Mineral shortages pose physical risk
A seismic shutdown at the world’s largest underground copper mine shows the significant costs of business interruption to a critical minerals project. The Andes Norte project inside the El Teniente operation was stopped after a six-month study identified an emerging seismic phenomenon linked to the greater depth of the works.
A union leader has put the pause at as long as two years, which landed days after Chile posted second-quarter output of 1.27 million tonnes, down by nearly 8% year on year and its weakest April-to-June result in two decades.
Critical minerals supply insecurity often looks like a geotechnical problem, a storm, an ore grade, or a plant that cannot run, rather than a policy document. Michael Beaumont, account engineering group manager and senior advisor at global commercial property insurer FM in Australia, has spent more than three decades in mining risk engineering.
Beaumont encourages brokers to ask: ‘If this critical asset was unavailable for an extended period, what would it do to the business?’ He notes that it’s not just a week of lost production, but a month or a year, and what that does to project economics, cash flow, customer commitments, and shareholder expectations.
Two features of this cycle make the situation harder than in previous booms. The first is who the insured now is: governments are taking equity, such as Canada’s C$2 billion Critical Minerals Sovereign Fund, which makes direct equity investments and issues loan guarantees. The second is that much of the buildout is midstream, with countries like the UK targeting 20% of demand from recycling by 2035.
Beaumont notes that the strategic weight attached to these materials changes the consequences of a physical loss. In many cases, the geopolitical importance of critical minerals actually increases the importance of operational resilience because prolonged interruptions can have consequences far beyond the individual operation.
The International Energy Agency (IEA) found that the top three refining nations’ average market share across copper, lithium, nickel, cobalt, graphite, and rare earths is about 86% according to 2024 figures. This concentrated supply chain means that one plant outage can be a market event.
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Beaumont’s team analysed more than US$2 billion of mining losses over two decades.
The market is inviting the conversation, with Gallagher’s Global Mining Market Review 2026 reporting new capacity, broader coverage, and higher limits.
As critical minerals projects become increasingly important to governments and the global economy, the need for operational resilience and careful risk management becomes more pressing. For the people most affected by these projects, such as workers and local communities, the consequences of a physical loss can be severe and long-lasting, highlighting the importance of considering the human impact of business interruption.
The data supports the need for a more detailed approach to risk management, one that takes into account the complex interplay of factors that can affect critical minerals projects. By understanding the risks and taking steps to mitigate them, companies and governments can help ensure the long-term sustainability of these projects and the communities that depend on them, which is especially important when considering insurance concerns related to these projects.
Companies must consider their supply chains and how they can be affected by interruptions. They must also consider the geopolitical implications of their projects and how they can impact the global economy.
It is essential.
Beaumont’s team is working to help companies and governments understand the risks associated with critical minerals projects and to develop strategies to mitigate them. They are also working to educate brokers and other stakeholders about the importance of operational resilience and careful risk management in these projects.
