As the global mining industry advances, several key trends and forecasts are shaping its direction, especially around critical minerals, Platinum Group Metals (PGMs), and gold.
By Rudairo Mapuranga
These shifts are driven by the rise of renewable energy technologies, geopolitical factors, and the evolving energy storage landscape. One of the most debated topics is the future of hydrogen as an energy solution and its impact on platinum demand, alongside the enduring role of gold in the global market.
Hydrogen Batteries and Platinum Demand
The potential use of hydrogen for energy storage has sparked intense debate. While hydrogen has various applications, energy storage remains controversial due to its inefficiency. Despite political enthusiasm and significant investments in hydrogen infrastructure, the fundamental physics of hydrogen as an energy storage medium reveals significant limitations.
Hydrogen’s low energy density and inefficiencies in production, storage, and conversion have cast doubt on its viability as a large-scale battery solution. Consequently, the projected demand for platinum, used in hydrogen fuel cells, is expected to remain subdued. Platinum demand may largely be met through recycling from internal combustion engine (ICE) vehicles being scrapped over the next several decades, suggesting that the rush for new platinum supply may be overstated.
Platinum Prices
Given the limited demand for hydrogen fuel cells in energy storage, platinum prices are expected to remain suppressed in the near term. Some experts even predict a significant drop in platinum prices by the end of this decade. This forecast mirrors recent trends in other battery materials, such as lithium, nickel, cobalt, and manganese, which have experienced price corrections as markets adjust to oversupply and reduced demand growth projections.
The West vs. China
A major force reshaping the mining landscape is China’s growing dominance and its strategic partnerships with Russia and other BRICS+ countries. China’s control over critical mineral processing, particularly for lithium, cobalt, and rare earth elements, has granted it a considerable advantage in global manufacturing. This influence allows China to keep commodity prices low, further consolidating its position in key industries like electronics, automotive, and renewable energy.
China’s expanding influence in Africa over the next decade is expected to fuel infrastructure development across the continent. Many African nations are gravitating toward China, recognizing that partnerships with Eastern powers often yield more immediate benefits than those with the West, which historically imposed burdensome debt and retained control over local economies. However, concerns from African governments are rising over irresponsible practices by some Chinese companies, particularly regarding environmental degradation and illicit financial flows.
In response, the Chinese government has introduced measures to ensure its investors operate responsibly abroad. For instance, in the Democratic Republic of Congo (DRC), Chinese companies are now held accountable for complying with environmental standards and local labour laws. These efforts aim to curb illicit financial flows and mitigate the growing backlash against irresponsible mining practices in African countries.
Resource Nationalism and Geopolitical Risks
Rising geopolitical tensions and resource nationalism are impacting global mining operations. Countries rich in mineral resources increasingly seek to extract more value from their natural resources by imposing stricter regulations, higher taxes, or encouraging local beneficiation. While these measures aim to boost local economies, they can lead to supply disruptions and increased operational costs for mining companies.
Several African nations, including Zambia, the Democratic Republic of Congo (DRC), and Zimbabwe, are pushing for greater local ownership and beneficiation in their mining sectors. For example, Zambia has raised royalty taxes on copper production, and Zimbabwe’s government has announced plans to increase taxes.
Governments in Chile and Peru, major copper producers, are considering reforms that may increase taxes and royalties on mining companies to fund social programs.
Critical Minerals
The energy transition continues to drive demand for critical minerals, especially those essential for batteries and renewable technologies. However, the challenge lies not only in extracting these minerals but in processing them cost-effectively to meet high-purity standards. High-grade resources hold promise, but without efficient refining technologies, these resources risk becoming economically unviable.
This reality is reflected in current market conditions, where an oversupply of some critical minerals has driven prices down. Lithium, once the cornerstone of the EV revolution, has seen prices fall by over 88 percent, with lithium carbonate and lithium hydroxide dropping below $11,000 per metric ton due to high operational costs and reduced demand growth forecasts. Similar trends are observed in other battery materials, like cobalt and nickel.
Gold Prices
Unlike critical minerals, gold operates in a unique market where its value is less tied to industrial use and more influenced by macroeconomic and geopolitical factors. As a safe-haven asset, gold typically performs well during times of uncertainty, economic downturns, or political instability. In 2024, gold has retained its appeal due to ongoing geopolitical tensions and global inflation concerns, particularly surrounding US foreign policy and the fragility of international markets. Gold futures hit a new all-time high on October 30, briefly surpassing $2,800 per ounce as investors turned to the metal amid uncertainty around the U.S. presidential election and simmering geopolitical tensions.
With central banks, especially in emerging economies, increasing their gold reserves as a hedge against economic instability, gold prices are expected to remain resilient. Any potential conflict or further escalation in geopolitical tensions could drive prices higher as investors seek refuge in the asset. However, given that gold’s industrial use is limited, its price will continue to be largely driven by investor sentiment rather than supply-demand fundamentals from mining.
Sustainability and ESG
As we progress through the 2020s, mining companies must excel at navigating a landscape where easy profits are no longer guaranteed. While there is growing demand for materials essential to the energy transition, such as copper and lithium, oversupply and high operational costs will continue to suppress prices, leaving only small profit margins.
Simultaneously, governments and investors are pushing for more sustainable and responsible mining practices, with ESG (Environmental, Social, and Governance) considerations becoming central to mining operations. Companies that fail to meet these expectations may find it increasingly difficult to access capital and secure long-term growth opportunities.
A Competitive and Complex Future
The global mining sector is evolving rapidly, with critical minerals playing a pivotal role in shaping the future of energy and technology. However, challenges related to processing, geopolitical control, and market volatility continue to present obstacles. Platinum’s role in hydrogen fuel cells may not be as significant as once thought, and critical mineral prices, including those for lithium and nickel, could face further declines.
Meanwhile, gold’s resilience as a safe-haven asset provides a counterbalance to the volatility seen in other commodities, though its price remains vulnerable to shifts in global political and economic sentiment. Mining companies must remain agile, focusing on efficient resource extraction, sustainable practices, and strategic partnerships to thrive in the competitive global marketplace. The ongoing geopolitical reshuffling, with China’s dominant role in critical minerals, will continue to shape the industry in the years to come.
