Resource use and circular economy impacts, risks and opportunities (SBM-3)
Material impacts, risks and opportunities and their interaction with strategy and business model
Epiroc develops and provides equipment, such as drill rigs, rock excavation and construction equipment as well as tools for surface and underground hard-rock applications. We also offer service and other aftermarket support as well as solutions for automation, digitalization and electrification. The material impacts, risks and opportunities relating to resource use and circular economy is connected to Epiroc's business model and dependency of natural resources needed for its production and services.
| Resource inflows | Location in value chain | Time horizon | |||||
| Up- stream | Own operations | Down- stream | Short- term | Medium- term | Long- term | ||
| Epiroc relies on non-renewable natural resources as input to our products | Actual negative impact | o | o | o | o | ||
| A circular approach can boost resource efficiency and reduce need for new components and materials | Opportunity | o | o | o | o | o | |
| Resource scarcity and rising material prices can increase costs | Risk | o | o | o | o | ||
Epiroc's dependence on steel and other non-renewable natural resources for the production of machines and consumables contribute to resource depletion and environmental degradation in the upstream value chain. Access to critical raw materials such as cobalt, tungsten, copper, tin and lithium, and several rare earth metals is important for several of our products. As some resources become scarcer in the future, we may face potential supply chain disruptions, rising material prices and production delays. The present geopolitical situation is also enhancing the risks. On the other hand, the increased demand for metals like copper, lithium and nickel, crucial for a sustainable transformation, presents business opportunities for us.
By developing circularity in our design, production and services and optimizing resource use, the need for new parts and materials can be reduced. It can also enhance profitability through improved resource efficiency and lower costs. To capitalize on this opportunity and mitigate risks, we are adapting our strategies to reduce reliance on primarily non-renewable resources. This includes sourcing sustainable alternatives, such as recycled steel, closed loop cycles of scrap material from production from selected raw material suppliers and remanufacturing of machines and components. Strategically, this will drive decisions towards more cost-effective sustainable sourcing and continuous improvement in resource efficiency.
| Resource outflows | Location in value chain | Time horizon | |||||
| Up- stream | Own operations | Down- stream | Short- term | Medium- term | Long- term | ||
| Not all products and components may be feasible to service or repair | Actual negative impact | o | o | o | o | o | |
| Lifecycle design and circular services can extend machine life, boosting profits | Opportunity | o | o | o | o | o | o |
| Failure to meet stricter regulations and customer demands may risk our market position | Risk | o | o | o | o | ||
We design our products with a lifecycle perspective, striving for productivity, durability, efficiency, long service life, easy maintenance and recyclability. However, some products and components may be difficult to service or repair, or may contain materials that hinder reuse or recycling which leads to continuous resource depletion. As eco-design and waste management regulations tighten, we and our customers will need to extend circular practices and improve waste management.
Epiroc provides several circular solutions, with opportunities to expand further. A robust aftermarket demand throughout the equipment lifecycle creates a large and resilient service business with stable and predictable revenue and cash flow. Extending the circular approach and our circular offerings allows us to strengthen our market position and provide solutions with longer service life to customers. Additionally, it creates new revenue streams, e.g., from remanufactured products.
| Waste | Location in value chain | Time horizon | |||||
| Up- stream | Own operations | Down- stream | Short- term | Medium- term | Long- term | ||
| Operations generating waste leads to resource loss and can harm the environment if sent to landfill or incineration | Actual negative impact | o | o | o | o | ||
Waste generated in Epiroc operations contains metal scrap, process water, oils, packaging material etc. Waste is an unavoidable aspect of industrial operations, we therefore strive to minimize waste, especially waste that cannot be recirculated into the ecosystem but is directed to disposal. Waste management practices differ between countries and even between waste operators within the same region. For example, materials sent for recycling or energy recovery in one country may be directed to landfill in another, affecting both our environmental footprint and the potential for resource recovery. To address these challenges, we continuously explore new opportunities and partnerships that support improved waste handling.