth rate,” Stanley said.

While the demand will increase over that period of time, the heaviest growth will occur between 2030 and 2040, he adds.

“The major demand for a carrier metal like copper actually occurs about 11 years from now. We have to have in place for 11 years from now, all of the metals that are necessary to the energy transition. And in an industry where the average time from discovery to production is 14.9 years, we are already inside a fantastic transition, and the demand for metals is starting to climb,” he said.

The supply is expected to come from a combination of mining production doubling across the globe, and recycling operations tripling.

“We are inside a very fantastic energy transition-urbanization transition today,” he said.

One of the biggest challenges for meeting the growing global demand for metals and minerals is that the sector is currently operating in a time of very constrained capital access.

“It’s very difficult to move money into a lot of these mining sector projects. I want to say the reason for that is there’s a perception of risk that did not exist before, and it’s in two spaces,” Stanley said.

One area is the demand-side risk, where the adequacy and security of supply is now requested. This is because by 2035, the sector needs to meet significant demand for the energy transition – 11 years from now in an industry that’s 14.9 years from exploration, discovery through to production, Stanley explained.

“So, there’s certainly a concern about security of supply,” he said. “There’s also, on the supply side with governments, a reframing of mineral developments. They are looking to see mineral development in a very different way than they did before. They have expectations for this industry that did not present themselves five years ago.”

The World Bank recently deployed a survey asking what investors want and need to go into countries.

“The first is geological potential. Well, that’s quite obvious,” Stanley said. “But after that, we have potential profitability of operations. Could I move my profits back and forth across international boundaries? Security of tenure. Do I have a license holding from exploration subject to compliance with the laws, the policies and regulations to have security and tenure that I can move to exploitation? Are there barriers placed in the way? Consistency of mineral and tax policy… and then the last one, is perhaps the sleeper on the whole list: strong institutional governance. Does that government have the technical capacity to effectively implement the policy that is on paper, in terms of what takes place in mineral development?” Stanley said.

After geological potential, all the other factors are all under the control of the government, he notes.

“And so, governments are the largest determinant as to where mining investments flow, after you’ve gotten past that geological potential,” he said.

Operating in countries that are under economic distress will also play a factor in mineral and metals development.

“Currently today, 36 countries – 13 low-income countries and 23 middle-income countries – have fallen into or are at high risk of debt distress. They’re in need of financial restructuring programs, and per capita investment growth in 2024 has fallen to barely half the average it was in the last two decades. And without corrective action, global growth for the remainder of the 2020s is likely to remain very flat. If you are a government and a liberal producing country, these headwinds are very strong, and that sentiment is spilling over in late 2023,” Stanley said.

Stanley said the enabling environment is going to be built on three factors, with the first being economic development.

“Leveraging jobs, jobs, jobs – inside the mine, outside the mine. How can we catalyze the small to medium enterprises and ecosystem around those mines so that we get more jobs?” Stanley said.

The second factor is public-private partnerships.

“Catalyze infrastructure for development, beginning with energy, because that is the driver that governments are looking for – energy access on the grid, mini-grid, and off-grid, and it starts with energy,” Stanley said.

The third factor is for the industry to make contributions and then downstream users of metals to make contributions.

“This contribution to value addition, that’s a longer or aspirational goal for many countries. But that’s also something that is certainly going into policies today,” he said. “The industry representatives and members that can meet these objectives, and frame how your mine is a driver of broader development is going to thrive in a market where the goal is going to be 10 billion people at a certain point.”

The PDAC 2025 Convention will take place from March 2 to 5, 2025 at the Metro Toronto Convention Centre. For more information, visit: www.pdac.ca/convention.