We're concerned there won't be enough metal to meet energy transition targets: Wood Mackenzie
Greening metals and mining, where is the industry in managing this transition? In terms of greening itself, it’s making good progress. Steel remains the biggest challenge, which will take multiple decades and around about one 1 1/2 trillion dollars. But we’re starting to make progress. As far as the delivery of metals for the transition, we are way behind target and that really is because miners are focusing on decarbonising themselves. And distributing dividend and there isn’t really enough cash flow or appetite to invest in growth. And what that means is that our concern is that there won’t be enough metal to meet energy transition targets for EVs, wind, solar, etcetera. So when you look at the challenges faced by the big players whether they are Valet, BHP, Rio Fortescue and the Chinese players. For that matter, where are they? Who is best in breed in terms of really managing the transition? Well, I’d say the majors are in good shape out. The multi commodity majors, the BHPS, the Rios, anglers that the companies you mentioned, they’re all doing the right things in terms of decarbonising themselves, moving as fast as they can. They’ve got quite aggressive targets and in fact they’ve moved much faster than for example the oil and gas companies. The key challenge remains growth. How do these companies grow when the shareholder base is not really convinced that they should grow because they want their dividends? What’s interesting is when you look at the conversation in Europe, whether it’s building standards for steel, there are some clear requirements that the Europeans are now setting and are requiring their suppliers to meet as well over here in Asia. Are the suppliers, are the steel suppliers, the steel producers in particular, able to meet those exacting standards? Some of the standards, yes. The the key challenge will really be carbon standards. So C bam, C bam is something of a watershed game changer because carbon border adjustment mechanism, yes. So that doesn’t affect steel for a little while. But when it comes into play, the implication is that it it leads to an increase in costs and prices which obviously is inflationary for the consumer. And of course steel is a really difficult one, still represents around about 9% of global emissions. That is the one that really does need to decarbonize in order to get us onto the the net 0 pathway.