KEY POINTS
- Mergers alone won’t solve the supply crisis for key metals.
- Rio Tinto urges the industry to focus on building new mines.
- Demand for copper, lithium, and other metals is rising fast.
Dominic Barton, the chairman of Rio Tinto noted that the world cannot rely on mergers and acquisitions (M&A) to solve the crisis in the availability of essential metals for clean energy.
Barton highlighted that global demand for metals such as copper and lithium is only set to increase and explained that, as a result, there will be a need to construct new mines.
In a Bloomberg TV interview, Barton said that the mining industry has recorded lately a rise in mergers, “It’s huge, and it’s in at least five different commodity areas.” However, “we’re not going to inorganic our way out of this challenge,” he said
He pointed out that companies cannot just purchase other firms as a way of responding to the increased demand, and that the emphasis should be drawn to the search for new sources of these critical metals.
More mergers, but fewer mines
To ensure a rapid increase in production with the help of M&A, many mining giants have turned to energy-transition metals due to higher demand. Corporations have not been shy in their advances in the market, as seen with the acquisition attempt of Anglo American Plc for $49 billion by BHP Group.
However, in the M&A field, Rio Tinto has been relatively more conservative even with all these aggressive manoeuvres. However, the company has been focusing on creating new mining opportunities mainly in copper and lithium.
“We’re just going to have to build more,” Barton said, explaining that the world will need to discover and extract more tons of copper in the next 30 years to support the needs of a more environmentally friendly economy.
Meeting the green energy metals demand
According to Mining.com, the increased use of clean energy sources such as solar, and wind and the adoption of electric vehicles has increased demand for metals including copper, lithium and nickel.
These metals are essential in applications such as batteries for electric cars and in distribution networks of power. Barton emphasized that as clean energy projects grow across the globe, relying solely on acquisitions to acquire new sources will no longer suffice in covering the disparity.
Barton also pointed out that exploration and development companies will probably be significantly more involved in the search and production of these resources in the coming years.
