INTERNATIONAL SEABED AUTHORITY PREPS REGULATIONS FOR DEEP-SEA MINING / 3 Geotech_Earlug_2016_Alt2.pdf 1 2016-06-24 4:27:20 PM
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Appian ready to deploy US$2B in cash-starved mining sector PRIVATE EQUITY
What miners need to know about the ISSB Standards
| Recent deals have targeted zinc, potash ESG
A
BY ALISHA HIYATE
bout a decade ago, private equity (PE) funds began to take a greater interest in the mining sector. At the time, financing was hard to come by, and the growth of PE beyond the few players already established in the space promised a potential lifeline for the industry. U.K.-based Appian Capital Advisory, founded in 2012, was one of the first of that wave of PE entrants, raising US$400 million for its first fund in 2014. But far from being mining’s saviour, the amount of PE investment in mining has since fizzled, Scherb told The Northern Miner in early July. “If you compare it to even oil and gas where there are hundreds of general partners or private equity funds, there just isn’t that number
Michael Scherb, Appian Capital Advisory founder and CEO. APPIAN CAPITAL ADVISORY
in mining. The barriers to entry are very high. So there has not been a huge influx of capital into our sector — if anything, you’ve seen players disappear.” Scherb says the reason is that
“I’VE NEVER SEEN A SECTOR AS CRUCIAL TO SOCIETY (THAT’S) AS INEFFICIENT AS THIS SECTOR. PART OF THAT INEFFICIENCY IS THE AVAILABILITY OF CAPITAL. IT’S JUST NOT CUT OUT TO MEET THESE SUDDEN DEMAND SHOCKS LIKE WHAT WE’RE SEEING ON ENERGY TRANSITION.” MICHAEL SCHERB CEO OF APPIAN CAPITAL ADVISORY
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PE investors have made mistakes around analyzing permitting, political, infrastructure and other risks. “Mining is a sector where you have to get many things right. So it’s not just the technical issues, you’ve got the financial, the software, the ESG, all of those need to come together. And if you get one of those wrong, then through the entire chain, you’re likely to lose money — and obviously if you lose money in a fund for investors it’s tough for you to get money for the second fund.” The result is a continuing dearth of capital available for mining, even as analysts sound the alarm on the coming supply deficits in copper, lithium and other metals expected to power the energy transition. “I’ve never seen a sector as crucial to society (that’s) as inefficient as this sector,” Scherb says. “Part of that inefficiency is the availability of capital. It’s just not cut out to meet these sudden demand shocks like what we’re seeing on energy transition.” Scherb says there is some money coming into the space now, but he refers to it as “beta-chasing capital,” explaining the investment rationale as, “‘I like the energy transition thesis, but I’m going to go buy a share of Freeport and that’s my copper See APPIAN / 6
| New sustainability reporting scheme launched in June
BY ELIZABETH FREELE AND RACHEL DEKKER
W
e’re entering a new era of sustainability disclosure. June saw the much-anticipated launch of the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB). The standards mark a significant global shift in financially-relevant sustainability disclosure. Strong investor and regulator support, as well as G7 and G20 endorsement, suggest they will rapidly become expected and indeed even mandatory in many jurisdictions, including Canada and the United States, as soon as 2025. Capital intensive industries like mining are likely to quickly adopt these investor-focused standards, but in doing so, may risk forgoing other strategic insights on sustainability risk and opportunity and miss out on meaningful engagement. We cover what your company can expect and what questions to ask to ensure your materiality and disclosure efforts add value to your business. Scope of the ISSB Standards In the works since COP26 in November 2021, the inaugural standards — IFRS S1 and IFRS S2 — seek to provide a common language and single global baseline for investor-focused sustainability reporting to bridge the information gap between companies and investors. Individual jurisdictions can build on the standards to suit their requirements. The standards come into effect at the start of 2024. They will help companies to communicate their sustainability risks and opportunities in a robust, streamlined, comparable, and verifiable manner, providing high-quality decision-useful data to support stronger corporate strategy and more informed investor decision making. The standards are designed to be applied together and will be part of a broader suite of sustainability standards. IFRS S1 is the general standard, providing a framework for companies to report on the financially-relevant sustainability risks and oppor-
MINING EXEC SALARIES: HIGHS & LOWS / 5
tunities they face in the short, medium, and long term, as well as governance, strategy, risk management, and metrics and targets. This is supplemented by IFRS S2, which focuses on climate-related risks and opportunities. While future standards on additional material topics are expected, companies are advised to use the general standard guidance to report on them in the interim. ISSB has also offered companies relief from reporting on Scope 3 GHG emissions during the first year. Alignment with existing standards The ISSB standards are designed to complement and consolidate existing disclosure standards, amalgamating and building on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, Sustainability Accounting Standards Board (SASB) Standards, Climate DisSee ISSB / 8 PM40069240