Why innovation in the mining sector is critical for the energy transition

Amid our global energy transition, corporations and governments are conscientiously building pathways to decarbonize our energy sources. These efforts hinge on how readily we embrace renewable energy sources, yet even renewable-based technologies require a massive input of materials, including metals and minerals. Conversely, they are more material intensive than traditional fossil-fuel-based systems, which creates a vital caveat in the global push to decarbonize.

As this clean energy transition augments the demand for materials, the mining sector is ill-equipped to keep up in its current state. The conditions of ore deposits are changing, and the technologies and processes that have sustained the industry for the past decades are becoming increasingly energy-, water-, and environmentally intensive. For real progress in making clean energy more accessible, the mining industry requires meaningful transformation.

As Director of Vimson Group, a leading mining conglomerate spearheading efforts to promote environmentally sustainable practices, I have seen the pivotal role of innovation and the global start-up ecosystem in bridging critical gaps in the industry. To make the clean energy transition possible, we must focus efforts to meet the growing demand for materials, while making sure this growth is sustainable and minimal in its climate impact.

Our transition towards clean energy currently requires as much as 3 billion tons of metals, and the demand is expected to grow in the coming decades. To hit net-zero emissions globally by 2050, we would require six times more mineral inputs in 2040.

With transportation being the largest emitting sector in the U.S., the adoption of electric vehicles (EVs) is crucial in decarbonization efforts. This has been largely successful and presents significant potential. In 2021 EV sales doubled, and today, weekly sales exceed the annual sales turnover of 2012; however, electric cars require six times more minerals than petrol cars. As the adoption of EVs grows, so does the demand for these materials - most of which are specialized minerals including lithium, cobalt, nickel, and graphite - putting immense pressure on an already lagging industry.

Material-intensive batteries are driving up the cost of electric vehicles, making government-issued EV tax credits a key tool in promoting and driving down costs. Even so, the Inflation Reduction Act has disqualified most EV purchases from this perk by restricting them to batteries produced domestically. Companies are subsequently re-evaluating their existing mineral supply chain and exploring alternative methods.

The rising demand for raw materials has also led to a decline in the quality of ores produced from mines. Without innovative and updated technology to move and process these lower-grade ore deposits that contain large amounts of waste, mining companies are forced to use energy-intensive, legacy technologies which further drives up operating costs.

It is more critical than ever that traditional mining processes transform to maintain the momentum of EV adoption. Innovative methods, such as extracting and recycling materials from secondary resources, can augment the domestic supply of metals and minerals. It will, however, require institutional support to scale further and ensure that demand is maintained.

The mining process, from exploration to operation, is highly energy-intensive. It accounts for 10% of the world’s energy consumption, hindering net-zero ambitions and causing significant environmental impact from land-use change.

Though existing processes must be updated, mining is a risk-averse industry - neglected as a platform for innovation and private investment and slow to adopt innovative solutions due to the magnitude of safety, operational, and social challenges.

With the right resources and intention, there are opportunities to reduce life-cycle carbon emissions. These include adopting alternative clean energy like hydrogen and ammonia, breaking and moving ores non-conventionally, and decarbonizing metal processing by using green hydrogen and carbon capture, utilization and storage. To reduce Scope 3 emissions, which are attributed to the production and use of raw materials and have a massive impact, organizations like EV providers must look to less energy-intensive mining processes.

Nevertheless, when mining companies increase technology investment, they sometimes struggle to see the ROI, because they fail to make crucial foundational adjustments, such as promoting a company culture that embraces digital transformation or instituting management systems that nurture innovation. There is a clear appetite to change and reimagine the industry, but it will take time, resources, and consolidated efforts.

The only way for the mining sector to meet demand and global climate goals is through intentional, cross-sector collaboration and significant investments in scalable and sustainable solutions. Still, the sector is fragmented, both across the industry and in companies, hampering the implementation of a top-down and coordinated approach.

The mining supply chain is complex and accounts for many separate processes, like transportation, equipment and more, to go from mine to market. Organizational silos are common, and business divisions often operate independently with little coordination or information sharing. Companies cannot institute end-to-end solutions or make sweeping organizational changes without viewing the supply chain as an integrated process.

Innovation in the mining sector also requires close collaboration between the public and private sectors, as changes in regulations have pronounced supply chain impacts, while corporate decisions have geopolitical implications. In a fragmented industry, this level of partnership is challenging and requires industry-wide, global agreement.

Vimson Group identified an acute need for an early-stage technology platform for the mining industry and created Prospect Innovation. The programme supports the top innovators advancing the natural resource and mining industries by connecting them with public and private sector resources.

Using collaborative frameworks inspired by design thinking and open innovation, we seek to leverage the vast potential of the global start-up ecosystem while partnering with industry experts with deep knowledge of the sector’s roadblocks. This enables decades of mining expertise to hone these emerging technologies according to how such solutions can be scaled and implemented.

The sector incontrovertibly needs urgent and drastic change to keep up with the energy transition, and the start-up ecosystem and emerging technology can make that possible. By nurturing innovative solutions, mining companies can pave the way towards a more environmentally friendly, efficient industry and, ultimately, a more resilient and sustainable world.

Learn more about how UpLink, the World Economic Forum's innovation platform, and Prospect Innovation are collaborating together to find innovative solutions that are transforming the mining and metals industry.