RIO Tinto (ASX: RIO) chief executive J-S Jacques waxed philosophical to investors in London on Monday speaking of his vision of the company’s future.
He spoke about the ‘deeper world’ awaiting the mining industry in the 2020s, and the importance of recognising the finite nature of the resources being mined.
As Rio Tinto moves into the next decade, the shift from excess to discipline will be emphasised.
Mr Jacques said that as the world becomes faster, so it becomes deeper too – meaning AI and big data present an opportunity to transform mining majors’ business models toward circular economies.
“The world will not wait for us,” he said.
“The time for change is now.”
China’s insatiable appetite for resources in the earlier years of the 2000s left mining companies scrambling to keep up with demand.
This was the reason that thinking big was the right idea, that diversification and scale were the drivers.
But Mr Jacques said that the takeaway from this period was that volume growth for its own sake and “mega M&A” do not equal value.
“The push for scale will change,” he said.
“We can radically reshape the blending we do today and change the way the industry has thought of cut-off grades.
“This could potentially unlock billions of tonnes of previously ‘uneconomic’ resources and lead to the mining of tailings and waste.”
This shift to smarter, value over volume mining is what Mr Jacques sees as the future of an industry staring down a finite future.
Slow economic growth predicted for the coming years will mean majors may have to start thinking like fast moving juniors.
“Perhaps we should look to stage-gate investments, starting with smaller mines, which can be built quickly and safely, with imbedded optionality for growth,” he said.
“Shorter-builds mean quicker cashflows to shareholders, communities and governments, de-risking additional investment decisions.”
The third point raised was that of the responsibility to society that is increasingly expected from mining majors.
As society as a whole starts to demand more from the majors, there has been a paradigm shift in the value placed on social licence, and Mr Jacques said that his company has listened, and was already implementing structural changes.
“The only way we can truly tackle climate change is through partnerships across the value chain,” he said.
“There is no doubt that acting responsibly is an absolute necessity.
“But our approach needs to be based on a pragmatic kind of sustainability.
“With profitability at its heart.”
