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Circular economies in the mining sector: More than just recycling
![Dr Gargi Mishra](https://biz-file.com/c/1907/507209-700x364.png?2)
But it's about more than simple recycling. The focus today is gradually moving away from economies that rely on finite resources and shifting to a more sustainable model whereby resources are recycled and reused.
As the global economy grapples with the realities of resource depletion, rising price pressure, shifts in downstream demand and the need to align with environmental, societal and governance (ESG) principles to attract investment, a growing number of nations and businesses are looking to circularity as a viable pivot.
This requires companies and economies to completely re-engineer their value and supply chains in accordance with a circular economic model that keeps resources in use for as long as possible by taking end-of-life products and pushing them back into the economy to build economic, natural and social capital.
While certain nations and various industry verticals such as the consumer goods, retail and automotive sectors have emerged as first-movers in this regard, greater urgency is required within industries that are most vulnerable to this disruption.
Eliminating waste
A recently released Accenture report titled Mining New Value from the Circular Economy, highlights the major challenges facing global mining and metals companies in this context.
As economies seek to tap into the $4.5trn opportunity from eliminating waste through the circular economy, established mining and metals companies need to safeguard their market share while also tapping into a rich new value source.
A failure to get to grips with the circular economy puts mining and metals companies at risk because companies further down the materials supply chain that embrace circular models are increasingly driving downstream innovation in the extraction and use of precious metals and recycled materials.
Manufacturers, for example, are getting better at recovering their investment in natural resources in closed-loop cycles, while these new circular business models are disrupting historical links between ownership and sales growth.
Furthermore, as waste and material losses are eliminated over time, for example, as we move to additive manufacturing, the knock-on effect on primary demand will likely rise in significance.
Despite the urgent need to adapt, examples of circular innovation are comparatively scarce in the mining and metals sectors. Industry attention to date has largely focused on the circular economy as a route to operational efficiency, in the form of recycling water or monetising waste streams such as slag or used tyres, as examples.
However, mining and metal companies are not always well positioned to monetise the recycling flow. As such, the bigger question - and opportunity - of how to drive value from changing market demand, remains largely untapped.
Mining and metals companies must, therefore, adapt fast and embrace change to transition to a circular economic model if they hope to remain relevant.
By taking the right steps today, mining and metals companies can reposition for success by building long-term resilience and generating new sustainable business and economic opportunities, while also creating environmental and societal benefits.
Fourth Industrial Revolution
For example, new opportunities will likely emerge from demand for a wide range of base and precious metals required in the new technologies that define the Fourth Industrial Revolution. According to the World Bank, the transition to a low-carbon economy will also see increased demand for these commodities as countries shift to clean energy production and storage.
Mining and metals companies must, therefore, determine where best to focus in this shifting marketplace and how best to take advantage of both the circular economy and clean-tech trends.
In response, mining and metals companies must reposition operations and act fast to keep pace with the growing cohort of innovative first-mover industry front-runners and the downstream disruptors.
In this regard, these industry players must review their portfolios to assess where the risks of decreased demand or substitution loom largest, understand which materials can be recovered most effectively, and where new downstream circular business models could present threats or opportunities.
These companies must then reimagine their business models to accelerate their transition to the circular economy. According to the Accenture report, this three-step process offers an advantageous starting point:
- Develop circular operations Start by accelerating circular initiatives across mining and metals operations by partnering with suppliers to extend the life of capital equipment through real-time monitoring, analytics and predictive maintenance; selling production waste to other industries; and sharing ownership of heavy-duty equipment with low utilisation rates.
- Innovate new circular products and services Engage with downstream material users to co-create innovative circular products and services. These models might include leasing materials, enabled by advanced track-and-trace systems; supporting customer product certification to enable reuse and easy remanufacturing; or improving processes for scrap recovery, reprocessing and reuse.
- Collaborate with customers and build a circular partners’ ecosystem By proactively collaborating up and down supply chains, mining and metals companies can create industry momentum by working to create favourable regulatory regimes for improved circularity; establishing cross-industry partnerships to develop the mining and metals roadmap to extend product life and retain ownership; and developing cross-industry standards to validate the integrity of products or materials for end-of-life take-back and repurposing.
With the mining and metals sector poised for epic disruption, companies in this sector can no longer afford to be followers. Those that embrace the circular economy at speed can take the lead and reshape the future of the industry on their terms, with the potential to build closed-loop systems, lock-in downstream ecosystems and drive sustainable value, competitive advantage and future growth.
About Gargi Mishra
Dr Gargi Mishra is a senior mining innovation principal for Accenture in Africa![](/res/img/s.gif)