Gold at a Crossroads: Managing the Biggest Risks in Mining Today

Building on the careful selection of supply chain partners, the Swiss Positive Gold Fund sources gold from both artisanal and small-scale mines (ASM) and medium- and large-scale industrial mines. The industrial gold, purchased primarily from Africa, is fully traceable, reflecting our commitment to rigorous social and environmental standards.

As the mining industry continues to evolve, so do the challenges and uncertainties faced by both companies and investors. In 2024, several critical risks have taken center stage, demanding greater attention and strategic planning. EY has recently published a report outlining the top 10 business risks and opportunities for the mining industry in 2024. Of these risks, four are closely aligned with the approach taken by the Swiss Positive Gold Fund. These include ESG compliance, maintaining a license to operate, climate change, and geopolitical and regulatory challenges. Each of these risks not only affects the long-term viability of mining operations but also plays a critical role in how responsibly sourced gold is positioned in the market.

Environmental, Social and Governance (ESG)

For the third consecutive year, ESG remains the top risk and opportunity in mining, reflecting the growing importance of responsible environmental and social practices. Investors and stakeholders are scrutinizing issues such as water stewardship (51%), ethical supply chains (26%), and human rights (25%). Ensuring supply chains are free from conflict and meet ethical standards is not only a regulatory imperative but also a competitive advantage. Investors are increasingly turning to companies that can guarantee their gold is sourced in a way that respects both people and the planet. A robust, transparent supply chain provides assurance that their investments are aligned with their values and free from reputational risks. Failure to meet these rising ESG standards can result in loss of investor confidence, regulatory penalties, and operational disruptions.

License to Operate

The concept of “license to operate” (LTO) has evolved beyond simply complying with regulations. Mining companies now need to actively build trust with local communities, Indigenous groups, and regulators. Community expectations are increasing, with 64% of respondents noting that the local community impact of mining is under greater scrutiny. Securing and maintaining an LTO is crucial as social and environmental missteps can lead to community opposition, regulatory shutdowns, or reputational damage. Companies that engage transparently with stakeholders, invest in local development, and minimize environmental disruption are more likely to secure long-term operational stability.

Climate change

Climate change increasingly threatens mining operations, with more frequent and severe wildfires, floods, and droughts. Miners are expected to reduce their carbon footprint and provide resources for the energy transition. Companies that proactively adopt sustainable practices and climate adaptation strategies are better positioned to maintain resilience and reduce long-term risks. Investors are prioritizing leadership in tackling climate change, with 46% focused on net-zero emissions and 27% urging companies to account for future climatic events in their planning.

Geopolitics

Mining companies often operate in regions subject to geopolitical instability, shifting regulations, and government interventions. These risks are particularly relevant for companies involved in critical minerals such as gold where countries may impose stricter export controls, higher taxes, or resource nationalization. Mining companies will need to be agile, navigating government intervention while seizing new investment opportunities. Those operating in stable regulatory environments and prioritizing compliance with local laws and international standards are better positioned to mitigate these challenges.

Swiss Positive Gold Fund

In today’s investment landscape, navigating the complex risks of the mining industry requires more than just financial acumen. For investors looking to balance ethical concerns with financial performance, the Swiss Positive Gold Fund is a 100% Swiss solution providing access to physical, traceable, and artisanal gold, which is deliverable and deposited at Pictet in Geneva. Delivering returns exactly aligned with gold price, the fund demonstrates it is possible to generate tangible social and environmental impacts without compromising financial performance.