Energy Outlook 2023: Mining & Minerals

Technology will play a critical role in assisting miners reach net zero and productivity goals

Mining companies are increasingly investing in and developing their own technologies to support decarbonisation plans and increase productivity. We predict that the following two technologies will increasingly be adopted in 2023:

• Drones: the use of drones for supporting exploration, surveying, mapping, monitoring site safety, stockpile management, blast analysis and reviewing tailing dams is continuing to increase. Typically, these drones will operate at a low level and are exempt from most regular aeronautical regulatory requirements (such as registration, licencing and certification). Whilst the operation of drones and the benefits are now well understood, the next priority for the industry is ensuring secure data processing, management and analysis to enable real-time communication.
• Blockchain: the adoption of blockchain technologies will continue to support the traceability and accountability of supply chains. The diamond sector is already successfully demonstrating the implementation of blockchain to trace conflict-free diamonds from ‘site to finger’. We predict that more miners will adopt blockchain to track GHG emissions of critical minerals to support the credibility of the sector’s decarbonisation plans. Careful design and review of the smart contracts being utilised in this area will be required.

Green hydrogen

In 2022 we saw a number of joint venture and collaboration agreements between mining companies and researchers in relation to developing and trialling green hydrogen technologies. We also saw the potential of using green hydrogen in hydrogen fuel cell trucks to support decarbonising mining fleets currently using diesel. Green hydrogen technologies are notably costly and technically challenging to develop, therefore we also expect collaboration to continue.

Large scale renewable projects on site

In 2022 we also saw a number of mining companies announcing investments and joint ventures into large scale renewable projects. Typically, the projects involved the installation of renewable energy assets such as solar and wind, upgrading transmission networks and installing large-scale battery storage to support decarbonisation of sites. The Bird & Bird team have advised on one of the largest solar projects for a mining project in Africa. We expect this trend to continue as sites are well positioned with land, access to technical expertise, wind and solar resources. Advice on financing arrangements, energy infrastructure and power purchase agreements will be key.

Resource security

The war in Ukraine has highlighted international reliance on scarce energy supplies. As a result, the increase in energy costs has accelerated global investment into the clean energy transition, whereby renewable energy assets are localised. Notably, however, green technologies require critical minerals (such as lithium, cobalt, and rare earth elements) which are often challenged by geographical constraints. The outlook of growing global demand for green technologies and an increase in resource nationalism - the balance between attracting foreign investment and ensuring the benefits of mineral extraction are passed on nationally – should encourage Governments to adopt more flexible policies to support commercial opportunities for critical mineral exploration and development domestically, to shorten supply chains.