Last Update: July 2025
Metals sector risk report
From boom to capital discipline
SENSITIVE RISK FOR ENTERPRISES
Strengths & Weaknesses
- Surging long-term demand: Global demand for metals – especially those critical to clean energy and electric vehicles – is on a steep upward trajectory. Demand for critical minerals like lithium, cobalt and rare earth elements will triple by 2030 and quadruple by 2040 under net-zero scenarios.
- Supportive prices: Despite recent volatility and off their 2022 peaks, some key metals still trade above historical averages, which continues to support industry profitability.
- Policy tailwinds for critical materials: Governments worldwide are prioritizing critical minerals security, translating into potential support for the sector. This policy focus is creating funding opportunities, streamlining permitting in some jurisdictions and sending stronger demand signals for critical metal projects
- Solid balance sheets: Many metals & mining companies emerged from the recent commodity boom in strong financial shape, having accumulated cash and paid down debt. Strong liquidity and relatively low gearing provide resilience against market fluctuations.
- Geopolitical exposure and supply-chain fragility: The metals supply chain is highly globalized and thus vulnerable to geopolitical shocks.
- Ongoing conflicts and tensions pose risks. Trade disputes can quickly turn into export restrictions on key inputs or metals (as seen with China’s curbs on rare earths and graphite), threatening supply continuity.
- Intensifying ESG and regulatory pressures: Companies face increasing scrutiny over environmental and social impacts. Regulators and communities are raising the bar on issues like land use, water management and carbon emissions. New environmental regulations and carbon costs are adding compliance burdens. These ESG pressures can lead to project delays and higher operating costs.
- High capital intensity and long lead times: The sector is inherently capital intensive and projects take many years to come online.
- Commodity price volatility: Metals markets remain volatile and cyclical. This volatility complicates planning and can swiftly erode profitability for high-cost operators.
