Mineral governance refers to the systems, policies, institutions, and practices that regulate how mineral resources are discovered, extracted, managed, and shared among stakeholders. It is of critical importance to the industry for several interconnected reasons, all of which affect investors and other stakeholders.

Importance of Mineral Governance in the Industry

1. Security and Sustainable Access to Resources:
   Critical minerals are essential for high-tech applications, national defense, and emerging industries. However, their geographical distribution is highly concentrated, creating strategic vulnerabilities in resource security. Effective mineral governance helps nations and industries secure sustainable access to these resources by promoting international cooperation and establishing robust evaluation and reserve strategies [1].

2. Stable Investment Environment:
   The mineral industry is highly capital-intensive, requiring large and long-term investments. Clear, transparent, and predictable mineral governance frameworks—covering laws, regulations, and licensing—are essential to provide legal certainty and reduce investment risk. Investors are more likely to commit resources in jurisdictions where governance ensures stability and reduces the risks of expropriation or sudden regulatory changes [2].

3. Conflict Mitigation and Social License:
   Poor mineral governance can lead to social conflicts, environmental degradation, and even human rights abuses, particularly in regions with weak state oversight. Governance frameworks that engage communities and address environmental, social, and economic impacts are vital for obtaining a "social license to operate" and preventing project shutdowns due to opposition from local stakeholders [3].

4. Transparency, Accountability, and Revenue Management:
   Effective governance ensures the transparent collection and distribution of royalties and taxes, reducing opportunities for corruption and misuse of public funds. This also includes mechanisms to support verifiable corporate accountability and best environmental practices [4], [5].

5. Promotion of Sustainable Practices:
   Mineral governance is key in addressing the negative impacts of mining, such as CO₂ emissions, solid waste, and biodiversity loss. Regulatory oversight incentivises the adoption of environmentally friendly technologies and responsible supply chain practices—especially crucial as supply chains grow more complex and demands for "sustainable minerals" rise [2].

6. Global Supply Chain Integration:
   Increasingly, manufacturers downstream in supply chains are demanding evidence of responsible sourcing, creating a business imperative for upstream producers to demonstrate compliance with international governance, environmental, and social standards [6].

Effects on Investors

• Reduction in Risk:
  Clear governance structures reduce political and regulatory risks for investors. Stable regimes make project outcomes more predictable and help determine taxation and revenue-sharing expectations, which are critical for project valuation [4].

• ESG (Environmental, Social, and Governance) Compliance:
  Investors are increasingly assessed based on ESG metrics. Firms that demonstrate robust governance and responsible mineral management are more likely to attract responsible investment, improve financial performance, and attract institutional investors who are signatories to frameworks like the UN Principles for Responsible Investment [7].

• Access to Funding:
  Strong governance frameworks may attract a broader spectrum of investors, including those with fiduciary mandates to invest responsibly, while poor governance deters investment or increases the cost of capital [5].

Effects on Other Stakeholders

• Communities:
  Good governance safeguards local communities against environmental harm, displacement, and inequitable distribution of benefits. It ensures meaningful stakeholder engagement and fair compensation or benefit sharing [8].

• Governments:
  Facilitates maximizing national benefits from mineral wealth through effective taxation, royalties, and infrastructure development. Ineffective governance can contribute to the “resource curse,” where mineral-rich countries experience increased corruption, social unrest, and economic instability [9].

• Civil Society and NGOs:
  Transparent mineral governance supports civil society’s ability to monitor mining impacts and hold corporations/governments accountable, furthering the development of just policies and conflict mitigation [10].

The Critical Role of International and Multilevel Governance

Divergence in governance effectiveness can lead to significant differences in environmental and social outcomes even for the same mineral or metal. The promotion of global frameworks, due diligence, and transparency mechanisms (such as those emerging in the European Union and through UN efforts) is increasingly seen as necessary to level the playing field for trade and safeguard both competitive and sustainability interests [2], [11].

Summary Table: Effects of Mineral Governance