2025 Global Metals & Minerals Project Spending Outlook

Shaheen Chohan (00:18):
Good morning and welcome, my name is Shaheen Chohan and I am part of IIR's global analytics team. I'm based in our Dubai office and have been with the company now for 15 years. Now, for those of you who regularly tune in to our market outlook discussions, you may have noticed that we have a slightly different look and feel to our previous market assessments. Today, we are hosting the discussion from our brand new media suite and have retooled our previous webinar format to try and hone in now on really just discussing those trends and developments in the market that are sitting very much front and center of everyone's mind.
And to help me cut the ribbon, so to speak, I am delighted to be joined by Joe Govreau, who is our Senior Vice President of Research Operations for our Metals and Minerals Research. Joe has been with the company now for, gosh, 39 years. Joe is a subject matter expert on capital spending trends in the mining, metals and minerals sectors and, like myself, he is a fellow Geologist, who has a Bachelor of Science degree in Geology from the University of Houston. Today, Joe and I will be discussing the near term outlook across the mining and downstream metals sectors, with a particular focus on how and where the current tariff situation is impacting plant spending across the industry.
But before I do that I would like to say a very big thank you to our podcast sponsors, Hilliard Braking Systems, a world leader in industrial braking technology. Hilliard Braking Systems have a proven track performance, ability and value to their customers. Hilliard Corporation offers an entire range of industrial modular brakes, caliper brakes, rail and disc brakes, electric brakes and products such as power units, mounting brackets, discs and hubs.
So, Joe, I would like to bring you into the discussion and put you under the spotlight somewhat. I guess over the last 24 months, Metals and Minerals project spending activity has really been moving along at a reasonable pace — not quite the levels that we saw in the last CAPEX booming period, but on an upward trajectory nonetheless. Now, base metal prices have come off some of the highs we saw at the beginning of this year, and certainly off that high point in mid-2022, right? But still at elevated levels compared to back in history. Why are we seeing higher metals prices? Well, metals demand continues to increase, and the main driver over the last 10 years or so has been the energy transition — that's going to continue going forward. We are seeing significant growth in electricity consumption, up about 4.3% according to the IEA, and that is coming from electrification efforts, from the explosion in data center construction — things like that. The need for energy infrastructure will increase demand for copper, aluminum, and steel.
If you look at the World Bank metals index, metal prices are historically high, as you say, for most commodities, with precious metals — especially gold — going through the roof as an investment destination, off of uncertainty over the tariff war impact and possible economic downturn. The price of gold actually went up over $3,500 per ounce today. At the same time, some metal prices such as lithium and nickel have fallen due to a lot of new capacity coming online in countries like Indonesia, which has built out a lot of mine and smelter capacity, mainly from Chinese investment in that country.
The top mining companies were planning to spend more in 2025 than they did last year, and we haven't seen any changes in those plans. The BHP Group, for example, wants to spend about $13 billion on its copper operations in Chile over the next decade. So, Joe, with what appears to be a fairly positive set of tailwinds for the industry, do you see this now leading to and translating into more capital expenditures moving forward?

Joe Govreau (05:00):
Yeah, we are seeing increased activity and capex expenditures. We are looking at about a 7.3% increase compared to last year, and that is according to our global metals and minerals projects spending index. The spending index compares what is scheduled to begin construction this year compared to last year at the same time. We update that every month. I will say there is significant risk for increased project fallout as the year moves on, as project costs continue to rise. I've had several discussions with our equipment and service provider clients. They are indicating a couple of different things — one, they are increasing product pricing, and in some cases for their products and services. And others are saying there has been a slowdown, a market slowdown in capex and maintenance spend.
Since the tariffs were announced, metal firms are waiting for the other shoe to drop, so to speak, and market uncertainty makes it difficult to make long-term capital commitments. The Trump administration says it is negotiating with 75 countries on tariffs right now, so we are in a kind of wait-and-see period. The longer that uncertainty hangs over the market, the longer projects will be delayed, I think. So we will keep watching the index closely as the year goes on to determine how much fallout occurs.

Shaheen Chohan (06:29):
I do have — before we move off this particular aspect of the discussion — I'm looking at that spending index and seeing pretty much every market region pointing upwards, except Oceania, which I can only assume is primarily Australia, a big resource-rich player and certainly a major contributor to commodity supply chains. Why are we seeing a downward trend in plant spending?

Joe Govreau (06:55):
I think, well, the main exports for Australia are iron ore and coal, and we have seen a slowdown in project activity in both of those markets. Also, the lithium and nickel price has impacted operations in that country. That is where you are seeing the main downturn from that.

Shaheen Chohan (07:20):
Now, before we get to, I guess, the big elephant in the room — and that being the wave of US tariff announcements that we saw on the second of this month — what does the current level and activity of project spending, based on what your researchers are seeing and tracking across the world right now, tell us? Are we starting to see any impact from the tariff announcements? Are we seeing any kind of shift in the location of that spending, whether it is some geographies showing higher levels versus some market regions pulling back? Are we seeing any kind of shift in project spending from a geographical perspective?

Joe Govreau (08:04):
Yeah, we really haven't seen any market fallout yet that is greater than normal. There are indicators that suggest that might happen. Right now, when you compare construction activity versus last year, we are up 5.2% for construction projects under construction compared to last year. There is a healthy amount of spend going on — regions like the US and Canada are seeing increased activity, Latin America, Southeast Asia, Africa, and so on. And then there is a healthy pipeline of projects on the books for the rest of the year. Looking at medium-to-high probability projects, there is another $477 billion in projects that are currently still scheduled to begin this year.

Shaheen Chohan (09:00):
Now, turning over to tariffs — the topic of the day. Obviously, tariffs will have a different impact on different parts of your supply chain. Tariffs will be impacting mining and mining companies in a different way, perhaps, to the downstream sectors. What I mean by that is that mining companies invest for the long term — their assets run for multiple decades and their permitting processes are long and extended. Whereas the downstream sectors such as smelters are much more sensitive, I guess, to changes in macroeconomics, and obviously to any disruption to their end consumers. Would you say we are starting to see a divergence in the kind of impact between the mining sector and the downstream sectors?

Joe Govreau (09:56):
Yeah, I think the downstream sectors are going to be more impacted from tariffs. Steel, when you look at it globally, is in overcapacity. China produced over a billion tons of steel last year and they exported about ten to fifteen percent of that. When the tariffs go up, it blocks those imports from coming in, but those then go to other countries and it messes with their steel production, so there is a whole dynamic at play here. So from a project standpoint there will be winners and losers. Tariffs will boost domestic steel producers and encourage reshoring of capacity. We have already seen this with a couple of foreign producers who are now looking to build steel mills in the US — firstly, to take advantage of the US market, which is healthy, and secondly, to avoid the impact of tariffs on their downstream operations. Hyundai, for example, is planning to spend $21 billion in the US, with $5.8 billion to build a steel mill and the rest on their automaking plants in the southern US. Just recently, Posco announced a partnership with Hyundai to develop that steel project in Louisiana.
So the smelters sector is also very active lately. Companies have moved to shore up the supply chain around security issues and to move away from Chinese market control. Projects are arising in downstream refining and smelting of metals, including a large number of battery recycling projects, copper smelters, and lithium and rare earth oxide production refineries — all of which we classify in our smelters sector. China has retaliated with tariffs or restrictions on exports of critical minerals, such as rare earths and downstream products such as magnets. This will benefit projects in the US for those materials. We have seen one in Utah — the White Mesa Mill, which is a uranium project where they are recovering rare earths. And they can make some of the key heavy rare earths that they need — about a $400 million expansion that can produce six of the seven rare earths that China has banned.
Even our most important trade partners, Canada and Mexico, are impacted. In response to the tariffs, the province of Ontario has announced $11 billion in tax deferrals and rebates to support domestic business from the fallout from tariffs. We are definitely in a tariff war, and the longer we stay in it, I believe the worse it will be for project activity going forward.

Shaheen Chohan (12:56):
What I would like to do is shift gears for a little bit. We are still seeing a lot of momentum, but if we could perhaps get your input on some of the aspects around the type of projects — do you expect to see any improvement in grassroots mine developments? For a long time, it has been very difficult to get through the permitting process. Let's say the tariff situation, we get to a degree of normalization as we start to see more of the bilateral agreements occurring. Today we saw a statement put out by Vice President Vance, who is currently in India — the rhetoric is very positive, it is all about trying to get a win-win situation. Do you think the market is going to be responding to that? Will we see more confidence in moving forward with grassroots projects?

Joe Govreau (13:44):
Grassroots projects — the majority of what we are looking at — there are big projects in Pakistan, for example, building real copper projects, multibillion dollar projects. There are green steel mills in Europe going forward in Sweden. But more of what we are seeing is expansions and unit additions at existing mines, because it is so hard to permit a grassroots mine.

Shaheen Chohan (14:15):
Could you share a little bit — I think a lot of folks would be interested to know — what the permitting process is? I mean, how long does it typically take to take a new mine from feasibility and planning through to construction and completion? Typically, how long does that take?

Joe Govreau (14:34):
I have heard that the average is fifteen years, and I have seen projects go for twenty-five years that we have been watching in the permitting stage before they get to the construction stage. So it is a long, drawn-out process in many cases.

Shaheen Chohan (14:48):
So the focus remains on, I guess, expansions — probably easier to get through the pipe, as you could say. What other types of in-plant capital spending are we seeing at these mine sites?

Joe Govreau (15:03):
I think we are seeing a lot of restarting of past-producing assets, companies going underground at existing mines. A lot of companies are optimizing, new capacity has come online, there is automation being used that is making things more efficient and safer, and also decarbonization-type projects.

Shaheen Chohan (15:26):
Now, actually staying with that decarbonization theme — on one hand we have clearly got the mining sector sitting on both sides of the fence, right? On one hand, decarbonization is creating positive momentum. We need those critical inputs to support renewable technologies and so forth. But on the other hand, mining companies are really having to dig deep — no pun intended — but are really having to focus on spending that lowers their emissions, both at their operational mine sites as well as baking a low-carbon footprint into new projects. That is very, very key. I mean, it is probably key — mining companies are very conscious that you need now to have a very strong ESG rating to be able to just get the funding and the permitting through. Would that be fair to say?

Joe Govreau (16:21):
That is true. There is a lot of effort going into decarbonization right now, but very few of those are reaching the implementation stage, mainly due to the cost constraints of developing technologies like carbon capture and storage. It is being studied extensively in the cement and steel industry, but is very costly to implement. The use of hydrogen iron-making to replace traditional blast furnace technology, for example, shows promise, but is an expensive proposition. Technology improvement is needed to reduce the cost. There is also a lot of activity around electrification of mining equipment — trolley assist or dynamic energy transfer projects like Caterpillar is developing. In the glass manufacturing industry, they are retrofitting natural gas furnaces to electrify them or using oxyfuel to reduce carbon emissions.

Shaheen Chohan (17:31):
I want to come back to this broader concept about resource nationalization. The US is obviously the initiator, so to speak, of the current trade tariff war, and that kind of momentum moving forward comes at a time when really securing energy and commodity supply and building greater levels of domestic self-sufficiency is clearly a primary goal, right? Have you seen any moves by the US administration to try and improve the new mine permitting process?

Joe Govreau (18:10):
Yeah, I mean, just last Friday the Trump Administration put in place the addition of mining projects on what they call the "Fast 41" transparency list, which gets them more scrutiny from the regulatory agencies. The first project that was put on that list went on in 2023, and that was the South32 Hermosa project, which is still in permitting and is supposed to be complete in July of next year. So that is a three-year period, and they are calling it the Fast 41 process, but it may still take some time for some of these projects. Now, a couple of the projects on this list are more advanced, I noticed, so I'm not sure — some of them may start construction much earlier than that.

Shaheen Chohan (19:09):
It was interesting — when you showed me that list before we came into the podcast, I noticed that there was coal on there. I think that is quite telling. Seeing a new coal project on there is something we haven't seen a lot of. That is quite telling of the direction that the Trump administration is looking to go with a lot of these projects, right? They have had several executive orders to support coal. They are even looking at making metallurgical coal a critical mineral — defining it as a critical mineral. The one project on that list is for the Warrior Met Coal project in Alabama, that they are supporting. Now, sticking with the list, what I found really quite interesting is there are no rare earth mineral projects on there. They are not being fast-tracked at all. And I am quite surprised by that, because obviously China's role in that space — what is it, 60–70% of both the resource in the ground but also from the processing perspective. I'm surprised that rare earths aren't on there.

Joe Govreau (20:35):
I'm surprised as well. Also, bearing in mind that China, I think very recently, has said that they are going to halt exports to the US.

Shaheen Chohan (20:44):
Do you think that we will see some of these projects on this sort of fast-track list?

Joe Govreau (20:48):
I do, I do. And there is government support for rare earth projects — the DOE and DOD both have supported projects in the US.

Shaheen Chohan (20:59):
Now, Joe, I think that brings us to the conclusion of this discussion. I think we can't ignore the fact that there is still a high degree of uncertainty in the market today, but I think also, long term, there is still a lot of positive momentum. I'm assuming you agree with that. So in conclusion, what are some of the takeaways from our discussion today that you want folks to keep tuned in to and keep an eye on?

Joe Govreau (21:33):
Yeah, I think you're right — there is a lot of momentum going forward for project activity, especially around mining, steel, and smelting. This is mainly being driven by the energy transition. We are seeing quite a bit of activity in decarbonization projects as well. However, I think there is a significant risk for a slowdown in project activity if the tariff situation is not settled fairly quickly.

Shaheen Chohan (22:04):
So, Joe, a very big thank you to you for sharing your insights and perspectives today.

Joe Govreau (22:12):
Thank you, Shaheen.

Shaheen Chohan (22:13):
If any of you folks who have tuned in have any questions about some of the topics that we discussed today, then please do reach out to Joe or myself via the contact details that you can see here. And of course, I would like to say another big thank you to today's podcast sponsor, Hilliard Braking Systems. Please do take some time to visit their website or indeed reach out to some of the [transcript ends]