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Bechtel’s Impact Report

What today’s macroeconomy means for the mining and metals industries

These days, it feels like we are living from one textbook-making historic event to the next. The first half of 2022 alone saw the spread of Omicron, a variant of COVID-19 virus, the war in Ukraine, and record-breaking inflation, all with the backdrop of increasing environmental, social, and governance (ESG) awareness and the global transition toward a carbon-friendly future. These global events have created a unique macroeconomic environment that may have lasting impacts on the mining and metals markets. In this blog, we will explore these macroeconomic trends and what they might mean for the mining and metals industry.


While temporarily disrupted by the COVID-19 pandemic, supply chains are now being restored as countries come out of lockdown, which, in turn, is bringing back economic strength and renewed demand for raw materials. China, the world’s second biggest economy, has historically driven global consumption for commodities such as copper, steel, and aluminum. China’s coming out of lockdown could mean a restart in its industry and infrastructure sector, boosting demand for those commodities. However, conflicting factors such as the country’s zero-COVID policy, which could cause ongoing lockdowns and lower-than-expected economic growth, could impact China’s demand for metals. As such, it is important to temper expectations on Chinese economic activity as a future driver of commodities demand.

War in Ukraine

Historically, Russia and Ukraine have supplied a significant proportion of the world’s potash, nickel, titanium, and aluminum. Sanctions against Russia and supply chain disruptions have created opportunities for miners in countries such as Canada, Australia, and much of Latin America to fill the supply gap and invest in new capital projects. Additionally, this conflict has shed light on the importance of geopolitical events in global commodity trade flows. What may result going forward is an increased focus on strategic alliances that ensures supply chain reliability of key commodities and strengthens economic and political ties between countries.

ESG awareness

ESG awareness is rapidly increasing, from countries to corporations to consumers. Governments are more proactively protecting environments and heritage sites through legislation and stricter standards. Consumers are also showing their preferences for ethically and sustainably sourced materials, and financial institutions are implementing stricter ESG criteria in their investments.

As a result of increased ESG criteria, we can expect to observe greater caution against sourcing from countries that might not adhere to environmental and safety standards, such as countries where child labor exists. In addition, ESG considerations will likely influence the type of projects that mining companies develop and own. Rio Tinto, for example, has pledged to become a net zero company by 2050 and is planning large capital expenditures in climate-related projects by 2025. The company also made the decision to sell off the entirety of its coal assets – making it the first major mining company to do so – resulting in a series of project cancellations.

The green energy transition

Not many know that mining is necessary to produce the metals required in most renewable energy infrastructure. For example, wind turbines and solar panels use large amounts of copper, and electric vehicle batteries use lithium. As the world transitions toward a low-carbon economy to meet major climate commitments, such as the Paris Agreement, investment must be increased in mining the necessary metals to meet expected demand. Metals required in the power generation technologies that support the energy transition include steel, copper, aluminum, and nickel. Other metals, such as lithium, graphite, and cobalt, are also potentially critical for the transition as they are the primary ones used in energy storage.

What it means to the EPC industry

Having covered how current macroeconomic and geopolitical factors are shaping the mining and metals markets, it is only natural to ask: what does it all mean for the EPC industry? There are a few things to consider. For starters, the Latin American and Australian regions are well positioned to become metals suppliers for the global energy transition. It is critical for companies, if they want to solidify their place in the EPC industry in the years to come, to build up customer relationships and help develop local technical capabilities in the region. To bring the most value, early engagement at the study phase, sharing of best practices, and bringing effective technical expertise is key. Finally, adequate support to manage increasingly stricter ESG criteria is essential. Finding the right strategic partner, one who understands the increasingly complex landscape and can capably identify sources of value creation, will be crucial to capitalize future opportunities.

To learn more about mining and metals in the energy transition, click here.

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