Orion, Allianz among US$15T in funds seeking to boost mining investments for tripling output

A global group of institutional investors including Allianz, Legal & General and Orion Resource Partners wants to attract more funds to the mining industry by polishing its image and educating financiers.

Members of the London-based Global Investor Commission on Mining 2030 manage some US$15 trillion in assets and have attracted about 2,000 fund industry players to its annual conference in Toronto this week. The group plans to release an action plan by mid next year. It will likely detail efforts to open the finance industry to more mining investments while improving mining’s reputation concerning the environment, human rights and local communities.

“Choosing not to recognize the importance of mining is something that we’re really challenging,” commission chair Adam Matthews said by phone. “When the best practice isn’t the preserve of a small number of companies, but actually just becomes the norm of the whole industry: that’s something that we’re really hoping to achieve.”

Time is running out to mine enough materials to meet global warming targets, the commission says. The mining industry must triple its production by mid-century. The group is targeting 2030 as a deadline to define a vision for a socially and environmentally responsible mining sector, then create a global consensus in financing to help pay for it.

Even as Canadian stock exchange statistics show this year has been the best for mining’s capital raising in more than a decade, closer inspection reveals majors such as First Quantum Minerals (TSX: FM) alone accounted for nearly a quarter of the total. Junior miners regularly gripe about the difficulty of raising funding while many are turning to a combination of streaming, royalties, private equity and debt to finance projects.

Funding majors

It’s a situation that Matthews says won’t be solved soon, but funds investing in majors should allow them, in turn, to finance juniors. Part of the answer is encouraging institutions to abandon index-funds that have low allocations in mining to instead invest in specific companies and projects, he said.

Other parts are consolidating standards for environmental, social and governance goals to help entice big risk-averse investors such as funds for pensions, endowments and sovereign wealth. Discussing what kind of levers financiers can pull to boost allocations to mining will go into the action plan, he said.

“It’s actually quite interesting the number of majors that have clearly significant stakes in minor companies,” said Matthews, who is also the chief investment officer of the £3.4-billion ($6.1-million) Church of England pension fund. “Can there be a way of supporting juniors more intentionally?”

The investor commission, which formed in 2022, is targeting six specific areas for its action plan. They first three are: align investor expectations of companies with global and mining industry standards; ensure companies buying minerals align with these expectations and work towards circularity and traceability; and encourage regulation to reinforce investor expectations.

Additionally, the commission wants to see fair, equitable and sustained benefits locally and nationally; reductions in mining-related conflict; and positive mining legacies.

Mining first

The commission expressed concern that institutional investors aren’t backing the one industry that supports all the others in the way manufacturing, aviation, technology and almost everything needs mining first.

The Church of England pension fund is invested in companies such as Teck Resources (TSX: TECK.A, TECK.B; NYSE: TECK), BHP (LSE: BHP; NYSE: BHP; ASX: BHP), Anglo American (LSE: AAL) and Newmont (TSX: NGT; NYSE: NEM) to name a few, Matthews said. Funds should increase their exposure to mining to reflect the weight it deserves, he said.

“We’re quite a generalist investor,” the fund manager said. “Some of the things that we’re looking at in the commission is whether we need to be looking at much more intentional investments.

“When you look at mining in a general portfolio that’s globally diverse, it’s a very small sliver of your overall investments, but [the allocation] completely undervalues the relevance of that sliver to all your other elements of your portfolio.”