Australian mining: navigating the complexities of global headwinds
- 4 November 2025
Australia's mining industry is no stranger to the ebb and flow of global markets. Mining is a cyclical business shaped by complex global geopolitics, fiscal policies and regulatory arrangements, economic growth, industrial development and innovation, and the expectations of stakeholders such as communities, governments and investors.
Global socioeconomic development is the primary driver of demand and supply, particularly through urbanisation, industrialisation, infrastructure, housing and consumer goods, energy and agriculture and the digitalisation of economies, enterprises and lifestyles.
Economic cycles are the primary determinants for commodities, with recent peaks in tightening cycles preceding downturns. But I submit that the cyclical variability oscillates around a longer-term buoyant trajectory.
Notwithstanding the hype around so-called critical minerals for the transition in the electrification and decarbonisation in the supply and use of energy, this will be of marginal impact: likely single digits for the new commodities lithium, graphite and cobalt.
I have long considered the real issue for critical minerals is more a national security imperative than an energy transition construct.
The minerals sector is deep into a period of uncertainty and volatility, characterised by a deteriorating macro-economic environment, stuttering global growth, negative fiscal policies and regulatory vulnerability, with geopolitical tensions giving rise to a bipolarisation of geopolitical and socioeconomic construct between “the West” and “the East”. Defined in terms of domestic protectionist measures, we have anti-competitive conduct and preferential trading blocs giving rise to the de-globalisation of trade and commerce where “national interest” is considered best served by reshoring and/or ally shoring critical supply chains and product markets, principally in minerals, metals and pre-derivative and end products.
China, aided and abetted by advanced manufacturing and technologies and highly competitive energy costs, has successfully positioned itself as a driver of future growth in sectors deemed strategically important to other countries and especially the USA, Europe and Japan. China dominates much of the critical supply chains and is exercising its competitive strength in export markets and building alliances among the “BRICs economies plus” to counter the USA led “foreign entities of concern” cohort.
The fragmentation of the global trading system
Fragmentation of the global trading system is profoundly reshaping resource allocation, productivity and trade and investment dynamics. Ironically, protectionism damages primarily the protecting economy itself and is rarely sustainable. Protectionist policies lead to increased costs for user industries and consumers, tighter financial conditions and reduced demand for minerals and metals, all of which hamper economic growth, business confidence and societal well-being.
This environment prompts companies’ acute consideration of sovereign risk in all its manifestations, demand and supply of so-called “future facing commodities”, risk management in building balance sheet resilience, redress of declining multi-factor productivity and improved social and environmental stewardship through innovation in technologies and operating systems, in building capacity and capability in the hard and soft skills disciplines, and in the physical and social infrastructure of operations.
A new perspective on sovereign risk
Traditionally, sovereign risk was associated with unstable economies, but now developed economies are also a source of uncertainty. Supply chain concentration risk has come to the fore, with heightened anxiety over geographical, project and open market policies. Resource nationalism is on the rise, with companies facing uncertainty over fiscal and taxation arrangements, property rights and security of tenure.
Inflation and deflation are playing havoc with capital costs and risk appetite, affecting global growth, productivity and investment, with particular impacts on energy, labour and project feasibility and timelines.
Monetary policy uncertainty, especially in heavily indebted countries such as the US and China, complicates cost of capital and investment assessments, the inflationary and risk weighting effects severely compromise project valuations and risk appetite. And in parts of Asia the economic outlook has shifted from optimism to concerns over recession due to trade tensions and macroeconomic disruptions, with deflation already apparent.
State of the sector
Demand for minerals and metals, with the notable exception of gold, is lacklustre, reflecting both global circumstances and a faltering energy transition moderating “critical minerals” demand and supply elasticity from earlier projections.
Energy transition capacity is well short of expectations in the pace and character of technology developments in energy density and industrial processes, and infrastructure build.
Commodity prices, again net of gold, are likely to continue to track the long-run equilibrium of marginal cost curves – the percentile of which will depend on where markets clear.
Costs …
Costs always rise to revenue. The upswing is both structural and cyclical drift. But their resilience and redress to the downside is more a structural challenge.
Capital intensity for new builds and operating costs has risen significantly, often surpassing inflation. The impact is exacerbated by persistently declining multifactor productivity, with some suggestions unit mining costs have as much as doubled over the past five years and multifactor productivity has declined by 3-3.5%/year over the past decade and a half.
The sector is confronted with increased regulations governing land access, project permitting and scope-of-work project approval processes.
The inflationary environmental and social stewardship expectations of communities, capital markets and governments are transcending company initiatives in social license to operate and community engagement practices. Mandatory regulatory requirements, including increasingly prescribed cultural heritage compliance, stricter environmental standards, and obligatory social stewardship are all contributing to this shift without, prima facie, demonstrable derived value.
Supply
Supply, meanwhile, continues to outpace demand with surpluses likely through the decade and into the next, with a few exceptions, notably seaborne traded coal. This is notwithstanding that commodity prices remain below levels necessary to incentivise new greenfield projects and, in some cases, brownfield expansions.
The supply side story is one of a “reality check” to the hereto unbridled optimism of “inconceivable” demand curves on account of the projected era of “green growth”.
The industry has a tendency to “cry wolf” about pending supply shortages but the reality is there are plenty of resources out there. Take copper, for example. There are currently 5 billion tonnes of copper resources in developed economies and at a price of US$4.20 per pound, there are 870 million tonnes of global reserves. Annual copper demand is about 28-29 million tonnes, with recycling contributing 5-5.5 million tonnes each year and reportedly growing. Professor Nigel Cook from Adelaide University reassured us at the Copper to the World conference that there was plenty of copper out there and technological advances are making even geologically complex deposits viable.
Unsurprisingly, major and mid-tier companies particularly are hesitant to gear new greenfield supply. Supply increases have largely come from brownfield expansions, revisiting processing waste dumps and tailings facilities, and recycling from fabrication scrap and end-of-life products.
Growth strategies are principally more acquisitive inorganic growth through mergers and acquisitions, prioritising short-term producing assets, rather than buying prospective development assets from explorers or early-stage start-ups. – Consolidation for synergies in scale, efficiency and effectiveness is improving productivity and building balance sheet resilience and delivering returns to shareholders above net capex investment reputably for the first time on record.
Capacity constraints – access to capital and skills
This “strategic cycle” is a material disincentive to investors. Capital markets are proving persistently antipathetic to mining and risk averse to investment generically and more acutely in exploration, start-ups and long-life projects. They are either not participating at all, inflating risk premiums and investment hurdles, or quarantining investment to a short-term focus on producing assets.
Added to which, by their own volition, they are deficient in the analytical skills to assess and manage risk and increasingly uncertain about which commodities/products, technologies, companies, jurisdictions and projects to back. To quote a colleague, “capital is a coward, it will go to where there is the least line of resistance or greatest degree of safety”.
Workforce issues persist, with skills shortages and outdated workplace arrangements compounding the industry’s challenges. There is a need for more quantum and discipline-specific expertise, as well as interdisciplinary competencies. The sector needs to expand beyond its core disciplines of engineering, metallurgy and geology to include data engineers, chemical engineers and environmental and social sciences. People skills are also integral to building a corporate culture that fosters integrated and interdependent operations, moving away from traditional silos and single-point solutions.
Unbridled optimism
Companies are already acting rationally. They are focused on building resilience and redress to the downside, hopefully avoiding the blunt instrument of short-term absolute cost cuts that can undermine longer-term capacity and capability, in favour of optimising unit costs and productivity.
There is appreciation of the key enabler of investing in technology and systems innovation, particularly where these can improve safety, productivity and profitability and thus sustainable development in the conversion of natural endowment to social capital.
For instance, digitalisation and increasingly the more sophisticated powers of generative AI, has the potential to revolutionise the industry in optimising operations, reducing costs, enhancing safety and building a better platform to community engagement and inclusive capitalism. However, it’s not just about technology – it’s about people and strategy. Companies that create a culture of curiosity, receptiveness and continuous development to fully harness the benefits of new technologies and systems are the standout performers.
Just as it has historically the industry knows its salvation does not lie in the next upswing of the commodities cycle but rather in addressing structural challenges confronting the sector – even if that only amounts to an understanding of the imperative to navigate these complex forces with a clear and strategic mindset.
This, I contend, is a platform conducive to positioning Australian mining companies for long-term success.
*Mitch Hooke is chairman of Partners in Performance, which is part of Accenture.
