Mining industry faces investor apathy despite rising gold prices
NEW YORK (February 24) The mining industry is grappling with a severe case of investor apathy despite soaring gold prices, according to Kevin Murphy, Research Director for Metals and Mining at S&P Global Market Intelligence.
Speaking with Kitco Mining at the 2025 Mines Money conference in Miami, Murphy highlighted a divergence in the commodities market, with gold prices "flirting with $3,000 an ounce" while other metals like nickel and zinc are "languishing."
Juniors face financing hurdles
Murphy noted that junior mining companies are finding it increasingly difficult to raise capital. "If you're trying to finance a project right now, it's not the easiest financing is on in general or on a downtrend," he said. Critical mineral projects in the advanced stages are more likely to receive funding, while raw exploration projects struggle.
The reluctance to invest in junior mining firms can be traced back to the 2010-2011 bull run, which was followed by a cataclysmic downturn. Many companies entered that period with significant debt, and when commodity prices crashed, shareholders suffered. "We saw a definite turn away at that point from a lot of institutional investors," Murphy explained.
Traditional institutional investors have aged out, and younger investors are not drawn to the mining sector. "We're not a cool industry for kids," Murphy lamented, adding that millennials often view mining negatively. The industry has also failed to advocate for itself, allowing negative perceptions to persist.
The mining sector is also plagued by an overpopulation of companies chasing limited funds. "There's thousands and thousands of mining hopefuls out there, and when we're talking about financings being a fraction of where they were a little over a decade ago, there's not enough money," Murphy stated. This has led to calls for consolidation within the industry.
Alternative financing mechanisms like streaming and royalty financing are emerging, but traditional lenders are increasingly wary of providing debt, especially to smaller companies, he added.
Merger and acquisition activity has been subdued, particularly in base metals, although there have been some high-profile acquisitions in the gold sector.
Companies with reduced project pipelines may look to acquisitions to boost production. While caution is expected, Murphy anticipates further M&A activity. "Capital restraint is definitely the name of the game, especially when we're in somewhat uncertain times," he noted.
Murphy anticipates continued volatility in mining markets, with financing remaining a challenge for junior companies. Gold is expected to continue performing well while struggling commodities like nickel will likely continue to face headwinds.
He expressed surprise that gold's strong performance has not generated more excitement. "It is very, very strange, but that just sort of speaks to the malaise over the mining industry in general," Murphy stated. He hopes that a major breakthrough in one stock could trigger a rolling effect, revitalizing interest in the gold sector.
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