Over the past decade, global geopolitical instability has posed significant challenges for industries like mining, particularly in politically volatile regions. This uncertainty complicates financing, supply chain management, and regulatory risk mitigation.
Financial pressures from inflation, project delays, and commodity price fluctuations make strong capital discipline and efficient cash flow management crucial for mining companies. To meet the growing demand for critical minerals, financial executives must adopt innovative approaches to financing, tapping into diverse capital sources and adjusting risk strategies to align with investor expectations. Effective risk management will help miners de-risk assets, optimize cost of capital and returns, while addressing concerns from boards, shareholders, and lenders.
Mining companies should consider risk management solutions like Trade Credit Insurance (TCI) and Political Risk Insurance (PRI).
Trade credit insurance helps miners protect against payment defaults on receivables, improving financial stability. By insuring receivables, miners can secure better financing terms, as insured receivables serve as stronger collateral for lenders. This can enhance borrowing capacity and unlock additional working capital for miners.
Political risk insurance helps miners safeguard their balance sheet and project cash flows from losses due to political risks, including trade disruptions, political violence, currency controls, expropriation, and regulatory interference.
To understand how insurance can be a strategic tool for mining companies read this article from the Canadian Institute of Mining.
