The growing role of political risk in global metals markets

The growing politicization of metals markets

Risks facing metals companies today, including resource nationalism, regional conflict and supply chain disruption, are increasingly rooted in government action or political instability. Metals have become a politically charged sector globally as critical minerals evolve into strategic assets, governments assert greater control over extraction and export, and geopolitical blocs compete for supply security. This shift has contributed to an uptick in political risk events worldwide, reflected in more frequent state interventions, more volatile regulatory environments, and a rise in politically motivated disruptions to mining and logistics. These are precisely the conditions that political risk insurance (PRI) is designed to help address.

How political risk insurance can respond

Expropriation coverage helps protect against direct or indirect government seizure, nationalization, or deprivation of an insured asset. In the metals sector, this increasingly includes forced shutdowns of mine sites under the pretext of environmental or security reviews, sudden revocation of licenses or concessions, state‑directed offtake mandates or compelled renegotiation of fiscal terms, and confiscation of stockpiled or export‑ready material. A recent example involved a West African military government taking control of a foreign‑owned mine’s stockpiled output and compelling a suspension of operations. While the specific companies vary, the pattern is consistent: governments under fiscal pressure or political strain are more willing to intervene directly in strategic mineral assets. This trend has contributed to a rise in expropriation‑related claims and near‑misses across the private political risk market.

Political violence coverage can protect against physical damage to an insured’s infrastructure or assets. For metals producers, exposure to political violence has expanded significantly as conflict spills into mining corridors, armed groups operate near transport routes, civil unrest targets commercial infrastructure, and sabotage affects energy, rail, or port assets essential to mineral exports. During widespread unrest in Southern Africa in 2021, for example, warehouses, processing facilities and logistics hubs across multiple provinces were damaged or destroyed, and metals-related infrastructure was among the affected assets. Similar patterns have emerged in Latin America, the Sahel and parts of Southeast Asia, where political tensions increasingly manifest as attacks on extractive sector infrastructure. Insurers have noted a rise in political‑violence notifications tied to politically motivated unrest rather than traditional conflict.

Currency inconvertibility and non-transfer coverage helps protect companies when a government blocks the conversion of local currency revenues into hard currency or prevents funds from being repatriated offshore. This risk has intensified as more governments face severe foreign exchange shortages, dual exchange rate regimes, administrative backlogs for dollar access and capital control measures introduced with little warning.

A recent example occurred in a large West African economy where companies across sectors accumulated significant trapped cash balances due to central bank restrictions on dollar availability. Delays stretched into months, and some firms were unable to repatriate earnings entirely. A currency inconvertibility policy can respond by indemnifying the insured for the value of those blocked funds, effectively restoring hard currency proceeds, even while the host government restricts conversion and transfer.

PRI capacity is provided by different players. Private market underwriters can offer flexible cover that can be tailored to specific assets, tenors and transaction structures. On the public side, MIGA (the World Bank Group’s political risk arm) and the U.S. International Development Finance Corporation (DFC) play a distinct role: where most private insurers pulled back from the more difficult markets, DFC and MIGA can operate in jurisdictions and risk environments the private market will not enter. In challenging jurisdictions, where critical mineral assets are increasingly concentrated, either market may be suitable depending on the specific project.

Why political risk insurance matters for metals companies today

For metals companies navigating today’s political landscape, political risk insurance is not a theoretical instrument. It is a practical tool for protecting assets in politically unstable jurisdictions, unlocking project financing in markets where lenders require political risk cover as a condition of lending, preserving the balance sheet against sovereign intervention, civil unrest, or foreign exchange controls, and supporting long-term investment in markets where political volatility is rising.

For metals companies navigating today’s political landscape, political risk insurance is not a theoretical instrument. It is a practical tool for protecting assets in politically unstable jurisdictions, unlocking project financing in markets where lenders require political risk cover as a condition of lending, preserving the balance sheet against sovereign intervention, civil unrest, or foreign exchange controls, and supporting long-term investment in markets where political volatility is rising.

The global political climate has made metals a focal point of state power, geopolitical competition and domestic political pressure. As a result, political risk events ranging from expropriation to political violence to currency inconvertibility are occurring with greater frequency and severity. Political risk insurance provides a structured, credible mechanism for managing these exposures at a time when the sector’s political risk profile is becoming more complex, not less.

This article forms part of the report 'Managing the New Economic Risks in the Metals Sector'. Read the full report to learn more about the top economic risks facing the metals sector and how they are reshaping trade flows, cost structures and investment decisions.

Willis Towers Watson Insurances (Ireland) Limited, trading as Willis, WTW is regulated by the Central Bank of Ireland