What is the circular economy and what does it mean for miners?
The circular economy decouples growth from natural resource consumption. In a world with increasingly constrained resources and many environmental challenges, the balance of supply and demand will shift for key commodities. This will have fundamental impacts across the mining and metals value chain.
We are seeing macro trends that affect demand, such as the urbanization of emerging markets and the rise of the sharing economy. And there are new industry entrants focused on building the market for secondary sources through recycling and recovery of materials. Novelis, for example, has cornered the market for scrap aluminium and has an arrangement with Jaguar Landrover (JLR) to be its sole supplier of the resource1. Veolia is pioneering the extraction of precious materials2 from a variety of sources, including pharmaceuticals—platinum from cancer treatment drugs, gold from pacemakers and insulin pumps, silver from burn dressings.
We are also seeing material substitution, with companies using carbon fiber to replace steel or fiber optic in lieu of copper cables. The pace of regulation is also increasing, for example with the introduction of the Circular Economy Package in the EU. All of this poses many threats and opportunities for miners.
How does your current work relate to this trend?
For the past few years, I’ve been devoted to exploring how sustainability affects mining companies both strategically and operationally. More recently, I’ve focused on how trends like circular economy and digital disruption will drive business opportunity for the sector.
In 2014, I wrote an article about how mining and metals companies needed to wake up to the circular economy. Now I’m encouraged to see the increasing recognition of the importance of it. The World Steel Association recently published a paper on the circular economy and Eurometaux has a position paper on the topic as well. However, the sector is still lagging behind others, such as consumer goods, in terms of action, but we are seeing increasing interest in exploring the implications. I recently presented at a roundtable organised by the ICMM on the circular economy, and have carried out briefings for a major global mining company and steel company who want to know more about strategically how to position.
What are the circular economy opportunities for miners?
Accenture research, culminating in a new book by Peter Lacy and Jakob Rutqvist (Waste to Wealth), demonstrates that a circular economy could deliver $4.5 trillion in revenue to a range of companies by 2030. We have identified five business models that companies should consider across their value chain: circular supply chain; recovery and recycling; product life extension; sharing platforms; and product as a service. These will influence how miners source materials and energy, optimize their operational footprint, and make them consider where to play in the value chain and how to partner with customers.
For miners in particular, we believe that circular economy winners will be equally focused on managing resources in the market and digging to extract additional resources where needed. The trick is to understand how the supply/demand trends play out for each commodity, to identify the relevant risks and opportunities, and to position for future growth before the circular economy becomes a reality.
How do digital technologies power the circular economy?
Mining companies need to embrace digital technologies to make the transition. As Accenture CEO Pierre Nanterme explained in an interview at the World Economic Forum Annual Meeting 2016, practical innovations using digital technologies—such as Internet of Things sensors, big data analytics and machine learning—are creating new possibilities for companies in the resources, products, industrial and chemicals industries.
For instance, miners could use sensor-based technologies to monitor the exact usage on heavy machinery in order to increase asset lifecycle and utilization, or to better understand product journeys across the value chain. Other technologies like pulverized coal injection and blast furnace control systems can reduce direct energy use. Trace and return systems enable sharing of commodities and products, which can be developed into as-a-service business models. Imagine these scenarios: instead of selling platinum, a miner could create platinum-as-a service for the car industry and retain ownership across the cycle; or metals companies could design reusable steel girders that function like LEGO bricks to plug into new buildings.
You studied both chemical engineering and environmental technology. What sparked your interest in these subjects?
When I was young, I loved the sciences. I wanted to understand the practical application in society, which led me to chemical engineering. During my time in university, I became interested in the oil and gas industry, and I did my thesis on different techniques to prevent and manage oil spills. This began my journey to understand and address global environmental challenges. Given my education and experience, I am passionate about promoting STEM skills and experience for women. I am thrilled that this is an area Accenture focuses on through its corporate citizenship work.
1Graeme Roberts, US: Novelis inks sole-supply aluminium deal with Jaguar Land Rover. Just Auto. 11 January 2012 Factiva, Inc. All Rights Reserved.(accessed 04 March 2016) -
2Nicolette Fox, Veolia pans for gold on the UK's streets, The Guardian. 30 April 2015. Factiva, Inc. All Rights Reserved.(accessed 04 March 2016) -