The global mining industry has been trying to rebuild its reputation after years of bad deals and writedowns that drove away investors. But that effort has suffered a major blow in the past three months, as the sector has faced a series of scandals and setbacks that have cost shareholders billions and shaken faith in some of the industry’s biggest names.
The latest shock came on Thursday, when Endeavour Mining Plc, the largest gold miner listed in the UK, announced it fired its CEO Sébastien de Montessus for “serious misconduct” after discovering an alleged “irregular payment instruction” of $5.9 million related to an asset sale. The shares plunged as much as 15%.
De Montessus, who had led Endeavour since 2016 and oversaw its rapid growth through acquisitions, said in a statement that he instructed a creditor of Endeavour to make the payment in 2021 to a security company, to offset money owed for essential security equipment. According to a report by Mining.com, he said the decision had no additional cost to the company and did not benefit him personally in any way, but admitted it was a “lapse in judgment” to not inform the board.
Protests, Cost Blowouts, and Production Cuts
Endeavour’s scandal is just the latest in a string of troubles for the mining industry, which has been struggling with rising costs, weak demand, and environmental and social challenges.
In Panama, one of the world’s largest and newest copper mines, owned by First Quantum Minerals Ltd, was ordered to permanently shut down in November after mass protests by local communities and environmental groups. The closure of the $10 billion project, which opened in 2019 and still had decades worth of copper to extract, wiped out more than half of First Quantum’s market value and raised questions about its ability to repay its debt.
In Chile, the world’s top copper producer, two of the biggest miners faced major setbacks in their flagship projects. Teck Resources Ltd dropped 9% in October after revealing a $1.3 billion cost overrun and a six-month delay at its Quebrada Blanca Phase 2 project, while Anglo American Plc slashed its copper production guidance for the next two years, including a significant cut at its Los Bronces mine, due to operational issues and lower ore grades. The announcement sent Anglo’s shares tumbling 19% on Dec. 8, the steepest single-day fall since the global financial crisis.
In South Africa, the world’s largest platinum producer, two of the leading miners also faced difficulties. Sibanye Stillwater Ltd, the biggest platinum miner, saw its shares drop as much as 25% in November after announcing a $1 billion convertible bond sale, which some analysts said was too dilutive and unnecessary. Impala Platinum Holdings Ltd, the second-biggest platinum miner, suffered a tragic accident at its Rustenburg mine in December, which left 12 people dead and dozens injured.
A Green Transition at Stake
The mining industry’s woes come at a time when the sector is trying to position itself as a vital part of the green transition, as it supplies the metals and minerals needed to decarbonize the global economy, such as copper, nickel, and lithium. But to do that, the miners need supportive governments and local populations, as well as investors willing to fund them.
The industry has spent much of the past decade trying to improve its environmental, social, and governance (ESG) performance after a slew of bad deals and writedowns in the previous decade eroded its credibility and profitability. The miners have also tried to boost their returns to shareholders, through dividends and buybacks, to lure back investors who fled the sector.
However, the recent scandals and setbacks have cast doubt on the industry’s ability to deliver on its promises and to meet the growing demand for green metals. The miners will have to work hard to regain the trust and confidence of their stakeholders and to prove that they can be part of the solution, not the problem, for a sustainable future.
