Opportunities and risks will arise from a number of global megatrends, such as the electrification of transport and the global imperative to become more effective stewards of land, water and the environment.
The International Maritime Organisation established new low sulphur fuel regulations in 2020 with the aim of halving the industry’s total emissions by 2050.
We project that one in every two vehicles could be an electric vehicle by 2050 – this will require a lot more copper and nickel.
The first 100 million electric vehicles on the road are expected to displace close to 1.3 millions of barrels of oil demand per day by around 2030, equivalent to around 1.25 per cent of annual demand today.
Electric vehicles will displace oil demand, drive a major uplift in nickel use in batteries and amplify the attractiveness of copper.
Electric vehicles (EVs) were impacted by the collapse in auto sales activity under the pressure of COVID–19. National and local governments in China and Europe have responded with policy support, with France and Germany stepping up their support of EV take-up and China extending NEV (new energy vehicle) subsidies to 2022.
The upcoming US presidential elections could also have long-run implications for EVs as the Democratic policy platform includes an ambitious plan for building EV charging infrastructure, which would be a critical enabler of more rapid take–up.
In the longer-term, our central case remains that by 2035, EVs will constitute around 14 per cent of the light duty vehicle fleet – or close to 30 per cent of annual sales. And by 2050, EVs are expected to consume almost 7 per cent of the world’s electricity, by which time they will constitute around half the fleet and comprise around three–quarters of annual sales.
We think that nickel rich lithium-ion batteries will help electric vehicles out-compete existing traditional engines on both performance and cost.
Food security and biosphere stewardship
Food security and biosphere stewardship are expected to shape our long run operating environment.
Since 2000, crop production has risen by nearly 50 per cent, but we estimate that cultivated land has expanded by less than 3 per cent. The global population will be close to 10 billion by 2050, and diets are becoming more complex as populations urbanise and incomes rise.
The strain this places on finite land availability means global crop yields must increase significantly if we are to meet the increase in demand.
We think that potash based fertilisers will be a vital part of the solution, as they help produce more crops from less arable land.
Here's how potash based fertilisers can help us become more effective stewards of the biosphere.
The introduction of the new IMO 2020 low sulphur fuel regulations in January 2020 signalled a new era of sustainability for the dry bulk maritime freight industry as it moves towards a target of halving its total emissions by 2050 (from 2008 baseline levels).
An intense period of fleet replacement is scheduled to occur in the mid-to-late 2020s, which offers a unique opportunity to dramatically alter the technological and environmental profile of the dry bulk fleet.
Introducing LNG fuelled vessels into our own iron ore value chain will help to reduce emissions by roughly one-third on a per voyage basis compared to conventional fuel, reducing CO2 and NOx (nitrogen oxide) emissions and eliminating SOx (sulphur oxide) emissions. If the industry gets this right, the steep task of halving shipping emissions by 2050 may not seem as far off as it does today.
If the shipping industry were a country, it would be the sixth largest emitter of CO2 on the planet. That equates to more emissions than Germany or Canada.
New International Maritime Organisation standards (IMO2020) aimed at curbing carbon emissions generated by the freight sector are expected to strengthen the industry’s environmental performance.
To identify opportunities and challenges for our business, we monitor the social, financial and geopolitical trends that will shape commodity and exchange markets in the short, medium and long term.
Global economic growth is one of the main drivers of demand for our commodities. We monitor the growth trends in major advanced economies like China, India, Japan, Europe and the United States to identify challenges and opportunities for our portfolio.
Commodity markets can be volatile on a month-to-month, or even year-to-year basis. That’s why we constantly monitor the global trends both on the supply and demand side that will affect the commodities in our portfolio in the short, medium and long term.
Read BHP's economic and commodity outlook in full
Data and events referenced in this report are current as August 7, 2020. The data is compiled from a wide range of publically available and subscription sources, including Bloomberg, Platts, Wood Mackenzie, CRU, Thomson Reuters, Argus, CREIS, Fertecon, FastMarkets, SMM, AME, Parker Bay, MySteel, LME, COMEX, SHFE, ICE, DCE, SGX and I.H.S Markit, among others.