Former Anglo American (LON: AAL) CEO Mark Cutifani has warned that mining companies risk being acquired by outsiders unless they accelerate innovation to overcome deepening deposits, lengthy permitting delays and dwindling resource replacement.
Speaking at the International Mining and Resources Conference in Sydney this week, Cutifani said mines are getting an average of 40 metres deeper each year, while permitting new projects can take up to 20 years. He argued that the industry is failing to develop the technologies needed to address increasingly complex mining conditions.
“So, we aren’t able to replace the resources that we’re mining,” he said. “On average, in 10 years, you’re going to be 400-500 metres deeper, and the technologies that we’re going to need to be successful with the complexities when we do it, we’re not doing well.”
The warning raises questions about whether major producers can sustain mineral supplies as deposits become harder to access and development timelines stretch. Cutifani believes their failure to invest in long-term solutions could eventually prompt companies outside the sector to acquire established miners.
Innovation deficit
Cutifani recalled a 2010 conversation with then-General Electric CEO Jeff Immelt that first crystallized his concerns about the industry’s future.
“He said, ‘What’s the biggest worry I should have about your industry in the next 10 to 20 years when I look at my business?’ And I said, ‘In 10 to 20 years, you will not be able to get the materials you need from us because we’re not innovating quickly’,” he said.
Sixteen years later, Cutifani sees little evidence that the industry has adequately addressed the problem.
During his tenure at Anglo American, the company pursued technological improvements through its FutureSmart Mining program, which focused on improving safety, productivity and sustainability.
“In setting up organizations, I always felt it was an imperative to keep working on innovation projects that would change the game,” Cutifani said.
He credited a combination of technological advances and operational efficiencies with helping Anglo American deliver an average annual shareholder return of 22% over nine years.
While acknowledging the need to balance immediate operational improvements with longer-term research, Cutifani said major producers remain too focused on short-term gains.
“I think it’s a real issue, and one of the reasons why major players outside the mining industry will start buying large mining companies, because we’re not doing our job.”
Northern Star challenges
Cutifani’s comments come as he takes on a new role at Perth-based gold producer Northern Star Resources (ASX: NST), joining its board as a non-executive director earlier this month following a recommendation by activist investor Elliott Investment Management.
His appointment comes amid a pivotal period for Northern Star, which is ramping up its expanded KCGM operation in Kalgoorlie, facing pressure from Elliott and takeover interest from Gold Fields (JSE, NYSE: GFI). New CEO Suresh Vadnagra is also settling into the role.
The company is targeting a final investment decision by mid-2027 on its 13.2-million-ounce Hemi gold project in Western Australia. Vadnagra said earlier this month that advancing the development would “absolutely be a priority”.
Cutifani said understanding the full potential of a mineral resource is among the most important considerations when planning a major development.
He estimates that fewer than 30% of mining projects worldwide have been designed or are operating at their full potential, suggesting companies routinely overlook opportunities to maximize their assets.
“Think about the potential and how you might deal with various pricing scenarios,” he said. “But assume the worst and make sure that you can deliver a project that works at that level.”
He also urged developers to consider a deposit’s longer-term potential when planning infrastructure and community investments rather than designing solely around initial production expectations.
“But don’t miss the resource potential, and build the infrastructure or the thinking around what you do with infrastructure and community on that basis, and then put the steps in place to get you there.”
Since leaving Anglo American, Cutifani has also established consultancy Odin Partnership with former Anglo American group director of technical and sustainability Tony O’Neill and several investment bankers.
His involvement at Northern Star offers an opportunity to apply those development principles as the producer weighs major capital commitments while navigating shareholder pressure and competing strategic interests.
Source: https://www.mining.com/cutifani-warns-mining-sectors-failure-to-innovate-opens-door-to-takeovers/
