Tech Companies Could Boost Mining Production

Although the mining industry has mostly benefited from the growing global interest in decarbonization, many investors stress that boosting production to the required level is hardly possible. However, experts say this production increase could become a reality if large technology companies were fully committed to making it happen.

In recent years, mining companies have become more popular and increased their profits as countries demand more production and better commodity supply chains. At the end of 2022, the world's 50 largest mining companies had a combined value of US$1.39 trillion. Earlier in the year, mining stocks benefited from a 52-week high. However, the value of the top 50 companies fell by more than US$1 trillion due to issues exacerbated by uncertainty. This left the top mining companies with a combined value of US$459 billion at the beginning of 2023.

According to experts, the sector that has maintained the most excellent financial margins in recent years has been tech. The Top 5 tech companies started 2023 with a total value of US$4.55 trillion. Mining.com highlighted that they therefore could help achieve global decarbonization efforts but are not yet focusing their efforts on this issue.

For instance, even though Apple’s market capitalization declined by US$750 billion in 2022, it could still afford to purchase the world's Top 50 mining companies and still have enough to tap into the global copper mining output and buy all seaborne iron ore by 2022.

Experts stressed that while the gains for tech companies are undeniable, their interest in transforming the global market is subdued. “The market capitalization of entities like Facebook or Netflix implies that there is more than enough money, more than enough capital to deliver whatever economic transformation is required. The fact that our revealed preference, amusing cat videos, is at odds with our stated preference of a sustainable economic future for our children should not be erroneously taken to infer that there is some financial constraint to the ends we choose to pursue,” said Paul Gait, Senior Research Analyst, Bernstein Investment Research and Management.

In Mexico, the most popular investment by a tech company in an area tied to the mining industry is expected to be Tesla’s Gigafactory. According to Reforma, the Gigafactory will produce components for the company's current electric vehicle models. However, it could later develop new models at a lower cost compared to other car factories. 

With the new investment, Mexico is moving closer to its goal of developing a strong and attractive lithium value chain. However, industry experts have highlighted that the green transition can be hampered without the right government incentives, as well as if the public and private sectors do not invest in infrastructure and research. In addition, another challenge is that Mexico's lithium reserves are found in clay deposits, which makes extraction complicated and expensive.

Mexico Business is proud to extend an invitation to Mexico Mining Forum 2023, where the industry’s most important leaders and investors will gather to discuss the most relevant topics regarding the sector, including innovations in terms of technology and industry digitization. A ticket to the forum will grant you access to stakeholders defining current trends. Taking place on February 1 and 2, the summit will provide space to develop new business opportunities.