LONDON/KATOWICE, Poland (Reuters) – A two-year recovery in the mining industry has faltered, as trade tensions between China and the United States and concerns about economic growth weaken commodity prices and deter investment.
Institutional investors and fund managers say tighter regulations, namely MiFID, a major reform of European Union financial markets, have limited banks’ lending to mining companies and reduced research coverage, giving them fewer tools to carry out due diligence on businesses.
Sustainability and anxiety about the impact of mining on global warming has also risen to the top of the agenda, pushing miners to find new resources in riskier and politically unstable jurisdictions. “An increasing number of investors are becoming aware that ESG (environment, social, governance) risks can also be financially relevant,” Matthew Smith, head of sustainable investments at Storebrand Asset Management, said.
The total amount raised in debt, equity and depository receipts for the mining sector globally in the first nine months of the year fell 60 percent to $18.8 billion (14.77 billion pounds), compared to $44.9 billion in the same period a year ago, S&P Global Market Intelligence data shows.
At the same time, the number of new London listings has fallen again after a tentative recovery in 2017, with the amount of money raised by junior miners so far this year down more than 40 percent from 2018, figures from the London Stock Exchange show.