What areas of EY’s Mining and Metals business were most in demand in 2022?

In 2022, we witnessed growth in every one of our offerings, particularly in assurance, consulting, integrated mobility, and strategy. First, our audit and financial advisory teams acquired several great clients as we continue to strengthen and expand our teams under a renewed leadership. Second, the lifting of cross-border restrictions and the increase in expat hiring have kept our Integrated Mobility teams very busy. Third, in consulting, we have seen a substantial demand for technology transformation anchored on updating, upgrading or implementing new ERP systems. We implemented or are currently implementing top tier SAP and Oracle projects, but we’ve also seen medium-size enterprises go for lower and respectable tier solutions too. In addition, we have helped a lot of clients in data analytics and data strategy, and that is tied most of the time to ESG, because the reporting requires good data, and clients realize they need to have a data strategy and trust in the data coming from operation and planning systems. Another area of high demand was Risk Services, where there is more interest in enterprise risk management to bring in the right specialists. Still in consulting, emerging areas of focus have been higher demand for cybersecurity and ESG strategy services. Finally, our EY Parthenon teams have been super busy on corporate strategy engagements, and operations turnaround discussions. In fact, the most recent trend is on inflation control, and recession proofing operations. As a result, right sizing operations, reducing costs, and changing the structure of organizations have been on the rise in recent quarters. We expect that there is going to be a need for operations excellence style work, and cost optimization in the upcoming quarters. Finally, our clients continue to request our tax services, as they have always been.

Do you feel that the industry is being overly prudent in its pursuit of growth today?

The sector has always contemplated the three growth models - organic, inorganic or hybrid. Ultimately, boards and management focus on allocation of capital under some customized risk appetite. The various waves of consolidations have taught us all that the custodians of value creation should be extremely careful, in adopting any of the models; some M&A have destroyed value, while some organic growth projects nearly wiped-out companies. So, there is a strong reluctancy to make the same mistakes of previous cycles. However, many indicators point to a potential supercycle for some minerals, but as we showed in our 2021 Top 10 Risks, uncertainty of demand remains. As a result, boards and management would continue to show some restraints on flashy acquisitions or mega projects. We expect that approach to continue in 2023 because the global economic indicators are still mixed. On the critical minerals side, assurances are improving with more direct offtake agreements between mining and the EV companies, but overall, the industry is taking a prudent approach when it comes to pursuing growth in today's market.

How can investors be convinced that allocating capital toward critical mineral projects in North American will deliver a positive return on investment?

The Mountain Pass mine is a cautionary tale of boom and bust in the ‘new minerals’ world. Because most investors during those days are still active, there is a sensible concern about the robustness of the demand for critical minerals. Especially when the global economic indicators are blurry. Our clients, investors and producers, are telling us that the discussion around “greenium” and “clear path of commitments” is heating up. We are hearing more questions like- should producers assign a premium to critical minerals being produced in Canada for being greener, owing to green input energy or shorter transportation distances? Or should we focus on brownfield for which existing facilities are converted or upgraded to produce higher purity products? Or should we integrate more upstream and downstream to reduce unnecessary bottlenecks? And what will the contributions of governments? The clear path of commitments has investors strongly recommending offtake agreements between the mineral producers and the EV ecosystem. For Ontario in particular, we need to see more investments in manufacturing, to close the loop of the EV value chain.

What technologies are having the biggest impact in the mining industry today?

Aside from catching up on ERPs, operations planning and talent management technologies, our teams report that companies are realizing more and more that drone technology, autonomy, and automated systems have a near future, be it for processes or assets. Drone technology for example provides safer access as well as unparalleled data quality to make operations more efficient and improve decision-making. The same is true with automation and autonomy. Because there is a shortage of talent, most mining companies are fascinated by how these technologies will help resolve the talent gap. On other mainstream technologies, such as blockchain, the mining sector still needs to catch-up to other sectors. Blockchain is expected to enable even better trust between ecosystem participants, in addition to achieve time and cost efficiencies.

Where do you expect the mining industry to experience the most change in the coming years?

We have been talking about new business models with our clients for a while now, but we believe we are starting see rapid adoption of this kind of change. Recently, many of our clients have been migrating across the value chain more often. For example, a traditional nickel concentrate company is building a battery grade nickel sulphate plant in Quebec to supply an automotive company. A 50/50 joint venture (JV) was recently created between a gold mining powerhouse and a base metals major; the gold mining company will be sharing its development and operating experience in the region, in return of a 50% ownership. We are also seeing mining companies taking stakes in technology businesses, because they realize they need to branch out and anticipate the next waves of value creation. Another area in which we expect to see massive change is indigenous involvement in mining. Though it is not new, we expect tremendous improvements to the consultation, collaboration and integration models. We expect the partnerships to be deeper with increased levels of trust.