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1) Global mining and metals executives continue to rank environmental, social and governance (ESG) as the top risk for their businesses in the next 12 months, according to a report by EY. The report, based on interviews with 150 sector executives, highlights the complex operating environment facing mining companies in 2024. Respondents noted increasing scrutiny from all issues. EY emphasizes that mining firms excelling in ESG will enjoy benefits like improved access to capital, a stronger talent pipeline and a more robust license to operate. Following ESG, access to capital has now become a major concern for mining executives. The green transition, which requires significant investments, has made growth capital a priority. Despite high shareholder returns in recent years, the focus remained on dividends and capital discipline rather than growth. Expansion capital spending has typically exceeded 20% of top-line profits, but in recent years this metric has dropped down to 10% due to a focus on shareholder returns. The report highlights that capital for the energy transition is not yet flowing into mining, with iron and steel, gold and coal companies attracting the most capital. Copper, a critical component of the green transition, has seen a 28% drop in investment in 2023 and specialty metals a total of 50%. Mining companies now face ESG requirements that add to capital expenditure costs, and even existing operations must meet newer ESG standards to secure financing. Balancing financial returns with sustainability responsibilities is a challenge for the industry, and companies need to involve investors in their adaptation to new models and investment decisions.
2) Newcrest Mining's shareholders have voted in favor of the takeover offer from Newmont. Following the decision, Newcrest will apply to the Federal Court of Australia for scheme approval, with a hearing scheduled for October 17. If approved by the court, the scheme will become effective after lodging Court orders with the Australian Investment and Securities Commission. The offer entail Newcrest shareholders receiving 0.4 Newmont shares for each Newcrest share held, implying a value of over $25 billion for Newcrest. The offer represents a substantial premium, with a 30.4% increase in Newcrest's undisturbed closing price on February 3, and a 39.1% premium over the undisputed 30-day volume-weighted average share price.