LGIM calls for more mining sector funding to meet net zero goals
Funding for the mining industry will have to be ramped up to ensure the successful decarbonisation of global economies, warned fund manager Legal and General Investment Management (LGIM).
At current levels of investment, LGIM forecasts that the world will be unable to accomplish the huge increase of industrial metals needed to reach targeted net zero goals across developed economies over the coming decades.
The report was drawn up in collaboration with miner BHP – which LGIM has a 0.7 per cent stake in.
It estimates the cumulative demand for copper will have to double over the next 30 years and quadruple for nickel to limit global warming to 1.5C above pre-industrial levels, in line with the Paris Agreement.
Nick Stansbury, head of climate solutions at LGIM and co-author of the report, told the Financial Times: “The challenge is simple: without a growing, responsibly run mining industry there will be no energy transition. Investors need to engage with the mining industry, not shut them out, if the industry is going to deliver the critical resources the world urgently needs.”
This outlook was reflected in the report – which warned action had to be taken as soon as possible to avoid painful costs in managing growing demand for natural resources.
It also suggested the battle to reach net zero will ultimately be won or lost in populous emerging markets, where energy supply must grow to meet increasing demand while simultaneously transitioning to low-carbon sources.
LGIM argued there were clear roles for investors: to engage constructively with the sector to help drive down operational emissions, and to mobilise the capital required to ensure metal supplies do not become a bottleneck issue.
The comments follow warnings International Energy Agency that the world could run short of copper, nickel, cobalt and other metals unless investment is increased in new and existing mines.