Junior funding model blamed for mine delays

The mining industry’s exploration financing model leaves junior companies ill-equipped to address environmental and social issues that later delay mine approvals, the Washington, D.C.-based Trust, Accountability and Inclusion (TAI) Collaborative argues in a new report.

Many permitting disputes begin years before regulatory reviews, when explorers are rewarded for discoveries rather than community engagement and environmental planning, author Sefton Darby says in Mined The Gaps: Trust and Critical Minerals, issued Tuesday.

The industry’s focus on finding deposits leaves environmental and social risks unaddressed until projects reach permitting, when disputes become more difficult and expensive to resolve, Darby says. Drawing on global data, sentiment surveys and case studies, he says stronger regulation and earlier community engagement can identify risks before they escalate into legal challenges and project delays.

“The market for developing new mines is structurally broken,” Darby writes. “The exploration phase is dominated by small, under-capitalised junior mining companies whose technical focus is almost entirely geological.”

Early engagement

“Environmental and social risks are routinely created during this phase but go unaddressed because companies lack the resources, incentives, and regulatory obligations to consider them,” Darby said. “By the time a project reaches the mine permitting stage, those risks are deeply embedded.”

The findings challenge the view that cutting regulation alone will accelerate critical minerals development. Instead, he argues projects move fastest when communities trust the permitting process and regulators have the confidence to resolve issues before they become entrenched.

“When people have a meaningful voice, confidence in oversight and assurance that environmental and social concerns will be addressed, problems can be identified earlier and resolved before they escalate,” Darby said.

As a remedy, TAI proposes creating an adaptive governance partnership that would bring regulators, mining companies and community representatives together throughout a project’s life to identify and resolve environmental, social and cultural concerns before they become major obstacles.

“The fastest project is not necessarily the one with the fewest rules,” Darby said. “It is the one that identifies risks early, gives communities a genuine role in decisions and creates confidence that commitments will be honored throughout the life of the mine. Fairness and speed are not competing objectives. Done properly, each makes the other possible.”

Reforming exploration

TAI says the industry’s financing model should change by linking exploration funding to environmental and social initiatives from the earliest stages of project development, rather than leaving those issues until permitting begins.

“It will require changing the way governments, companies and funders work with the people who live alongside mining operations,” TAI executive director Michael Jarvis said.“A transition that ignores community rights will not only be unjust; it will also be slower, more expensive and less sustainable.”