Observatório

NUNO FARIA
Head of the Aggregates Production Centres Department at DST

The mineral resources industry currently [apparently] plays a strategic role in the European economy. Growing demand for critical raw materials, essential for producing batteries, electric vehicles, renewable energy systems, semiconductors and electrical infrastructure, has repositioned the extractive sector as a central element of industrial policy and economic security.

In this context, an extraordinary document identifying a strategy for Europe was produced: the Draghi Report on the Future of European Competitiveness (2024). The Critical Raw Materials Act (EU Regulation 2024/1252) also emerged, aiming to strengthen European production capacity, reduce external dependencies and promote more sustainable mineral extraction... but, in the best European tradition, the path from a Strategic Plan to its implementation proves tortuous.

In our country, we anticipated the Draghi Plan thanks to the extraordinary work led by Professor Costa Silva, through the Strategic Vision for Portugal's Economic Recovery Plan 2020-2030, a document incorporated into Portugal's Recovery and Resilience Plan (2021), which identifies the need to modernise the productive base, accelerate innovation and strengthen the competitiveness of industrial value chains.

With the loss of competitiveness of the European Union vis-à-vis the United States and China identified as a result of high energy costs, low investment in innovation, regulatory fragmentation and strong external dependence for the supply of strategic raw materials, one would assume that the extractive industry should play a decisive role in the resilience of supply chains and European industrial sovereignty. Portugal has favourable geological conditions and a consolidated extractive industry, although weakened in recent decades, both in critical and strategic minerals and, without forgetting essential ones such as aggregates and industrial minerals, and may play a relevant role in this strategy.

However, the sector's competitiveness depends on its ability to overcome several structural constraints, including lengthy licensing procedures, increasing environmental requirements, shortages of skilled labour and the need to accelerate technological innovation. Indeed, administrative simplification is one of the main challenges identified by Draghi, who advocates faster and more predictable licensing procedures compatible with high environmental standards.

Sustainability is nevertheless the greatest strategic challenge. Decarbonising the economy requires a significant increase in raw material production, creating the apparent paradox that the energy transition depends on more intensive extraction. Consequently, the sector will have to reconcile production growth with lower carbon emissions, energy efficiency, the circular economy, waste recovery and environmental rehabilitation of exploited areas, while simultaneously strengthening social acceptance of the activity. We should be inspired by Herberto Helder and believe in the circularity of materials, making 'everything capable of being something else'... The shortage of skilled labour is another limiting factor, aggravated by the ageing workforce and the sector's reduced attractiveness to younger generations. European initiatives are under way focused on training and attracting talent to the extractive industry, such as the EIT RawMaterials Academy, with very ambitious objectives resulting from the combined support of various Member State initiatives. There is also 'The Quarry Programme', a national initiative under the 'dst school', focused on skills development, production and sharing of knowledge, and value creation in the extractive industry.

Both Draghi and Costa Silva argue that European and national competitiveness will depend on the ability to transform raw materials into higher-value-added products, through the competitiveness factors identified and which must be strengthened. Enhancing industrial value chains is a strategic priority and few national sectors have the wealth-creation potential of mineral resources... but these resources must be accessed responsibly so that they can serve as raw materials for other industrial processes.

There is no shortage of occasional commentators on the Strategy Europe needs to follow, those generalist experts who 'undermine' and contaminate public opinion without knowing the current industrial reality. And, for lack of technically supported counterargument to help decision-makers implement the necessary measures without thinking in electoral cycles, we are impoverishing general knowledge of the extractive activity and making social acceptance, indispensable to any industry, more difficult.

Let us recall, as an example of serious and informed debate, the interview with Ed Conway, economics editor at Sky News and author of the book 'Material World', on the occasion of the 1st Congress of Geological and Mining Engineering, organised by the Order of Engineers and dstgroup, where the invisible presence of Georesources in our daily lives was discussed...

About the essential minerals I have worked with over the last decades... aggregates!

Let us now reflect on something that, while neither critical nor strategic, is essential to maintaining the conveniences that society takes for granted.

We are talking about aggregates, the 'poor relation' of the extractive industry! The expression may be shocking, but it makes us reflect on the indispensable nature of these materials, which support the construction of homes, hospitals, schools, roads, dams... the infrastructure that supports the energy and digital transitions everyone wants. Let us remember that, on average, each European consumes 6 tonnes of aggregates per year... So why are they so undervalued, despised and ignored?

History and facts normally provide answers. Let us look at what the Mining Bulletin tells us about the reality at the beginning of this century: roughly speaking, there were 1,100 quarries operating in mainland Portugal, and in the first quarter of 2000, 26 new licences were granted (12 DGEG + 14 municipal). In that same quarter, only one operation ceased activity. After about two decades, what does a more recent edition of the same publication tell us?

There is a dramatic reversal in the indicators... The number of establishments is below 800, down 30% in two decades, while recovering from the dark period of 2012-2016. And the number of quarry closures (41) is eight times higher than the granting of new licences, which stands at just five, since the remaining 16 are adaptations of existing operations. For the sake of accuracy, these figures refer to a one-year period (mid-2021 to mid-2022), whereas the data from the beginning of the century refer only to one quarter, which makes the conclusions even more serious.

Analysing these data would be reason enough to trigger a deep reflection on the sector. The sovereign debt crisis (2010/2014) affected the entire economy, and the extractive sector was no exception. The data showed recovery in the aggregates industry, both in the number of establishments and in production capacity... but what was it due to? Measures encouraging industrial investment? Governance and development policies? Courage on the part of the sector's business community?

In the 2010s, the challenge facing the aggregates sector was colossal and required an integrated effort from different actors. Let us recall the case of Spain... the Strategic Plan for the Aggregates Sector (PESA 2012-2015), which was a first instrument for modernising the sector, promoting competitiveness, innovation, sustainability and the public image of the extractive industry. Ten years later, that document became the basis for the Áridos 2030 strategy, promoted by the Federación de Áridos, establishing a long-term vision focused on carbon neutrality, the circular economy, digitalisation, biodiversity, safety and the value of human capital.

In Portugal, through Order No. 5146/2026, we intend to promote the preparation of the National Strategy for Geological Resources 2035 within 120 days... Meanwhile, we have been fighting for decades to gain access to coloured fuel that other national industrial sectors use successfully. Not only that: the Spanish extractive industry also uses coloured diesel (B), creating competitive challenges in border areas.

The aggregates industry barometer!

There is a phrase commonly attributed to Peter F. Drucker, the father of modern management, which says: 'If you can't measure it, you can't manage it'. Indeed, we need reliable, representative, coherent and timely data in order to make good decisions, or even to issue warnings about critical deviations.

In the information age, I dare say that we are working with tools from the 'Stone Age', an expression that fits the subject of this article very well. I believe the sector is changing. I know that the sector and its different stakeholders are changing, with various initiatives to modernise access to and processing of data... but in the meantime, let us try another approach. An industry can be measured by the performance of downstream industries, its customers... let us carry out this exercise using information from APEB - Portuguese Ready-Mix Concrete Companies Association, accepting the risk of bias that may be introduced by working with just one of the major consumers of aggregates.

APEB regularly publishes interesting indicators, such as annual production volume, turnover, some per-capita consumption ratios, among others.

It is useful to overlay this information with aggregate production data published by DGEG in order to assess historical behaviour and future trends. This quick exercise produces the data shown in the infographic 'Ready-Mix Concrete Production in Portugal' (see chart). Unsurprisingly, the aggregate production curve follows the trend in concrete production, clearly between 2007 and 2021. In 2022, there is a temporary reversal of the trend, which may be related to the impact of the conflict in Ukraine (*), potentially affecting the two industries differently, but the trend resumes immediately afterwards.

But despite the trend resuming, the scale of production is completely different! Concrete production is at 1999 and 2009 levels, but aggregate production is far below that. This indicator is a serious cause for alarm. The shortage of aggregates for current and future needs was discussed at DGEG's Earth Day initiative, at the Technical Seminar on Mineral Resources - Mines and Quarries, and repeated at other forums.

And where does this shortfall in aggregate supply on the market come from? Well, certainly from the combination of factors already described in this essay... plus:

• Exhaustion of existing resources, particularly near major metropolitan areas.
• Resources whose expansion is impossible or has been made unviable by urban pressure, with more than enough known examples.
• Existing resources whose viability is compromised by spatial planning policies that do not understand the need to reserve areas for geological resources.
• Existing resources located at distances that make road transport economically and sustainably unviable.
• Lack of functional rail transport solutions to address the previous point;
• Disinvestment by industrial operators due to difficulties in licensing or expanding their operations;
• Insufficient market value of aggregates in relation to the necessary productive investment, resulting in low margins and discouraging the modernisation of facilities (by way of contrast with aggregates, consider the increase in the value of the 'ready-mix concrete' product from 2022 to 2025). We must ask how major projects of national interest will be supplied when scarcity is already a reality.

The future of the mineral resources and aggregates industry!

Today's challenges for the mineral resources industry go beyond the traditional opposition between economic development and environmental protection. Future competitiveness will depend on the ability to integrate technological innovation, sustainability, human-resource qualification, administrative simplification and the enhancement of industrial value chains. The strategic guidelines presented by Draghi, Costa Silva and the Recovery and Resilience Plan converge on the need to build a more innovative, resilient and sustainable industry. In this context, Portugal has geological resources, technical knowledge and industrial capacity that enable it to play a relevant role in European strategic autonomy, provided it can turn its geological potential into economic, technological and social value.

Particularly in the aggregates industry, this strategy must translate into the need to strengthen and adjust the number of operations and promote industrial transformation, modernising production units and adapting them to current productivity and sustainability requirements.

As a cornerstone, the sector must, by combating prejudices and fundamentalisms, promote measures to prevent the waste of any fraction of geological resources (e.g. the dstgroup innovation project 'New Life for Quarry Dust'), something that is in the DNA of quarries, since they were already recycling before it became fashionable.

Aggregate processing plants should adapt their processes to recycling waste, e.g. construction and demolition waste (CDW), which will become new raw materials for other industrial processes.

Quarries should bring other industrial units together in the same physical space, e.g. concrete and asphalt production, concentrated in a developed area close to downstream consumers. In this way, the sector can make an important contribution to carrying out projects of national interest and, paying tribute to Pope Francis, ease pressure on our 'common home', as he affectionately called our planet.