Climate Smart Mining: Minerals for Climate Action
Countries are taking steps to decarbonize their economies by using wind, solar, and battery technologies, with an end goal of reducing carbon-emitting fossil fuels from the energy mix.
But this global energy transition also has a trade-off: to cut emissions, more minerals are needed.
Therefore, in order for the transition to renewables to be meaningful and to achieve significant reductions in the Earth’s carbon footprint, mining will have to better mitigate its own environmental and social impacts.
Advocates for renewable technology are not walking blindly into a new energy paradigm without understanding these impacts. A policy and regulatory framework can help governments meet their targets, mitigate, and manage the impacts of the next wave of mineral demand to help the communities most affected by mining.
Today’s infographic comes from the World Bank and it highlights this energy transition, how it will create demand for minerals, and also the Climate Smart Mining building blocks.
Renewable Power and Mineral Demand
In 2017, the World Bank published “The Growing Role of Minerals and Metals for a Low Carbon Future”, which concluded that to build a lower carbon future there will be a substantial increase in demand for several key minerals and metals to manufacture clean energy technologies.
Wind power technology has drastically improved its energy output. By 2025, a 300-meter tall wind turbine could produce about 13 to 15 MW, enough to power a small town. With increased size and energy output comes increased material demand.
A single 3 MW turbine requires:
- 4.7 tons of copper
- 335 tons of steel
- 1,200 tons of concrete
- 2 tons of rare earth elements
- 3 tons of aluminum
In 2017, global renewable capacity was 178 GW of which 54.5% was solar photovoltaic technology (PV). By 2023, it’s expected that this capacity will increase to one terawatt with PV accounting for 57.5% of the mix. PV cells require polymers, aluminum, silicon, glass, silver, and tin.
Everything from your home, your vehicle, and your everyday devices will require battery technology to keep them powered and your life on the move.
Lithium, cobalt, and nickel are at the center of battery technology that will see the greatest explosion in demand in the coming energy transition.
Top Five Minerals for Energy Technologies
Add it all up, and these new sources of demand will translate into a need for more minerals:
|2017 Production||2050 Demand from Energy Technology||Percentage Change (%)|
|Lithium||43 KT||415 KT||965%|
|Cobalt||110 KT||644 KT||585%|
|Graphite||1200 KT||4590 KT||383%|
|Indium||0.72 KT||1.73 KT||241%|
|Vanadium||80 KT||138 KT||173%|
Minimizing Mining’s Impact with Climate Smart Mining
The World Bank’s Climate Smart Mining (CSM) supports the sustainable extraction and processing of minerals and metals to secure supply for clean energy technologies, while also minimizing the environmental and climate footprints throughout the value chain.
The World Bank has established four building blocks to Climate Smart Mining:
- Climate Change Mitigation
- Climate Change Adaptation
- Reducing Material Impacts
- Creating Market Opportunities
Given the foresight into the pending energy revolution, a coordinated global effort early on could give nations a greater chance to mitigate the impacts of mining, avoid haphazard mineral development, and contribute to the improvement of living standards in mineral-rich countries.
The World Bank works closely with the United Nations to ensure that Climate Smart Mining policies will support the 2030 Sustainable Development Goals.
A Sustainable Future
The potential is there for a low carbon economy, but it’s going to require a concerted global effort and sound policies to help guide responsible mineral development.
The mining industry can deliver the minerals for climate action.
Zinc: The Essential, Sustainable, and Versatile Metal
Zinc’s widespread uses in the modern economy make it essential for urbanization and economic development. Learn more about the uses of zinc in this infographic.
What would the world be like without zinc?
Long-running TV show The Simpsons showed us one depiction what this could look like—but in order to truly gauge the impact of the metal on our lives, we need a better understanding of the uses of zinc and its role in modern life.
Zinc’s Role in Modern Life
Zinc is a naturally occurring mineral that is present all around us: from our bodies, foods, and medicines to the buildings we live and work in. Despite this, very few people actually know how it gets there.
This infographic comes to us from Trilogy Metals and looks at the widespread uses of zinc in the modern economy, from construction and infrastructure to health, farming, and green energy.
The Zinc Supply Chain
Zinc is the fourth most used metal in the world behind iron, aluminum, and copper.
Before zinc makes it into its various applications, miners have to extract the metal from the ground. So which countries are the top producers of zinc?
|Country||Mined Zinc Production (2019, metric tons)||Share of World Production (2019)|
China, Peru, and Australia account for 7 million tons or 54% of the world’s zinc production. Although the U.S. is among the world’s top five zinc producers, it only produced 780,000 metric tons of the silvery metal in 2019—roughly one-fifth of China’s zinc production.
We don’t always use zinc in its raw, metallic form; it is often refined and processed first.
The United States is lagging in the production of refined zinc, with a net import reliance of 87%. As the demand for zinc rises, local sources of mined and refined zinc will be valuable for import-reliant countries like the U.S.
But where does the demand for zinc come from, and what makes it so valuable?
Zinc Strengthens: Infrastructure and Alloys
Zinc is also referred to as the “galvanizing metal” for its role in protecting steel. In fact, galvanizing accounts for around 50% of total annual zinc usage.
Galvanizing with zinc improves steel in various ways:
Adding zinc as a protective layer provides steel with higher impact strength
The zinc coating on galvanized steel lasts around 50 years, allowing structures made from steel to last longer
Zinc acts as a sacrificial coating for the underlying steel, protecting it from corrosion and rust
From steel-frame buildings and bridges to furniture and automotive body parts, galvanized steel plays a critical role in building sustainable infrastructure.
According to a study by the National Association of Corrosion Engineers, corrosion costs the world $2.5 trillion annually. Given that only 6% of all steel produced annually is galvanized, increasing the use of zinc-coated steel could potentially reduce this economic impact.
Zinc in Alloys
Besides galvanizing, alloying is one of the most common uses of zinc. Zinc’s ability to provide other metals with strength and corrosion-resistance makes it an effective alloying material.
Around 25% of all zinc is used in alloys to create metals such as brass, which are commonly found in household fixtures, plumbing fittings, electronic devices, and musical instruments. Additionally, zinc alloys have a range of engineering applications, thanks to their rigidity, strength, and conductivity.
Zinc Improves: Health and Productivity
Zinc is not only a natural part of our body but also a critical nutrient for our immune systems.
The UN has labeled zinc a “life-saving commodity”—increased access to zinc could prevent 200,000 childhood deaths annually. Zinc is an essential nutrient for various reasons:
- Helps fight infections
- Vital for taste and smell
- Enhances memory and thinking
Furthermore, zinc oxide, a compound produced by oxidizing metallic zinc, is a key ingredient in various health and medicinal products including cosmetics, food additives, and anti-fungal creams.
Zinc in Crops
Besides its critical role in the human body, zinc is also an essential micronutrient for plants.
When farmers add zinc to soils in the form of zinc oxide, it helps their crops resist tough conditions such as drought, salinity, and heat. A stable supply of zinc can also help crops reach higher productivity and yield levels.
As the global population grows, crop productivity will be important in addressing the higher demand for food. Zinc has an essential role to play in making crops resilient and more productive.
Zinc Supports: The Clean Energy Transition
The transition to a low-carbon, clean energy future will be mineral intensive—and zinc is playing a key role in boosting this transition.
Zinc-air batteries are quickly emerging as an efficient clean energy-storage solution that can provide renewable electricity in remote regions. Three factors make zinc-air batteries an integral part of the clean energy transition:
- Efficient for storing non-constant renewable energy
- Affordable because of their use of zinc
- High energy density
In fact, NantEnergy’s zinc-air energy storage systems have already made a significant impact on sustainability.
- Avoided 50,000 tons of CO2 emissions
- Reduced 4 million liters of diesel fuel use
- Provided 200,000 people with access to power
Additionally, zinc protects the steel used to build renewable energy infrastructure. Offshore wind masts are made from zinc thermal sprayed steel to prevent corrosion, and solar PV panels use support structures made of galvanized steel.
Zinc in the Circular Economy
Zinc is part of a circular economy that restores, recovers, and reuses.
For starters, zinc is fully recyclable—it can be recycled from scrap without losing any of its properties. As a matter of fact, 60% of all produced zinc is still in use. Moreover, zinc’s 45% end-of-life recycling rate means that almost half of all the zinc produced is recycled after final-usage.
Zinc’s contribution to the circular economy will help minimize waste and improve resource sustainability as our material needs grow.
Zinc: Strengthening the Path to a Sustainable Future
The uses of zinc today are widespread and make an enormous impact on almost every aspect of our modern lives. Just as our present world could not function without zinc, so will our future.
As we transition to a cleaner world, zinc will continue strengthening, improving, and supporting the modern economy.
How Precious Metals Royalty and Streaming Companies Create Value
Discover how royalty and streaming companies offer a unique way to invest in precious metals and the mining industry.
Gold and Silver Royalty and Streaming Companies
Investing in precious metals often seems like it boils down to either buying the physical gold or silver or investing in shares of specific mining companies, both with their own very distinct advantages and risks.
Rather than having to settle for the simplicity of bullion or extensive research in individual mining companies, precious metals royalty and streaming companies provide investors with exposure to a diversified portfolio of miners’ revenues and produced metals.
These companies are not operators of mines. Instead, they seek to find undiscovered value by financing and working directly with miners to forge agreements that provide their shareholders with steady exposure to precious metals production.
This infographic from Empress Royalty outlines exactly how gold and silver royalty and streaming companies operate, and how they mitigate risk and create value for their shareholders.
What Do Precious Metals Royalty and Streaming Companies Do?
Royalty and streaming companies are an important part of the mining industry’s financial ecosystem, as they provide capital to mine operators and explorers in exchange for a percentage of revenue or metals produced from the mine.
Mining companies receiving this investment are able to further develop or expand projects, providing greater returns for both their shareholders and the companies with royalties and stream agreements on the projects.
These agreements typically last for the life of a mine, providing steady cash flow to royalty and stream holders while cutting out various risks associated with mining companies and operations.
“What it takes in the royalty business is patience and cash.”
– Pierre Lassonde, co-founder of the first royalty and streaming company, Franco-Nevada
The Difference Between Royalty Agreements and Streams
Royalty agreements and streams have similarities in their structure, but ultimately have some key differences.
- Royalty agreements, also called net smelter return (NSRs), provide the royalty holder a percentage of the mine’s revenue from production, typically around 1-3%. There are also other kinds of royalty agreements like net profits interests (NPIs), where the royalty holder receives a percentage of the profits rather than the revenue.
- Streams provide the right to purchase a certain percent (typically 5-20%) of metal production directly from the mine. Typically, streams will have an already decided purchasing price for the metal, which is usually either a fixed dollar amount or a fixed percentage of the spot price.
Royalties are more common than streams as they provide cash directly to the royalty company rather than the option to buy the physical metal which then needs to be sold.
While royalty and streams differ in what is delivered, both kinds of agreements avoid operational costs as they receive cuts from the top line.
The Growing and Diverse Landscape of Royalty and Streaming
The niche sector of gold and silver royalties has changed greatly since the founding of the original royalty business, Franco-Nevada in 1980.
While still fairly small today, the subsector has grown to have more than 10 companies with a market cap of $100M USD each, with five surpassing the $1B mark.
Here are the top 10 royalty and streaming companies by market cap:
|Company||Market Capitalization (USD)||Forward Dividend Yield|
|Wheaton Precious Metals||$17.8B||1.20%|
|Osisko Gold Royalties||$1.9B||1.39%|
|Metalla Royalty and Streaming||$368.3M||0.37%|
|EMX Royalty Corporation||$308.0B||0.00%|
Source: Yahoo Finance
While the three big names of Franco-Nevada, Wheaton Precious Metals, and Royal Gold tend to focus on larger and more secure ounce-producing agreements, the newer precious metals royalty companies start out by establishing a few cash-flowing agreements in their portfolio.
After this, they can begin targeting more speculative agreements with developing or exploration projects which are typically worth smaller dollar amounts and are slightly riskier or further from production, but have the potential of undiscovered upside.
Some royalty companies don’t even deal with mining companies at all, and focus exclusively on buying royalty and stream agreements held by third party companies or prospectors.
How These Companies Reduce Risk and Capture Upside
By avoiding many of the operational costs, royalty and streaming companies cut out a large amount of risk that is typically associated with mining investments.
In precious metal bull markets, it’s typical to see mining company revenues rise alongside the prices of gold and silver.
While mining companies’ operational costs will also rise, royalty and stream holders simply reap the benefits of high margins as they sell their physical metals at higher prices, despite having acquired them at lower fixed prices according to their agreement.
Another key advantage royalty and streaming companies have is their ability to diversify their portfolios and be selective with their agreements. This allows them to escape concentrated jurisdictional or asset risk and make agreements with mines which are already producing or close to production.
Since royalties and streams tend to last as long as the associated mine is operational, the holders of these agreements also benefit from any increased production or lifespan.
Royalty and Streaming Companies: Stable Exposure to Metals
As precious metals royalty and streaming companies are able to carefully choose their agreements and are overall less exposed to price downturns, they provide investors with a more stable investment in gold and silver.
Royalty and streaming companies typically have dividend policies which ensure shareholders are consistently rewarded with rising dividends, while many gold and silver mining companies cut dividends aggressively during precious metal market downturns.
As they help finance new projects and expansions, royalty and streaming companies take advantage of high margins in a unique form of financial arbitrage while providing their shareholders with stable exposure to precious metals and mining operations.
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