Thinking long term: Growth in the materials sector

Growth in the materials sector

From the earliest human societies who began to use metal for tools and coal for fuel, to our present resource-hungry cities, as a species we have depended on the natural resources of our planet for everything from energy to transport to computer technology.

The mining and processing of raw materials is one of the oldest human industries, and it has developed in parallel with our innovations and technological revolutions, as we have found new uses for minerals and metals, and as our mining pioneers have discovered new materials.

Increasing concern about the environmental impact of mining, and over the finite nature of our mineral and metals reserves, may suggest that the mining sector does not have a long-term future. But in fact, the mining industry is driven by a wide range of factors, including consumer behavior, population growth, innovation, government policies, fiscal fluctuations and new technology.

It is true that operators in the mining sector are likely to face increasingly stringent environmental regulations in the coming years as politicians and governments come under pressure to safeguard the planet’s resources. This will present challenges to mining companies, but responsible and innovative operators will not regard these regulations as barriers to growth.

The wellbeing of the mining industry is affected by two factors. Scarcity of the resource is the first factor and product innovation is the second. But both of the factors point to a positive future for the sector. As deposits of a particular mineral resource are reduced, the cost of extracting that mineral can increase, but so does the price at which the mining company is able to sell it. And as the rapid developments in technology in recent decades have shown, new products and uses for minerals are developing all the time.

The metals and mining sectors are undergoing constant upheaval and change. While some operators will find that difficult, many others will thrive. Benedikt Sobotka, the Chief Executive of Eurasian Resources Group, is one of a new breed of leaders in the materials extraction sector, who has been able to position his company to withstand short-term fluctuations in the requirement for materials, while being ideally positioned to take advantage of new demands.

And it is this ever growing demand for raw materials that is the best indicator of the long-term growth prospects for the materials sector. The population of Earth was estimated to be around one billion in 1800, but by 2018, it had grown to 7.6 billion. According to some forecasts, it will continue to grow and could approach 10 billion by 2050. That growth in population means more families, more homes, and an ever increasing demand for the raw materials that underpin so many aspects of our society, from transport and construction to domestic appliances and heating.

And parallel to this ever-growing global population, the pace of technological change will continue to accelerate. In the last 20 years there have been dramatic developments in technology, from smart phones to driverless cars, and that rate of change will increase as technology such as quantum computers, 3D printing, internet-connected homes and Virtual Reality develop. Our demand for new technology is as insatiable as our demand for fuel and food, and all of these new technologies depend entirely on the availability of raw materials extracted by modern mining operators.

Metals such as platinum, palladium and osmium, are in huge demand, as they are crucial components in a wide range of technology from hard disks to LCD panels. The light metal beryllium, extracted in Utah and Alaska in the US, is another in-demand material, as it plays an important role in a variety of medical equipment and computer devices. And the technology industry also drives increases in demand for more familiar materials.

Lead is used widely in the construction of computer monitors and circuit boards, while mercury is an important component of flat screen televisions. Nickel, tin and zinc are all familiar raw materials that are essential to the production of circuit boards, while oil is used widely for the manufacture of the plastic casing and plastic components that are integral to modern electronic devices.

The future is likely to bring many challenges to the mining industry, but the inexorable growth of the global population and the technological innovation that is continually finding new uses for raw materials should ensure that the future growth prospects for this sector remain strong.

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