Shaping the Future: The Top 10 Global Risks and Opportunities in the Metals and Mining Sector

Written by Theo Yameogo, Metals & Mining Leader, EY Americas

Editor’s note: This article was originally reprinted in the Winter 2025 issue of Canadian Mining Magazine. You can read the full issue for free at https://canadianminingmagazine.com/current-issue/. 

The metals and mining sector is a cornerstone of the global economy, providing essential materials for everything, from construction to technology. As we progress on the path towards energy transition, it’s crucial to understand the evolving landscape of risks and opportunities that the sector faces. EY annually publishes a comprehensive global study on metals and mining, surveying companies worldwide to forecast the challenges and prospects for the year ahead.

For the first time in three years, capital has surged to the top of the priority list as the mining sector confronts the escalating challenges of acquiring and developing assets to satisfy increasing demand for energy transition and sustainable economic development. Simultaneously, environmental stewardship has emerged as a key priority, distinguishing itself as the standout issue within the broader environmental, social, and governance (ESG) framework, with license to operate (LTO) also receiving high ratings.

Notably, resource and reserve depletion were recognized as a significant concerns, signaling a shift in focus that also sees the re-emergence of new projects as a critical area, last noted in 2018. In a surprising turn, previously prominent risks such as workforce, digital, and cyber threats have receded from the forefront of sector concerns, reflecting either a dynamic and changing risk landscape, or an expansion of prioritie s beyond the Top 10.

This Blog delves into the latest findings from the study, highlighting the top 10 risks and opportunities that will shape the sectors near future.

1. Capital takes the lead amidst growing demands

For the first time in three years, capital has emerged as the number one concern as mining companies grapple with the complexities of acquiring and developing assets to meet surging demand, driven by a steady economic group and the energy transition.

While the focus remains on asset acquisition, the importance of initiating new projects to satisfy expected demand cannot be understated. However, with dividends and buy-backs on the decline in 2024, and the challenges of allocating capital to battery metals amidst fluctuating prices and volatility, companies must balance capital discipline with growth.

2. Environmental stewardship: The standout ESG issue

Environmental stewardship has become the most prominent aspect of environmental, social, and governance (ESG) concerns, with a particular emphasis on achieving a nature-positive future by 2030. Mining companies are looking to minimize waste, which not only contributes to nature positivity but also enhances mine performance. Indigenous communities, with their knowledge and experience in sustainable land management, are becoming crucial partners. However, the growing expectations and complex obligations are putting pressure on small in-house sustainability teams.

3. Geopolitical uncertainty in the race for minerals

The geopolitical landscape is increasingly complex, with alliances and rivalries shaping the mineral supply chain. The energy transition and the quest for self-sufficiency have heightened geopolitical tensions. Transparent supply chains, new trade tariffs, and the 2024 election super cycle are contributing to this uncertainty, while resource nationalism is influencing tax regulations.

4. The emergence of resource and reserve depletion

For the first time since 2017, resource and reserve depletion has made the list, signaling a potential supply shortfall if investment in exploration and mine development doesn’t keep pace. For example, the sector faces the daunting task of needing 40 new copper mines by 2050, with exploration costs soaring (from US$91/tonne in 2011 to US$802/tonne in 2020) and a significant number of Australian mines (240) projected to close by 2040. Exploration budgets are shifting, with increased allocations to copper, lithium, and nickel.

5. License to operate: Building trust and value

External stakeholders are united in their desire for a greater return from mining assets, a demand that underscores the importance of not only meeting regulatory requirements but also exceeding them to build trust. Mining companies stand to benefit significantly from this trust by adhering to ethical practices and transparently communicating their environmental impact, community engagement efforts, and the value they deliver to society.

Moreover, the ability to effectively close mines is pivotal in ensuring a sustainable legacy that extends beyond the operational life of the mine. Despite its importance, only a small fraction of sector players, about 5 per cent, acknowledge effective mine closure as a key risk or opportunity, indicating a potential oversight in long-term strategic planning.

6. Rising costs and productivity under the microscope

For the past 10 years, the EY report has always highlighted the need for productivity as a central operational issue, which helps anchor most transformation programs in operations. The sector is focused on managing rising costs, particularly in labour and energy, which appear structurally higher, above headline inflation. Skills shortages are expected to impact both labour costs and productivity, which adds complexity to the transformation.

7. Climate change and the journey to net zero

A comprehensive action plan is essential for resilience, decarbonization, and meeting investor expectations. While progress is being made in integrating renewable energy into operations, a third of survey participants are not confident in meeting net zero targets. The last 10 per cent of the net zero journey will require innovation, especially around beneficiation, an area known to be energy intensive. As the push for low-carbon metals continues, many companies are moving up the value chain to achieve goals.

8. Overcoming barriers to new projects

The development of new mines is a time-intensive and complex process, with mines taking an average of 15.7 years to become operational. This timeline extends significantly in certain regions, some requiring up to 29 years in the United States and an even more prolonged 34 years in Zambia, highlighting the global variance in development timescales.

Regulatory hurdles play a significant role in these delays, extending the period from discovery to production. Additionally, the capital intensity of such projects is on the rise, exemplified by the Simandou iron ore mine, which has an estimated initial capital expenditure of US$11.6 billion.

The sector also faces challenges in securing skilled workers, further complicating project timelines. Moreover, higher taxes and royalties introduce additional barriers and risks, particularly in regions like Chile, where mining companies are subjected to a tax burden ranging from 41 per cent to 44 per cent, underscoring the financial and operational challenges involved in launching new mining projects.

9. Changing business models for growth and value

Companies are reassessing their portfolios and exploring new business models to capture more value. A focus on sustainability is reshaping business models, with companies expanding across the value chain to accelerate decarbonization, capture value from waste, integrate recycling, develop innovative technologies, and explore community-based models.

10. Innovation: The impact of lower-risk strategies

While a focus on lower-risk innovation may seem prudent, it could overlook significant opportunities. Collaboration between original equipment manufacturers and mining companies is on the rise, with many companies also funding university programs. Over half of the respondents plan to increase funding in innovation and artificial intelligence (AI), highlighting the need for a clear vision, budget, and strategy for innovation programs to succeed.

The path forward

In conclusion, the metals and mining sector stands at a crossroads, with the potential to significantly influence the global economy and the environment. EY’s global metals and mining study sheds light on the top risks and opportunities that will define the sector’s path forward. By understanding and addressing these challenges, companies can navigate the complexities of the modern world, ensuring a sustainable and profitable future.

The sector’s ability to adapt and innovate will not only determine its own success but also contribute to the broader goals of environmental stewardship and economic development.