Mining and Metals Scenario 2030 at World Economic Forum: Where Will Indonesia Be Heading?

An Invitation for Discussion: Source McKinsey Report Mining Metals Scenario 2030

The World Economic Forum launched the Mining and Metals Scenario project in January 2009 in collaboration with International Finance Corporation and the McKinsey Company.  I just read the report released on that process of discussion involving more than 200 world leaders from private sector, government, and NGOs and would like to share my thoughts on using the report as basis for an invitation to discussion as to what Indonesia should do with the different scenarios based on current domestic development.  Scenarios are different from forecasts that they represent stories about the future context that are relevant, plausible, challenging and divergent.  We can not expect scenarios to come true as it stands but it can help us learn and generate insights both from exploring a scenario and from comparing an contrasting them.

The World Economic Forum’s scenario development starts with one central question “How will the environment for the global mining and metal sector look in 2030?”  Through a five steps process the forum identifies 60 driving forces with they own degree of uncertainty and degree of impact and categorized in social, technological, economic, environmental, and geopolitical.   The forum agreed that these predetermined elements are relatively predictable and play key roles in shaping the future context of the future for the mining and metal sectors:

• Population growth and urbanizations
• The commodities productions are spread around the world

People living in urban areas will double from 3.2 billions in 2005 to 6.4 billions in 2050 or around 60-80 million people will migrate to cities every year.  The productions of valued commodities are spread around the world with Asia supplies the world 55% of coal, 33% of iron ore, 17% of cold, 13% silver and 12% gold.  Indonesia is one of the world top 10 emerging countries by size of resource for: copper, gold, and coal. The challenge in the future is the depletion of current resources while replenishment is increasingly difficult.

The Three Scenarios

There are three scenarios put forth by the forum considering eight critical uncertainties in geo-economic landscape, geopolitical landscape, economic outlook, and environmental outlook categories.  Depending on the degree of uncertainty of those eight critical uncertainties and which has higher degree of impact, the scenarios unfold.

Green Trade Alliance: In 2030, the world is divided and countries are defined economically by whether or not they belong to the Green Trade Alliance (GTA), formed in 2016 to promote “environmental sustainability without compromising competitiveness.” GTA countries, including some industrialized, resource-rich and developing countries have experienced a period of accelerating innovation and lifestyle changes.  While there is strong alignment among GTA countries, non-GTA countries operate independently.

Rebased Globalism: In 2030, the world is committed to realizing the benefits of global interconnection but has become for more complex and multi-polar.  Power comes from control of resources as well as possession of capital, with resource rich countries playing by their own rules.  Civil society gas gained power, resulting in various local laws that affect global corporations.

Resource Security: In 2030, the era of globalization is a distant memory as nations  prioritize narrow self interests.  They hoard domestic resources, enter cartels based on regional and ideology alliances and resource blocks, and engage in neo-colonialism and import substitution strategies

to be continued