Resource use and circular economy impacts, risks and opportunities
Epiroc operations encompass both assembly, production and services, with different impacts, risks and opportunities relating to resource use and circular economy, and in particular, resource inflows, resource outflows and waste. Our products are designed for safety, productivity and efficiency, as well as durability, recyclability, and easy disassembly to minimize use of natural resources and waste. We have for a long time had a strong focus on increasing products’ efficiency and lifetime, by providing service and maintenance. XX% (43) of our revenues come from service. Our service offerings are developed to be in line with the circularity principles. As our equipment is often performance-critical and used in harsh environments, the requirement of maintenance and consumption of spare parts are high.
Material impacts, risks and opportunities
Resource inflows
| Epiroc relies on non-renewable natural resources as input to our products | ||
| Actual negative impact | ||
| Upstream | Own operations | |
| Medium-term | Long-term | |
| A circular approach can boost resource efficiency and reduce need for new components and materials | ||
| Opportunity | ||
| Own operations | Downstream | |
| Short-term | Medium-term | Long-term |
| Resource scarcity and rising material prices can increase costs | ||
| Risk | ||
| Upstream | Own operations | |
| Medium-term | Long-term | |
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, is crucial for several of our products. Additionally, several rare earth metals are used in our products, mostly in small amounts in electronic parts. As some resources become scarcer in the future, we may face potential supply chain disruptions, increased operational costs, and production delays due to reduced availability or rising material prices. 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.
These challenges also present an opportunity to further develop circularity in our design, production and services, optimizing resource use, reuse and repairing, and reducing the need for new parts and materials. This also enhances 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 loops 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
| Not all products and components are repaired or serviced leading to resource depletion | ||
| Actual negative impact | ||
| Upstream | Own operations | Downstream |
| Medium-term | Long-term | |
| Lifecycle design and circular services can extend machine life, boosting profits | ||
| Opportunity | ||
| Upstream | Own operations | Downstream |
| Short-term | Medium-term | Long-term |
| Stricter regulations can push customers toward circularity, and failing to keep up with developments may risk our market position | ||
| Risk | ||
| Own operations | Downstream | |
| Medium-term | Long-term | |
Epiroc production include battery, electric and diesel driven equipment for mining and material handling, rock drills, bolts, drill rods and bits, breakers etc. We design our products with a lifecycle perspective, striving for productivity, durability, efficiency, long service life, easy maintenance and recyclability. However, not all products and components may be financially viable to service or repair, or may contain materials that hinder reuse or recycling. Using materials and parts that are difficult to recycle as well as designing and assembling products without considering service or end-of-life processes, reduces the possibility of keeping materials and parts in the ecosystem, leading to continuous resource depletion. As eco-design and waste management regulations tighten, we and our customers will face increased pressure 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
| Operations generating non-recyclable waste can result in its disposal in landfills or incineration, harming the environment and leading to resource loss | ||
| Actual negative impact | ||
| Own operations | ||
| Short-term | Medium-term | Long-term |
Waste generated in Epiroc operations contains metal scrap, process water, oils, packaging material etc. While waste generation is an unavoidable aspect of industrial operations, we strive to minimize waste generation, 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.