Mining in a NAVI World: Key Insights From EY

The mining and metals industry is undergoing a fundamental operational transformation, driven by the harsh realities of geological depletion and the urgent need for technological innovation.

According to an EY report, operational complexity has surged to the top of the sector's risk radar, displacing external strategic pressures as companies grapple with declining ore grades and increasingly challenging extraction environments.

The shift could signal a pivotal moment for an industry confronting what might be described as the physical limits of accessible mineral deposits.

The NAVI operating environment

The sector is operating within what EY characterises as a "NAVI" environment: nonlinear, accelerated, volatile and interconnected.

Paul Mitchell, EY Global Mining & Metals Leader, explains: "Slow, isolated change is not suited for an operating environment that is increasingly NAVI."

This new reality means that operational challenges no longer exist in isolation, with geopolitical tensions, resource nationalism and tariff shifts directly influencing capital allocation decisions and project timelines.

Notably, mining companies are shifting away from prioritising short-term shareholder returns, instead channelling resources into reinvestment and growth, evidenced by rising capital expenditure and growing interest in vertical integration, which has reached 26% as firms seek to secure their supply chains.

The geological challenge facing operators

The operational complexity transforming the sector is perhaps most starkly illustrated by what could be termed the 40% Copper Cliff.

Since 1991, the average grade of copper mined globally has declined by approximately 40%.

Today, numerous major operations are processing ore containing less than 0.5% copper content. This means that to extract equivalent metal volumes, miners must move, crush and process nearly double the quantity of rock compared to 35 years ago.

Additionally, extraction is occurring at unprecedented depths, frequently exceeding two kilometres underground, creating geotechnical stress, escalating energy costs for ventilation and exponentially increasing logistical transit times.

According to the EY report: "Predictability underpins investor confidence, capital access and strategic agility. But achieving reliable output is more difficult because of operational complexity."

This fundamental challenge is reshaping the relationship between mining operators and financial markets, as investors increasingly scrutinise operational reliability alongside traditional financial metrics.

Digital innovation and AI have emerged as critical tools for addressing this productivity crisis.

While early digital initiatives delivered only incremental improvements, 58% of miners are now substantially increasing their AI investments to transition from siloed data systems to an integrated operational framework.

"Gains have been realised within core operations," EY says, "but more value will come from an end-to-end approach that leverages a unified data and AI backbone."

Currently, 21% of respondents plan to increase their AI budget by more than 20% over the next 12 months.

These technologies are being deployed through precision mining strategies to reduce waste and predictive maintenance programmes designed to eliminate the operational unpredictability that concerns investors.

Workforce and future challenges

However, a critical workforce challenge threatens to undermine these technological advances.

A staggering 75% of executives express doubt about their ability to address labour shortages for onsite operations.

This human capital gap could jeopardise delivery of the US$5.4tn in new projects required by 2035 to meet anticipated mineral demand.

The challenge is compounded by a contracting exploration pipeline, with global exploration budgets falling to US$12.5bn in 2024, down from US$12.9bn in 2023.

Meanwhile, sustainability has dropped from #2 to #9 in the risk rankings, though this reflects not diminished commitment but rather a shift toward 'greenhushing', under-reporting ESG goals to avoid litigation under new anti-greenwashing regulations. 

Only 56% of mining companies currently express confidence in meeting their nature-positive commitments by 2030.

Yet, the report emphasises that licence to operate is evolving into a strategic opportunity.

Mark Bristow, President and CEO of Barrick, says: "Mining done right is a powerful force for development. When our host communities succeed, we succeed too."