The global energy landscape is undergoing significant change – from the overtake of traditional demand centers from developed economies by fast-growing emerging markets to the development of technologies that are dramatically increasing the energy supply coupled with the emergence of alternative energy sources. In the near term, focus will remain on the continuing adjustment of the oil market, as the impact on supply of the significant cutbacks in investment spending on new projects over the past two years has not yet been fully felt. At the same time the response to those near-term challenges must be connected with longer-term energy transition that is taking place, including (1) continued de-carbonisation of the energy mix, (2) rapid improvements in the competitiveness of renewable energy, and (3) growth of liquefied natural gas increasing the accessibility of gas across the globe, resulting in higher growth rates expected for renewable and natural gas demand relatively to oil or coal.
With a strong but volatile outlook for the sector, the global mining and metals industry has gone through an important cycle of renewed focus on capital discipline and balance sheet austerity which may have been lacking during the recent China driven commodity boom including some ill-timed acquisitions). Interest is back into the sector from global shareholders, institutional investors, creditors, and private equity. We have seen increased M&A activities both in the small, mid, but also large cap sectors, with investors positioning in strategic assets in expectation for the next cycle of supply deficit as a result from the lack of investments in the past few years in new projects and/or capacity replacement.
The sector will continue to face increased challenges of changing expectations in the maintenance of its social license to operate, skills shortages, effectively executing capital projects and meeting government revenue expectations.
By 2030 more than 50 trillion USD of global investment in infrastructure will be required just to keep pace with global growth, with emerging economies accounting for 60% of this needs. We expect Latin America to demand around 3.5 trillion USD in infrastructure investments, while China and emerging Asia shall require another 14 and 3 trillion USD respectively.