Impacts of megatrends on our business

Three billion new middle-class consumers will need vital resources such as metals and water in the coming decades. This makes it essential to optimize resource usage. Greater production capacity and more resource-efficient, sustainable technologies will be needed. We feel that technology can change everything.

Our management annually evaluates the global megatrends that impact Outotec’s business, examining related risks and opportunities to create the basis for our strategic planning. Sustainability-related risks and opportunities are addressed in Outotec’s routine risk management processes.

The megatrends with the greatest impact on Outotec today, as set put below, were first listed in our 2014 evaluation. In our 2016 review, the previously listed megatrend Decoupling wealth and ecological footprint has been included in the Resource efficiency imperative, as they both  relate to growing demand for metals and minerals, and the excessive resource use that is causing some of the world’s most serious problems, such as climate change.

Other megatrends identified as impacting Outotec’s business are: Urbanization and the growing middle class, the Drive for social sustainability, the Digitalization of the world, and a More volatile macroeconomy.

Overall, these global megatrends appear to bring Outotec more opportunities than threats (G4-EC2).

Megatrend: Urbanization and the growing middle class

Growing demand for minerals and metals to satisfy the needs of the new middle class requires greater processing capacity and more resource-efficient methods.

  Impact on Outotec Risks - / Opportunities +
Outotec’s cost structure may be too high for emerging countries

New interest for Outotec’s technologies; efficient ore processing, higher yields and advanced process control
Increased cost-competitiveness with modular products, local suppliers and best-cost-country sourcing

Resource efficiency imperative

Valuable metals and minerals must be more effectively recovered, and tailings and waste must be better recycled and processed to enhance the efficient use of resources.

  Impact on Outotec Risks - / Opportunities +
Ores become more complex and difficult to process
Tighter regulation affects customers’ operations
Changes in the availability or price of water, fossil fuels, power and mineral resources affect customers’ operations
Increased demand for Outotec’s new energy and water-efficient solutions
Increased demand for new production of metals from end-of-life secondary materials; electronic waste, metallic scrap, cabling, and battery paste or scrap.
Requirements for the efficient use of biomass and waste increase

Drive for social sustainability

To maintain their social license to operate, our customers are paying more attention to health, safety and social responsibility with regard to their employees and local communities.

  Impact on Outotec Risks - / Opportunities +
Customers’ disregard for social acceptability and regulation concerning the hazardous emissions
Outotec’s strong track record as a responsible partner helps customers gain social acceptance and financing for their projects
Possibilities for Outotec’s modern and safe technologies to solve the environmental challenges in mining
Customer and supplier collaboration provide new possibilities for improving the well-being of local communities

Digitalization of the world

Digitalization will greatly impact how business is conducted, how groups of people function, and what we offer our customers. The world is increasingly driven by connectivity, data, and software. Cloud computing, combining big data sets, advanced analytics methods, new ways of interaction with machines, user experience requirements drawn from consumer applications and autonomous systems will also become more commonplace in our business.

  Impact on Outotec Risks - / Opportunities +
Increasing competition and new players breaking the traditional market boundaries due to the development of digital services
Increasing possibilities for product and service development
New possibilities for cost-efficient, flexible and highly responsive partnership models and closer engagement with customers
New business benefits with advanced ICT systems and data management throughout Outotec’s international network

More volatile macroeconomy

Volatile investment activity rates, the speed of global GDP growth, metal consumption rates, and the balance or imbalance between supply and demand, capacity utilization rates and metal prices all greatly influence Outotec’s business. 

  Impact on Outotec Risks - / Opportunities +
Customers minimizing or postponing investments during downtrends
Significant changes in commodity prices, currency rates or the availability of financing
Volatile resource planning
72% of Outotec’s business comes from the cyclical mining and metals industry
Business opportunities during uptrends
Outotec’s global operations and solution offering for virtually all types of minerals and metals reduces dependence on any single commodity or geographical market
Outotec’s wide range of long-term service contracts balance the risks posed by the highly cyclical markets