Help, is on the way

When geopolitics becomes unpredictable, mining capital tends to vanish. The global mining industry, ever sensitive to social, economic and political tremors, has faced dramatic swings in public opinion and support as a revenue generator for political leaders. And now after hiding in the darkest corners of the globe, it rests as the darling of global economic recovery.

Yet, the obstacle for those same political leaders and mining executives lies in a decade of financial contraction, overburdened regulation and public shunning of the sector. The past number of years has seen slashing capital expenditures, shelving exploration programmes and retreating to the safety of existing operations while politicians have ignored, demonized and castigated mining. The Mining Association of Canada (and others) have long made the case for a “greener future” as one that requires more mining, not less.

And over that time, while governments fretted over mineral security and net-zero targets, miners are hoarding cash and hollowing out future supply pipelines. The result is an industry caught in a paradox: flush with long-term opportunity but paralyzed by short-term uncertainty. And yet as politicians across the globe have waved the banner of critical minerals with the fervor of a new religion, this has been the case for much of the past decade and will take considerable investment and substantial policy shifts to unearth.

As Risk Grows, Shovels Stop

Instability, whether civil unrest, resource nationalism or erratic policy shifts, has a well-documented effect on mining behaviour: it drives investment to a halt. According to S&P Global, global nonferrous exploration budgets fell more than 11.2% in 2019—part of a broader contraction in exploration spending that has seen budgets swing wildly with commodity cycles and political uncertainty. As evidenced by the Financial Times, despite continued growth in some strategic minerals like lithium (+360% since 2020 to US $1.1 billion) and copper, overall exploration budgets remain well below the pre-2012 highs.

Anglo American, facing shareholder pressure and grappling with market volatility, announced in December 2023 that it would slash capital spending by $1.8bn through 2026, alongside broader cost-cutting measures. The firm is doubling down on known quantities—its Los Bronces copper mine in Chile, for instance—rather than taking on the risk of new jurisdictions or projects.

Rio Tinto’s Jadar lithium project in Serbia has similarly stalled. Once hailed as Europe’s largest lithium resource, the mine was suspended in 2022 after mass protests and government opposition. Rio has since cited an “uncertain investment environment” and continues to hold the project in limbo, despite rising lithium demand.

From Discovery to Depletion

Faced with hostile or unstable environments, mining firms are increasingly opting to “sweat” existing assets rather than expand into new territory. Exploration—a high-risk, high-cost endeavour—is often the first casualty of uncertainty. Inflation, tighter monetary policies, lower commodity prices, and capital constraints pushed majors to shift budgets away from early-stage work which has choked the project pipeline that governments are so desperate for now.

Barrick Gold, for instance, has shifted its strategy away from greenfield exploration in politically complex jurisdictions such as Papua New Guinea and parts of South America. Instead, it is investing heavily in its Nevada Gold Mines joint venture, one of the world’s largest gold-producing complexes, in a jurisdiction with well-established legal and regulatory norms. “Geopolitical volatility,” notes chief executive Mark Bristow, “is now the biggest determinant of where we allocate capital.”

First Quantum Minerals provides a more dramatic example. In late 2023 Panama’s Supreme Court struck down its contract for the massive Cobre Panamá copper mine, following weeks of nationwide protests and accusations of government impropriety. First Quantum was forced to suspend operations, wiping out 1.5% of global copper supply overnight and costing the company billions.

Emerging Markets, Retreating Investors

It is no coincidence that the countries richest in untapped mineral reserves are often the riskiest places to invest. The Democratic Republic of Congo (DRC), home to over 60% of global cobalt production, continues to vex Western mining firms. Frequent contract disputes, legal opacity and growing anti-foreign sentiment have discouraged all but the most risk-tolerant investors.

Glencore, which operates copper and cobalt mines in the DRC, has repeatedly clashed with the government over tax concerns and other investigations. China Molybdenum has faced similar scrutiny. While China continues to dominate Congolese extraction through state-backed ventures, Western firms are exiting—or simply never entering.

Latin America, long a pillar of global mining, is also wobbling. In Chile, once considered the darling of South American mining, President Gabriel Boric’s efforts to reform mining royalties and the national constitution have rattled investor confidence. Antofagasta and BHP, major copper producers, have slowed new investments pending regulatory clarity. And while Argentina has moved to amplify its position, uncertainty remains a point of hesitation for many.

Further, in Peru, MMG’s Las Bambas copper mine has suffered frequent disruptions, with protests by local communities shutting down operations for over 400 days since 2016. The company’s attempts at community engagement have largely failed to pacify tensions, and the country’s revolving-door presidency—six leaders since 2016—has offered little policy consistency.

Strategic Minerals, Elevated Risk Exposure

The retreat from high-risk jurisdictions carries macroeconomic consequences. As capital flees emerging (and higher risk) markets, global supply chains become narrower, more fragile and more politically exposed. Nowhere is this more evident than in critical minerals—lithium, cobalt, nickel, rare earths—which underpin everything from electric vehicles to military technology.

The International Energy Agency warns that demand for these minerals will quadruple by 2040 under current climate pledges. Yet many new deposits lie in regions where investment is perilous. Without capital to develop these resources, supply bottlenecks are likely. Worse, China’s dominance of downstream processing—for example, refining 60% of the world’s lithium—makes Western economies increasingly vulnerable to geopolitical coercion.

Governments are responding. America’s Inflation Reduction Act includes generous incentives for domestic and allied mineral production. Canada’s Critical Minerals Strategy earmarks C$3.8bn for exploration and infrastructure. But no amount of subsidy can fully offset the deterrent effect of civil conflict, legal unpredictability or political expropriation. Recently Canadian Prime Minister Carney noted that he would substantially improve Canada’s NATO commitments to 5% of GDP—underpinned by growth in mining investment, all of which has been stalled, ignored and overburdened by the last decade of his predecessors in the Liberal Government.

The Cost of Standing Still

Mining is not a fast business. From discovery to production, a new project can take 10-20 years. The decisions not made today—because of coups, court rulings or contract disputes—will be felt in 2035, not 2025. As miners dig deeper into the same deposits instead of branching out, the world is left with a shallower pipeline of future production.

There are, of course, exceptions. Australia, Canada and parts of Scandinavia continue to attract greenfield investment, buoyed by political stability and clear permitting regimes. But these jurisdictions cannot meet global demand alone. The net result of mining’s capital caution is a widening gap between resource need and project readiness.

Stability, then, is more than a political virtue—it is an economic imperative. Without it, even the richest mineral reserves are of little use. For all the industry’s technological advancements and capital discipline, the mining sector remains hostage to geopolitics. The real treasure, it seems, lies not just underground—but in the rule of law above it.

A Few Key Lessons:

For Political Leaders: While mining may not always be aligned with your voting base, recognize that it requires steady, stable and consistent operating environments to attract investment, produce jobs and economic wealth. Mining projects require massive amounts of sunk capital and long-term stability to be attractive.

For Mining Executives: For politicians and other stakeholders to understand the above requires relations that are durable and sustained. Maintaining those relationships is a strategic investment that can and will pay off enormously if held as a priority. Finding common ground requires nurturing and supporting relationships and a willingness to work within the socio-political realities.

For Activists: Understand that there are many ways to achieve your outcomes. Protest and violence rarely lead to productive outcomes. Understand where mining companies and governments are aligned and work within those frameworks. The task isn’t to rule out mining, but rather generate positive outcomes that benefit those you represent. Mining companies have demonstrated a healthy willingness to do so.