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Capital has emerged as the leading risk facing the mining industry this year, overtaking last year’s second-place position, as challenging financing and economic conditions make it harder to secure the metals needed for the energy transition, according to a new report by EY.
Theo Yameogo, EY Americas and Canada Mining and Metals Leader explained that approximately $1 trillion in investment is required to produce sufficient metals for the energy transition. He noted that such investment has not yet materialized, and the capital challenge has now become the top concern, with stakeholders increasingly worried. Although some mergers and acquisitions (M&A) have occurred, there has been limited direct investment in the mining sector.
Based on an annual survey of senior mining and metals leaders from organizations generating over $1 billion in revenue, the report outlines the top 10 business risks and opportunities as 2025 approaches. The survey, conducted in June and July, gathered responses from 353 participants.
Environmental stewardship ranks second on the list, with companies focusing on minimizing ecological damage from mining activities. Geopolitical concerns, such as the U.S. effort to source critical minerals outside of China’s sphere of influence, rank third. Other key risks include resource depletion in fourth place and maintaining miners’ licence to operate in fifth.
Yameogo pointed out that costs have risen not only due to inflation but also because community standards are evolving. For instance, in Chile, miners are now required to construct desalination plants to avoid using freshwater relied upon by local communities.
The report highlights that mining companies are seeking diverse capital sources, exploring options such as partnerships or joint ventures to mitigate risks and ease financing demands. Among the respondents, 41% indicated that they were considering funding from commodity traders, 40% from supplier funding, and 40% from export credit finance. These trends reflect a shift in strategy as miners struggle to secure new capital.
Yameogo observed that compared to several years ago, capital strategies have become more focused on productivity, with companies streamlining operations to concentrate on fewer metals. Another emerging trend is the increased inclination towards M&A in critical minerals portfolios, with EY predicting more consolidation in copper assets due to strong demand forecasts.
The report also referenced a separate survey of CEOs conducted by EY in April, which showed that all respondents in the mining and metals sector planned to engage in some form of transaction within the next year. Of those surveyed, 76% expected to pursue divestments, spin-offs, or initial public offerings (IPOs), 54% anticipated engaging in M&A, and 33% planned to pursue joint ventures and strategic partnerships.
Yameogo suggested that miners view capital risk as interconnected with other key risks, especially when financing projects in geopolitically or environmentally sensitive regions.
Environmental, social, and governance (ESG) factors ranked second in the report’s risk assessment, down from first last year, though the emphasis on environmental concerns has grown. According to EY, 46% of respondents indicated that “nature-positive initiatives” aimed at reversing environmental degradation were a key goal, with sustainability teams facing increasing demands for performance improvements.
New standards, such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Global Industry Standard on Tailings Management (ISTM), are shaping these environmental goals. Waste management is becoming a top priority for investors, with 44% of respondents identifying it as a key concern. The focus on waste extends beyond tailings to include reducing waste and emissions through improved mining processes.
In contrast, the governance aspect of ESG dropped out of the top 10 risks in this year’s report, a surprising shift that EY identified as a potential “gap” for miners. Yameogo emphasized the importance of governance in ensuring that projects avoid accusations of greenwashing, which would require robust board-level oversight.
Resource depletion emerged as a new risk this year, driven by declining ore grades, which are increasing extraction costs, and the near-exhaustion of high-grade resources. EY recommended that miners invest in new exploration technologies, replace depleted reserves through M&A, improve productivity through enhanced techniques, and explore untapped areas such as the ocean floor or even asteroids.
Another new risk, ranked eighth, is the challenge of developing new projects to meet the high demand for critical minerals essential to the energy transition. Regulatory hurdles, high taxes, inflation, and lower ore grades further complicate efforts to open new mines.
The report advised miners to build stronger relationships with stakeholders to enhance their license to operate, derisk capital projects by integrating supply chains to reduce costs, and develop new talent pools to acquire skills in sustainability, automation, and electrification—skills that may be outside the traditional mining industry.
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