Can mining survive in the circular economy?

There’s been much talk in the environment community about shifting from a linear “take-make-dispose” economy to a circular one. The premise is that by mimicking natural systems, and focusing on recovery, reuse and recycling of materials, we can eliminate waste and reduce extraction of virgin materials. The promise is that we can decouple growth from resource and environmental constraints. It almost sounds like a path to putting the mining industry out of business. Is this the beginning of the end of mining? I doubt it, but some things will change.

What is the circular economy?

Mainstream discussion on the circular economy is recent, however it’s reflected in various concepts from the 1970’s to 1990’s, including Industrial Ecology, Biomimicry and Natural Capital. All focus on systems design, learning from nature, eliminating wastes, and inter-disciplinary collaboration.

The Ellen MacArthur Foundation was established in 2010 to accelerate the transition to the circular economy based on three principles:

• Principal 1: Preserve and enhance natural capital...by controlling finite stocks and balancing renewable resource flows
• Principle 2: Optimise resource yields...by circulating products, components, and materials at the highest utility at all times in both technical and biological cycles
• Principle 3: Foster system effectiveness...by revealing and designing out negative externalities

Innovate UK visualizes the circular economy through material loops and interconnections.

https://connect.innovateuk.org/web/collaborations-circular-economy © Innovate UK 2017. All rights reserved.

Up till now, mining is all about scale

Over the last 50 years, the mining industry has been extracting increasing ore volumes based on a "bigger is better" paradigm. This was financially rewarding, as larger equipment with automated control brought economies of scale and low operating costs, often in the form of huge open pit mines and processing plants. However, with scale comes more water and energy use, more GHG emissions and more wastes. This heads in the very opposite direction to the circular economy. Declining ore grades and waning exploration success force miners to spend more to bring metal production to market. Miners have underestimated the complexity of executing mega-projects. Capital cost and schedule blowouts, difficult production ramp-ups and stakeholder interventions have led to big investor losses.

Only higher metal prices justify the risks and costs for such projects. But higher metal prices reflect increasing scarcity and declining productivity in mining. They stimulate innovation for substitution and more resourceful use of materials. This includes redesign of products to reduce weight of material used, refurbishing and recycling. In the long term, these factors affect the viability of the current mining business model.

Economics, consumer demands and environmental factors are driving the circular economy

Today’s customers are increasingly looking to purchase products as a service, when and where they want them. This changes the relationship between materials ownership and standard of living. Citizens in many parts of the world are becoming more aware and increasingly concerned about the health consequences of pollution, and risks from spills and failures of mine tailings facilities. This is driving regulatory constraints on the mining industry, and incentivizing investment in recycling and renewable resources. Many consumers, particularly in Europe, now demand more transparency on the environmental performance of products, this is reported through the EU Ecolabel scheme.

There is also momentum towards a circular economy through product stewardship and extended producer responsibility, which places responsibility on manufacturers to account for and minimize safety and environment impacts from their products.

How can the mining industry adapt to the circular economy?

The circular economy can be an opportunity for the mining industry to adapt. Mining companies are starting to use renewable energy and increase water recycling, strategies which reduce overall emissions, risk and long term costs. Underground mines that selectively mine higher value ores and return paste backfill minimize waste. Some vertically integrated mining and smelting companies, such as the European base metals producer, Boliden, have business models based on both raw materials extraction and recycling. This allows them to find synergies in materials sourcing, resource recovery and meeting quality requirements. This is a more stable business model than the boom and bust swings of mining.

Ultimately, a circular economy will impose costs and consumer pressure on mines that generate a lot of waste and environmental impact. This will force changes to an industry that is currently trending to more waste and impact. It should make miners review relationships with downstream smelting, refining and manufacturing customers, and reconsider the case for some level of vertical integration into refining and recycling.  The mining industry, and professionals in it, should build their awareness of where they fit in the materials economy, and their ability to shape more sustainable supply and use of materials. Walter Stahel stated that “excellence in metallurgical and chemical sciences is a precondition for a circular economy to succeed.” As a metallurgist, I’m jumping on that band wagon!

If you’re interested to learn more and engage on the circular economy and mining, please look out for information on the upcoming session that I will be chairing at the 2018 SME Annual Conference in Minneapolis, MN. Email me at laurie@resourcefulpaths.com to find out more.