Over the past 15-20 years, funding in the resource sector has declined, and recently high inflation and interest rates have made it even harder for companies to obtain the funds they need to keep going.
The Decline of Financing in the Mining Sector
Investment in the mining industry has fallen significantly in recent years, especially in the retail segment of the market. Retail investors have shunned the asset sector in favor of the quick gains and flashy profiles associated with big tech companies
.
Causes of the Decline in Investments in the Mining Sector
The Western market has largely moved away from gold as a metal, and investors have turned to more lucrative sectors such as technology and cryptocurrencies.
Cold Investors Towards the Mining Sector
The lack of performance in the mining sector has become endemic, with an impressive lack of investor confidence.
Excluded Explorers and Developers
Bringing new mines online is a long and complex process, requiring critical funding at the time of exploration. However, exploration is also the most difficult and risky point for investors
.
Consolidation and Financing Alternatives
The saturation in the landscape of small explorers and developers has created an environment where there are too many companies with too many small projects. Consolidation would allow companies to develop projects of greater size and scope
.
Alternative Funding Sources
During the debate, panelists discussed how mining companies can obtain funding outside of public markets. Private sources of capital such as private equity funds and family offices may be essential.
The mining sector is struggling to attract retail investors, which means miners may want to consider alternative funding sources. In addition, more consolidation in the resource sector could help companies attract larger amounts of funding not available to small entities
.