White & Case partner John Tivey is a co-author of the report, which explores how ESG has anchored itself as a mainstream aspect of business and will remain top-of-mind in the boardroom. ESG issues remain a considerable risk to the sector in 2022, with 24 per cent of survey respondents viewing it as the biggest threat, with that number rising to approximately 40 per cent when climate-related activism and regulation is included.

In conversation with Lawyers Weekly, Mr Tivey said that within the mining and metals sector, “ESG has anchored itself as a mainstream aspect of business”.

“Almost a quarter of respondents view ESG issues as the biggest threat, with a fifth believing that exposure to energy transition materials is the best way to draw in new investors – almost double last year’s response. Last year also saw nearly every major mining company commit to becoming carbon neutral over the next two to three decades, with leaders in this year’s survey revealing they believe cutting their own emissions is the most effective way for mining companies to respond to climate change,” he explained.

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“The report also revealed that there is a considerable opportunity for the sector to capitalise on its improved ESG performance and position itself as a trusted partner to mine the materials that will enable the green energy transition.”

“Last year, White & Case’s Mining & Metals report highlighted COVID-19 supply chain disruption and demand destruction as the second greatest concern for the mining and metals industry. This year saw that key issue being overtaken by ESG, resource nationalism and climate change regulation and shareholder activism. In 2022, survey insights indicate the mining and metals sector will continue to keep its attention on ESG issues to position itself as a trusted partner in fighting climate change.”

Thirty-seven per cent of survey respondents in the report said that cutting their own emissions is the most effective way for miners to respond to climate change – and 38 per cent see increased recycling as a key structural shift that the industry can undertake to burnish its ESG credentials, with these trends expected to accelerate further in the coming years as technologies improve, especially if commodity prices continue to rise.

Additionally, for the third straight year, respondents said that copper is the best-performing metal in 2022, with 31 per cent agreeing it’s set for another year of outperformance. Access to these crucial metals, however, is one of the key issues for the sector moving forward, added Mr Tivey.

“Downstream battery and car producers, wind turbine and other renewable sector related products that utilise minerals such as lithium, cobalt, nickel, copper and rare earths will seek to secure integrated supply chains that meet the ESG requirements of the consumers of their products and their investors by strategic investments in all parts of their supply chains and in jurisdictions they would not traditionally have invested in,” he added.

“Trade tensions are an ever-present focus of the survey. Interestingly, this year, almost triple the number of respondents to White & Case’s survey (32 per cent in 2022 versus just 11 per cent in 2021) expect a by-product of trade tensions is likely to have inflationary pressures on end-users. The survey showed coal and iron ore are the commodities most likely to lag this year, despite, or perhaps because, both hit record prices in 2021. On the opposite end, respondents indicate copper is set for another year of outperformance and will be the best performing metal in 2022 for the third year straight, after hitting record prices last year.”

In terms of how lawyers in this space can best serve their clients as we enter a post-pandemic market, Mr Tivey said firms should be filling their teams with lawyers who have extensive industry knowledge “across key issues facing the sector”.

“Deep industry knowledge is key for all lawyers, but particularly for lawyers working in the mining and metals sector. We believe an understanding of industry developments, risks and debt and equity transactions as well as key developments that impact on country and project risk assessment is required to successfully advise clients in this space. In order to support the increasingly borderless landscape, there is a stronger demand for unparalleled sector experience and counsel at the centre of complex, domestic and cross-border matters,” he explained.

“Driven by the flow of funds and globalisation of investment, this shift in the market has seen a focus on client needs prioritised over firm offerings, resulting in the need for multidisciplinary integrated teams of experts. It is therefore becoming increasingly critical for firms to ensure they are devising teams that meet specific client needs – bringing the best suited lawyers forward to advise on key areas. This client centricity is at the core of White & Case’s approach to servicing clients and will provide the direction for future strategic growth in the Australian market.”