Trends and challenges in the metals and mining sector

Top mining and metals sector trends and challenges in 2023

The mining and metals sector is an essential contributor for continued economic development and achieving Sustainable Development Goals (SDGs).


In brief

  • The mining and metals companies need to surmount various challenges, including meeting rising ESG and social expectations, transitioning towards low-carbon value chains, among others, to fully leverage the potential of the sector. 
  • Minerals are non-renewable and limited natural resources that constitute vital raw materials in numerous industries, and have the potential to contribute significantly to the achievement of the SDGs.
  • The sector should actively seek to upgrade and adapt to the global developments to become sustainable and future ready. 

India plays a significant role in the production of essential minerals, which has a notable impact on environmental sustainability, social inclusion, and economic development. Despite the diversity in the mining and metals industry, the country has the potential to contribute positively to all 17 Sustainable Development Goals and the implementation of the Paris Agreement. However, as part of this sector, mining and metals companies must grapple with numerous variable factors. These include the increasing expectations of environmental, social, and governance standards, the need to decarbonize value chains, geopolitical risks, the shift towards digitalization, and the unique challenges posed by portfolio and capital investment decisions. The following are the primary challenges that confront the mining and metals industry.

challenges faced by this coal, Iron ore and Steel sector

Coal and iron ore are key driving factors of the mining sector in India. There lies a huge scope and opportunity for increasing the capacities of coal and iron ore mines and considerable opportunities for future discoveries of sub-surface deposits. While India has adequate iron ore reserves, however, the same is not the case for coal as there are not sufficient reserves for coking/metallurgical coal. To keep the industry globally competitive, India plans to maximize the use of its domestic reserves to meet its requirement for coking coal to reduce iron ore to iron.

 

The Government of India is also working toward the development of the metals and mining sector by launching key policy initiatives and regulatory interventions in the auction process, levy of duties, and land availability. Private sector has also adapted new technologies, automation and digitization. However, there is still a considerable scope of improvement . 

 

The Indian steel sector has been vibrant and is growing at a CAGR of about 5% to 6% y-o-y. With a V-shaped demand recovery post-COVID-19 and the policy announcements made by the government across sectors, including rail, road, aviation, gas pipeline, and housing and changes in global supply and demand equations, the industry has had record production and growth in FY 2021 and 2022.

The mineral resources sector has the potential to contribute and achieve Sustainable Development Goals (SDGs) through socio-economic benefits, foreign exchange earnings, employment and livelihoods, development of infrastructure, communication, provision of vital services, and supply of raw materials for green technologies

For the Indian steel and minerals industry to achieve its expansion targets and goals, the use of new technology and digitization is the need of the hour. The coal, iron ore, and steel industry is essential to India's economy, but it faces challenges such as inefficiencies and environmental concerns. The government can provide support by streamlining processes and offering incentives, while industry players can adopt best practices and new technologies. Collaboration between government and industry can create sustainable growth, benefiting both the industry and the economy. 

Government and industry action points

There are several tangible benefits that may be realized by increasing adoption of emerging technologies in the mining sector:

  1. Improving human efficiency and develop extensive real-time performance systems in the overall supply chain of the industry
  2. Digital manufacturing based on artificial intelligence involving predictive and preventive analytics
  3. Effective sourcing of input raw materials
  4. Optimizing consumption through right material blends
  5. Maximizing throughout and capacity utilization
  6. Maintaining consistent quality

India's ambition for 2047 is to become a global leader and the third largest economy in the world. The ministry's goal for green steel is to increase steel production capacity through scrap by 60%, to 300 million tons, and to reduce crude steel's carbon footprint by 50%, from 2.6 T CO2/T to 1.3 T CO2/T. This is a tremendous opportunity for which it is extremely important for India to devise a strategy which brings finance and tech together to achieve the goals which have been setup for the mining sector.

Download the full pdf

Related articles

Top mining and metals sector trends and challenges in 2023

EY highlights the latest trends and challenges in the metals and mining sector and they are the backbone of global sustainable initiatives.

How can India become the industrial hub for electrolyzer production by 2030 

Discover how India can become the industrial hub for electrolyzer production by 2030. Learn about the electrolyzer market in India.

The Inflation Reduction Act – a turning point for the global green hydrogen market 

Discover How the US is using the IRA to jumpstart and improve the economics of low-carbon hydrogen production (especially green hydrogen), making it one of the most competitive regions globally.

    Summary 

    The mining industry is constantly required to embrace novel digital solutions that can revolutionize the value chain and enhance the production process in a holistic manner, resulting in both tangible and intangible business advantages. The adoption of such technologies may surge in the forthcoming years as the industry prioritizes reducing emissions to attain carbon neutrality.

    About this article

    Authors