Mind the gap: Bridging project approval timelines with effective risk management

Inconsistencies in project approval timelines across different jurisdictions are creating major financial exposures for mining companies.

With over 4,000 known minerals and countless applications for metals, global innovation and growth is built on resources prospected and processed by the mining sector. Three futures are on the horizon, according to the International Energy Agency (IEA) 2024 Global Critical Minerals Outlook. Mineral demand for clean energy technologies could:

1. Double by 2030 in a scenario reflecting current policy settings
2. Almost triple by 2030
3. Quadruple by 2040 in a net-zero scenario 

Any potential future scenarios will require efficiency improvements, recycling, and most of all – new sites and sources to meet demand.

But research by S&P Global Ratings (previously Standard & Poor’s) of 214 operating and non-operating sites shows average lead time for mines now is nearly three times longer than it was between 1990 to 1999.

Why the wait? The lack of a global mining regulator and changing risk requirements

Over the past 30 years, mine approval processes have shifted from relatively streamlined, technically focused assessments to far more complex, multi-stakeholder regulatory journeys that recognize the need to plan beyond the operational lifespan.

Unlike other specialty sectors, mining has no unified international regulatory body. National sovereignty remains one of the most critical factors shaping the global mining landscape. Every country maintains full control over the development and regulation of its natural resources – a principle rooted in international law.

Timelines can vary significantly across countries. Projects in the Philippines are reported to have the longest lead times from initial discovery to operation, with an average of over 20 years. Contributing to this is a 12-year open-pit mining ban between 2010-2022, putting projects and operations on hold.

When aggregated across sectors and jurisdictions, these delays can significantly hamper socio-economic development and the transition to clean energy.

There are steps in the right direction, but more needs to be done to create a cohesive global structure.

Taking control: What risk leaders can do to help condense approvals timelines

Uncertainty is a major barrier to attracting capital and protecting investments. Keeping pace with these trends requires leaders to go beyond dealing with insurable risks in silos and optimize premium spend across the entire portfolio of risk. As the demand curve creates a steep incline, creating a robust and resilient risk strategy will be critical.

• Build a forward-looking strategy, backed by data.  With project gestation periods that may extend over several years - even decades - getting the timing right so a new project comes on stream as the price cycle peaks is sometimes critical to a company’s survival. Utilize data analytics and risk engineering models to assess the resilience of your strategy under various market conditions
• Optimize your insurance spend to deploy capital strategically. Analytics point to areas to retain risk that’s costly in the market, or how best to spend on premium across all risks and set your limits at the most efficient level, in line with your organization’s risk tolerance. Risk and finance leaders can make decisions knowing there will be no better option, and savings made on premium spend can then be deployed strategically in ways that best support the organization’s future growth objectives

Download the full article below to find out how your company to risk managers and help to condense project approval timelines.