• Industry
  • August 26, 2019
  • Czas czytania

Six key megatrends influencing the raw materials sector

Six key megatrends influencing the raw materials sector

Mining worldwide, as well as other economy sectors of the economy, shifts between rapid development, stagnation and sometimes even phases of shrinking. The current phase of the business cycle is determined by a multitude of factors, phenomena and forces of global reach, which shape the reality and affect the future. Such factors and phenomena are called megatrends. They shape the global economy as a whole as well as its individual areas. Below are six key megatrends which will be shaping the raw materials sector in the nearest future.

  1. Global growth

 If global economy is rapidly developing, it needs fuel to grow. This fuel includes raw materials which are then consumed in increased quantities. Currently, a modest yet stable global GDP increase of around 2.5-3.0% is expected in the long term. The raw materials sector will be developing in similar fashion. The threat of global economic slowdown remains the greatest danger. It affects the chances of growth of the whole sector and will have a negative impact on the level of investments.

  1. China

 China is the most populated country in the world and the second largest global economy. What happens in the Middle Kingdom has an increasing impact on the global economy and the raw materials market. After years of GDP increasing at double digit rates, a significant slowdown can be noticed in the economy of that country. The Chinese GDP currently grows at a rate of about 5.6% a year, challenged by the lack of growth drivers, and the whole economy is transitioning and changing its model into one that focuses more on services and consumption. In addition, Chinese companies are increasingly active in international markets, thus competing with local market participants and changing the current power structure.

  1. Energy generation

 Trends related to climate protection and an increase in environmental awareness are becoming more and more apparent. They lead to, among other things, a change of traditional energy generation models based on coal combustion, shift of support for nuclear energy, development of RSE (Renewable Sources of Energy) and tightening the CO2 emission standards. Energy raw materials are mostly on the defensive and the energy and mining companies are carefully approaching new projects of factories and mines based on traditional energy sources.

  1. Protectionism

 In recent years, free trade has been threatened by growing protectionism of certain countries. Arising conflicts lead to skirmishes and trade wars, destabilisation of markets and supply chain interruption. New customs duties and additional restrictions on imports of certain raw materials, materials or finished products result in disputes between countries and limit the development of enterprises trading in the global markets. Protectionism may have positive or negative implications for certain entities. It is more threatening to a particular raw material in certain markets rather than to the whole sector.

  1. Technology

The rapid development of technology has direct impact on the raw materials sector. The nature of traditional mines and machinery designed for such mines is changing. The technological progress and the focus on productivity drives the implementation of new technologies related to the automation of machinery and processes, autonomy, electrification (battery-supplied drives), predictive maintenance, remote control, limiting human work in hazardous areas, big data analytics, establishment of control centres (one control room), robotics, virtual reality, and other. Future technology will be increasingly changing the nature of the raw materials sector.

  1. New applications

Raw materials sector is susceptible to trends related to the rapid development of certain raw materials and the decline of the importance of others. Growing popularity of battery-powered electrical vehicles causes an increase in demand for raw materials, such as lithium used for the manufacture of batteries.  The extraction of lithium is to quadruple by 2030. A similar situation applies to a multitude of other raw materials used in the development of high-technology sectors. This trend does not affect the picture of the sector as much as others, but it will undoubtedly create new growth leaders.

Maciej Krętosz

Maciej Krętosz

A manager with over 7 years of experience in mining machinery and equipment industry. Employed by FAMUR Group in Business Development Department as a strategic marketing manager. Actively seeks, implements and develops new, prospective business areas, co-creates and implements new company strategy and participates in acquisitions and establishment of strategic partnerships. Dedicated the last 14 years of hislife to China - first he studied in Asia and then worked in several mining companies. An expert in Chinese language and local market.

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