Metals sector risk report

The global base-metal mining market is expected to reach USD744.14bn by 2030. The global metals sector, including mining companies, has been through a recent period of growth and expansion. The sector's profitability has been driven up by increasing demand for metals in developing economies as well as the boost from the energy transition and by higher metal prices. In 2022, metal prices increased by almost +90%, thanks to strong demand and supply constraints. The average EBITDA margin for the global metals sector was 28.7% in 2022, indicating a healthy level of profitability. Firms also have strong liquidity, with the average current ratio standing at 2.1 in 2022.

However, the sector faces challenges such as geopolitical tensions, environmental regulations and the need for technological innovation. The ongoing Russia-Ukraine war and high input costs will continue to pressure profitability in 2023. Indeed, the rise in cost of production has been squeezing margins. Despite the tremendous needs of the green transition, many firms in the sector have decided to limit plans to develop mines. The sector faces a growth dilemma as miners should spend more on exploration to ensure sufficient supply. However, their capex is set to decrease by about -10% in 2023, with exploration likely to fall by twice as much.