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| Barclays |
Nature degradation poses significant financial risks for mining sector
Barclays projects mining earnings could decline by up to 25% over five years due to escalating nature-related risks. These risks include stricter pollution regulations, rising water costs, and expanding protected areas, which increasingly impact mining operations globally.
Transition risks threaten mining profitability amid environmental regulations
Barclays analyzed 250 mines linked to 30 companies, revealing that transition risks such as higher water prices and increased minerals recycling present the largest earnings threats. Mining companies face more severe impacts than power firms, which might experience a 10% earnings decline from physical risks like droughts and floods.
Meanwhile, copper mines in water-stressed regions such as Australia, South Africa, and Chile show heightened vulnerability. These sites overlap with sensitive ecosystems, underscoring the urgent need for sustainable practices in critical mineral extraction.
Biodiversity loss emerges as systemic financial and operational challenge
The report highlights biodiversity loss and ecosystem degradation as growing systemic risks affecting the mining sector’s financial health. Barclays’ sustainability head, Marie Freier, emphasized that while data gaps remain, sufficient information exists to drive immediate action.
Furthermore, the World Economic Forum estimates adopting nature-positive strategies could unlock over $430 billion in savings and revenues by 2030. However, a $700 billion annual financing gap in biodiversity initiatives challenges the industry’s ability to mitigate these risks.
ScrapInsight Commentary
Barclays’ findings stress that mining firms must integrate nature risk management to sustain earnings. The anticipated 25% profit decline spotlights the need for enhanced water stewardship and ecosystem protection, especially in copper-intensive regions. Investors and policymakers should accelerate support for biodiversity financing to stabilize long-term metal supply chains.
