Decarbonisation is key to achieving operational excellence for metals and mining companies, professional services firm KPMG’s latest ‘Metals and Mining Outlook’ has revealed.

The report, published on October 1, surveyed 453 C-level executives from 20 countries across the metals and mining sector. It highlights the growing focus on reducing the carbon footprint within the industry, which has become a top priority for leaders over the coming year.

"Mining and metals companies are pivotal in the energy transition," KPMG International mining global sector lead Trevor Hart said.

He explained that the 2023 report focused on the mining and metals industries’ role in enabling a carbon-free future. This year, however, the focus had shifted toward efforts to reduce carbon emissions amid volatile commodity prices, geopolitical change and a shortage of technology capabilities and skills, which posed both challenges and opportunities for the sector.

The report also addresses commodity price risk, emphasising that volatility has increased over the past decade. As many as 66% of executives said output price volatility had risen in the past two years, while 53% noted similar trends for input prices.

A World Bank study published in January 2022 indicated that macroeconomic shocks, rather than changes specific to commodity markets, have driven these price shifts since 1996.

Hart cautioned executives to consider past experiences, such as the capital expenditure spikes before the 2008/9 global financial crisis, when investing in new technologies and decarbonisation efforts.

As clean energy technologies expand, global demand for critical minerals is expected to double by 2040, potentially quadrupling under sustainable development scenarios. This trend is driven by low-carbon power generation technologies such as solar, wind, nuclear, electric vehicles, battery storage and hydrogen production.

The KPMG report reveals that metals and mining companies must accelerate efforts to reduce emissions, while responding to customers’ decarbonisation needs. The data shows that 75% of companies in these sectors have set net-zero goals, with 40% aiming to achieve net zero by 2040 and 29% targeting 2025.

KPMG International steel global sector leader Ugo Platania emphasised the challenge of balancing growth with decarbonisation.

"Companies will need to grow production while reducing emissions. Operational transformation and decarbonisation are mutually reinforcing, especially when integrated into corporate strategy," he stated.

Another key issue highlighted in the report is the skills gap and the need for technological advancements. Nearly half (47%) of industry leaders pointed to skills shortages as a significant barrier, while 55% of executives stated that investing in relevant technologies is the most effective way to reach net-zero emissions, particularly in areas such as reducing emissions from steel production.

The implementation of digital IT systems to measure and report decarbonisation key performance indicators has been a high priority over the past two years, with 43% of respondents confirming its importance, and 48% projecting its growing relevance in the next two years.

Platania added that companies were increasingly partnering with educational institutions to attract talent with the skills necessary to achieve decarbonisation goals. He urged the industry to understand the required skills and develop plans to acquire them, stressing that this challenge would persist over the next five years.