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A New Vision for the Mining Company of the Future

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A New Vision for the Mining Company of the Future

A New Vision for the Mining Company of the Future

In 2012, a diverse group of global leaders met at the KIN Catalyst conference in Brazil. With representation from business, academia, nonprofits and government, the group convened and collaborated to discuss the look of the Mining Company of the Future.

Participation in the discussions came from a range of stakeholders. Mark Cutifani (CEO of Anglo American), Ray Offenheiser (President of Oxfam America), and Peter Bryant (Senior Fellow, Kellogg Innovation Network) all co-chaired the discussions. There was also representation from organizations such as Vale, AngloGold Ashanti, The Ford Foundation, Harvard University, Global Indigenous Solutions, and many other organizations.

Together, these different parties identified a set of priorities that could help shift the industry. The consensus was that mining needs to change proactively in order to design their own destiny – or someone or something else will.

Mining companies today face a complexity of problems: spiraling costs, government intervention, deepening pits, lower ore grades, and declining productivity are just some of the issues. Communities are not trusting mining, and this creates additional uncertainty. It is harder to find and start a mine than ever before. Combine this with today’s capital environment and struggling commodity prices, and it creates a very difficult picture.

Since the KIN Catalyst conference in 2012, the working group has developed a much more extensive framework for mining companies, called the Development Partner Framework (DPF). This framework is outlined in the above infographic. If you are looking to get involved, the organization can be contacted at [email protected]

For more information on the KIN Catalyst: Mining Company of the Future at the Kellogg Innovation Network, visit the website: http://www.kinglobal.org/catalyst.php

What do you think? Is this vision possible – and what are the biggest challenges facing the industry?

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The New Energy Era: The Lithium-Ion Supply Chain

Is the U.S. positioned to win the battery arms race, or will China remain in control of the world’s transition to renewable energy?

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The world is rapidly shifting to renewable energy technologies.

Battery minerals are set to become the new oil, with lithium-ion battery supply chains becoming the new pipelines.

China is currently leading this lithium-ion battery revolution—leaving the U.S. dependent on its economic rival. However, the harsh lessons of the 1970-80s oil crises have increased pressure on the U.S. to develop its own domestic energy supply chain and gain access to key battery metals.

Introducing the New Energy Era

Today’s infographic from Standard Lithium explores the current energy landscape and America’s position in the new energy era.

lithium ion supply chain us china

An Energy Dependence Problem

Energy dependence is the degree of a nation’s reliance on imported energy, resulting from an insufficient domestic supply. Oil crises in the 1970-80s revealed America’s reliance on foreign produced oil, especially from the Middle East.

The U.S. economy ground to a halt when gas prices soared during the 1973 oil crisis—altering consumer behavior and energy policy for generations. In the aftermath of the crisis, the government imposed national speed limits to conserve oil, and also demanded cheaper, smaller, and more fuel-efficient cars.

U.S. administrations set an objective to wean America off foreign oil through “energy independence”—the ability to meet the country’s fuel needs using domestic resources.

Lessons Learned?

Spurred by technological breakthroughs such as hydraulic fracking, the U.S. now has the capacity to respond to high oil prices by ramping up domestic production.

By the end of 2019, total U.S. oil production could rise to 17.4 million barrels a day. At that level, American net imports of petroleum could fall in December 2019 to 320,000 barrels a day, the lowest since 1949.

In fact, the successful development of America’s shale fields is a key reason why the Organization of the Petroleum Exporting Countries (OPEC) has lost the majority of its influence over the supply and price of oil.

A Renewable Future: Turning the Ship

The increasing scarcity of economic oil and gas fields, combined with the negative environmental impacts of oil and the declining costs of renewable power, are creating a new energy supply and demand dynamic.

Oil demand could drop by 16.5 million barrels per day. Oil producers could face significant losses, with $380 billion of above-ground investments becoming worthless if the oil industry and oil-rich nations are not prepared for a surge in green energy by 2030.

Energy companies are hedging their risk with increased investment in renewables. The world’s top 24 publicly-listed oil companies spent on average 1.3% of their total budgets on low carbon technology in 2018, amounting to $260 billion. That is double the 0.68% the same group had invested on average through the period of 2010 and 2017.

The New Geopolitics of Energy: Battery Minerals

Low carbon technologies for the new energy era are also creating a demand for specific materials and new supply chains that can procure them.

Renewable and low carbon technology will be mineral intensive, requiring many metals such as lithium, cobalt, graphite and nickel. These are key raw materials, and demand will only grow.

Material201820282018-2028 % Growth
Graphite anode in Batteries170,000 tonnes2.05M tonnes1,106%
Lithium in batteries150,000 tonnes1.89M tonnes1,160%
Nickel in batteries82,000 tonnes1.09M tonnes1,229%
Cobalt in batteries58,000 tonnes320,000 tonnes452%
(Source: Benchmark Minerals)

The cost of these materials is the largest factor in battery technology, and will determine whether battery supply chains succeed or fail.

China currently dominates the lithium-ion battery supply chain, and could continue to do so. This leaves the U.S. dependent on China as we venture into this new era.

Could history repeat itself?

The Battery Metals Race

There are five stages in a lithium-ion battery supply chain—and the U.S. holds a smaller percentage of the global supply chain than China at nearly every stage.

Lithium-Ion Supply Chain

China’s dominance of the global battery supply chain creates a competitive advantage that the U.S. has no choice but to rely on.

However, this can still be prevented if the United States moves fast. From natural resources, human capital and the technology, the U.S. can build its own domestic supply.

Building the U.S. Battery Supply Chain

The U.S. relies heavily on imports of several keys materials necessary for a lithium-ion battery supply chain.

U.S. Net Import Dependence
Lithum50%
Cobalt72%
Graphite100%
(Source: U.S. Department of the Interior, Bureau of Land Management)

But the U.S. is making strides to secure its place in the new energy era. The American Minerals Security Act seeks to identify the resources necessary to secure America’s mineral independence.

The government has also released a list of 35 minerals it deems critical to the national interest.

Declaring U.S. Battery Independence

A supply chain starts with raw materials, and the U.S. has the resources necessary to build its own battery supply chain. This would help the country avoid supply disruptions like those seen during the oil crises in the 1970s.

Battery metals are becoming the new oil and supply chains the new pipelines. It is still early in this new energy era, and the victors are yet to be determined in the battery arms race.

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Sustainable Investing: Debunking 5 Common Myths

Do sustainable strategies underperform conventional ones? This infographic shines a light on the realities of sustainable investing and the ESG framework.

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sustainable investing

Sustainable Investing: Debunking 5 Common Myths

It began as a niche desire. Originally, sustainable investing was confined to a subset of investors who wanted their investments to match their values. In recent years, the strategy has grown dramatically: sustainable assets totaled $12 trillion in 2018.

This represents a 38% increase over 2016, with many investors now considering environmental, social, and governance (ESG) factors alongside traditional financial analysis.

Despite the strategy’s growth, lingering misconceptions remain. In today’s infographic from New York Life Investments, we address the five key myths of sustainable investing and shine a light on the realities.

1. Performance

MythReality
Sustainable strategies underperform conventional strategiesSustainable strategies historically match or outperform conventional strategies

In 2015, academics analyzed more than 2,000 studies—and found that in roughly 90% of the studies, companies with strong ESG profiles had equal or better financial performance than their non-ESG counterparts.

A recent ranking of the 100 most sustainable corporations found similar results. Between February 2005 and August 2018, the Global 100 Index made a net investment return of 127.35%, compared to 118.27% for the MSCI All Country World Index (ACWI).

The Global 100 companies show that doing what is good for the world can also be good for financial performance.

Toby Heaps, CEO of Corporate Knights

2. Approach

MythReality
Sustainable investing only involves screening out “sin” stocksPositive approaches that integrate sustainability factors are gaining traction

In modern investing, exclusionary or “screens-based” approaches do play a large role—and tend to avoid stocks or bonds of companies in the following “sin” categories:

  • Alcohol
  • Tobacco
  • Firearms
  • Casinos

However, investment managers are increasingly taking an inclusive approach to sustainability, integrating ESG factors throughout the investment process. ESG integration strategies now total $17.5 trillion in global assets, a 69% increase over the past two years.

3. Longevity

MythReality
Sustainable investing is a passing fadSustainable investing has been around for decades and continues to grow

Over the past decade, sustainable strategies have shown both strong AUM growth and positive asset flows. ESG funds attracted record net flows of nearly $5.5 billion in 2018 despite unfavorable market conditions, and continue to demonstrate strong growth in 2019.

Not only that, the number of sustainable offerings has increased as well. In 2018, Morningstar recognized 351 sustainable funds—a 50% increase over the prior year.

4. Interest

MythReality
Interest in sustainable investing is mostly confined to millennials and womenThere is widespread interest in sustainable strategies, with institutional investors leading the way

Millennials are more likely to factor in sustainability concerns than previous generations. However, institutional investors have adopted sustainable investments more than any other group—accounting for nearly 75% of the managed assets that follow an ESG approach.

In addition, over half of surveyed consumers are “values-driven”, having taken one or more of the following actions with sustainability in mind:

  • Boycotted a brand
  • Sold shares of a company
  • Changed the types of products they used

Women and men are almost equally likely to be motivated by sustainable values, and half of “values-driven” consumers are open to ESG investing.

5. Asset Classes

MythReality
Sustainable investing only works for equitiesSustainable strategies are offered across asset classes

This myth has a basis in history, but other asset classes are increasingly incorporating ESG analysis. For instance, 36% of today’s sustainable investments are in fixed income.

While the number of sustainable equity investments remained unchanged from 2017-2018, fixed-income and alternative assets showed remarkable growth over the same period.

Tapping into the Potential of Sustainable Investing

It’s clear that sustainable investing is not just a buzzword. Instead, this strategy is integral to many portfolios.

By staying informed, advisors and individual investors can take advantage of this growing strategy—and improve both their impact and return potential.

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