Looking ahead at 2024 trends in mining

While 2023 had its fair share of volatility in the mining sector, mining trends into 2024 continue to be shaped by a dynamic landscape of technological change, customer support models and global shifts with critical minerals.

SMS Equipment actively follows these industry indicators and is constantly investing in equipment, technology and people to best support our customers. In this edition of Experts Corner, Simon Kim, SMS Equipment’s Director of Mining Sales Support and Strategy, shares some of the trends he’s seeing and how SMS Equipment is positioned as we move into 2024.

The Global Picture

At a global level, the mining sector saw some pullback heading into the end of 2023 for major indicators. These include commodity prices, significant drill results, resource announcements, major financings and other key project milestones. Exploration investment in Canada, however, remains strong – Canada ranked 1st globally with an estimated $3.3B CAD in exploration budgets. This impressive 20% share of global exploration budgets has grown at a 12% CAGR since 2018. Gold remains the top driver at 56%, while critical minerals such as Copper, Lithium and Nickel are growing rapidly.

Growth Amongst SMS Equipment Customers

In our business, we still see a lot of activity with the major mining producers across Canada and a strong growth in critical mineral projects. In 2021 and 2022, critical mineral projects formed approximately 30% of development studies released by mining companies but grew to nearly 45% of development studies released in 2023.

In development studies, we are seeing a greater engagement with engineering and consulting firms to provide information on new technologies such as autonomous haulage, trolley assist and tele-remote to help design mines of the future.

From an equipment perspective, this translates into continued demand for ultra-class haul trucks used by current producers in the oilsands, met coal, iron ore, and large gold and copper projects, as well as growing demand for upcoming nickel projects.

We’re also seeing growth in smaller, more versatile equipment, such as 100-150 ton mechanical drive haul trucks (Komatsu HD785 and HD1500 models) and 200-400 ton hydraulic excavators and shovels (Komatsu PC2000, PC3000 and PC4000 models), to support emerging gold and lithium projects.

Financial Pressures

To get a read on inflationary cost pressures, we reviewed the cost trends for operating copper, gold and coal projects in Canada. Cash costs have been up 30% per unit since 2018 as a result of cost increases across the board (labour, energy, reagents, etc.).

Higher interest rates are also taking their toll. This seems to mainly affect the junior miners who are seeing challenges in the equity markets and may struggle to have the cash flow to make, say, a 20% down payment on new equipment deliveries during the early stages of their mine life.

The Staffing Crunch Continues

The tight labour market seems to be getting tighter. According to the Mining Industry Human Resources Council, employment in mining and quarrying grew 50% in 2022, but since the pandemic, the percentage of job openings that remain unfilled has doubled. The Canadian mining industry will need approximately 29,000 new workers over the next five years and continues to face challenges in attracting and training talent. This localized challenge is also shared in other major mining regions worldwide.

How SMS Equipment is Working to Fill These Gaps

On the equipment acquisition side, we’re evaluating some options to help customers bridge the financing and timing gap, and we’ve gotten some good responses from that. We look forward to continuing the conversation with mining projects on how to help.

In the 2023 Fall Economic Statement, the Department of Finance targeted the introduction of legislation on clean economy investment tax credits in early 2024. We closely monitor these tax credits and how they can deliver value to mines and critical mineral projects.

The increased digitization of equipment will help mines deal with a talent deficit.

State-of-the-art equipment increases productivity per worker, shortens the learning curve for new operators and makes mining more attractive to the younger generation.

While the autonomous haulage solutions we have deployed with customers can be leveraged to aid with the talent deficit, it is not the only solution we offer. Technologies such as tele-remote operated equipment can attract employees with different skill sets and increase the ability to mentor a junior operator. Safety systems such as collision awareness can also be introduced to the operation to maximize productivity further while protecting employees and equipment.

Lastly and most importantly, we have successfully attracted and brought people into the industry. We’re particularly proud of the apprenticeship program that our Fort McMurray branch has grown to cohorts with more than 50 apprentices and our strong recruiting results in Timmins, where we are scheduled to unveil our new facility investment in the 2nd half of 2024. This means we have the staff to support our customers anywhere in Canada in various capacities, depending on our customers’ needs – from an all-inclusive maintenance agreement with dedicated staff to a training program for a mine’s operators and maintenance teams. In mining at SMS Equipment, we draw from dedicated pools of resources, so we are all in this together.