Technical Review Middle East 4 2019 by Alain Charles Publishing

S12 TRME 4 2019 Annual Mining Review_Layout 1 23/09/2019 14:50 Page 42

Annual Mining Review

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Promising future

The GCC will continue to develop existing metallurgical industries such as aluminium and copper smelting.

The GCC’s mining sector presents opportunities for growth and throws up challenges. Abhishek Paul reports. HE GCC’S MINING industry is taking rapid strides to exploit the mineral resources of the region. Instead of riding on oil and gas revenues, the GCC countries have been focused on economic diversification – investing in non‐ oil sectors, such as mining, to boost their economies and jobs creation. To realise this, the GCC countries are betting big on mineral deposits such as gold, silver, iron ore, copper and bauxite. Some of the mineral deposits left after desalinating seawater, such as magnesium, are being recycled as well. “The GCC has huge untapped mineral deposits of all types, and with investment these could grow to be a substantial industry,” says Nick Carter, president and CEO of American Arabian Development Company, in The Economist Intelligence Unit’s report The GCC in 2020: Resources for the future. Though the natural resources are available, the mining industry is not in a position to continue its business as usual, owing to constant disruption in the fourth industrial revolution and pressing concerns about sustainability practices. “The mining industry is poised for greater growth than it’s seen in a decade, but today’s market realities are very different than those in the past,” says Bart Cornelissen, partner and energy and resources leader, Deloitte Middle East and managing partner of monitor Deloitte, Middle East. “Disruption and volatility has become the

new normal and the pace of change is challenging the industry’s ability to adapt. In this new world order, mining companies will not attract talent, investment, or community support if they only focus on communicating the value that they currently bring to communities. Miners will need to go a step further and articulate what they stand for by developing differentiated business models designed to drive long‐term value.”

Challenges remain Despite bold plans being charted out, such as Saudi Vision 2030, focusing on generating mining opportunities, it seems uncertainty over the sector’s future climate is dampening investment spirits of all stakeholders. Some of the crucial challenges the industry is grappling with include human resources, health and safety, capital investment, sustainability, responsible use of water and energy and economies of scale. According to Ines Scotland, CEO of Citadel Resources, a mining firm based in Australia, growth would be faster if governments were to build on new laws allowing foreign investment in mining by actively granting exploration and mining licences. “The major risks are around the ability to attract foreign investment,” notes Scotland in The Economist Intelligence Unit’s report. “Investment in exploration is risky, and you need companies that are prepared to take those risks and manage them with technical abilities.” Going by traditional metrics, things are

Technical Review Middle East - Issue Four 2019

looking good for the world’s top mining countries, according to PwC’s Mine 2019 research report which mentioned that the world’s 40 largest mining companies’ revenue increased by eight per cent (US$51bn) to US$683bn in 2018. EBITDA of these companies was up four per cent (US$7bn) to US$165bn. Dividends paid to shareholders recorded US$43bn, which is an all‐time high. Additionally, capital expenditure showed an increase by 12 per cent to US$57bn for the first time in five years, albeit still below 2008 pre‐boom levels. However, issues such as trade wars, geopolitical crises and climate change continue to create industry volatility. This uncertainty was particularly evident at the end of December 2018, when commodity prices and emerging economy exchange rates decreased substantially, reveals the PwC report. “And when investors and other stakeholders look at the future of the mining industry, it is clear they have concerns about the industry’s perception on vital issues such as safety, the environment, technology and consumer engagement,” states the report. With mining companies investing in analytics and AI in a bid to leverage the data they generate to sharpen planning and decision‐making across the mining value chain, it could improve safety, increase productivity, reduce costs, and enhance the employee experience, according to Deloitte Global’s 11th annual mining report.