Newmont’s ESG Gold good for mining

Newmont’s ESG Gold good for mining

The mining industry is shifting its focus – to adopting ESG policy targets on the road to zero emissions mines.

Newmont (NYSE: NEM) announced its long-term emissions target on 16 Oct. 2020.  The largest gold miner is aiming for consistency with the Paris Agreement.

This is a first for the gold mining sector.

  • The gold mining industry saw a 26% rise in share prices since January 2020. Nevertheless, Gold mining is facing increasing pressure from investors to prioritise ESG.
  • Newmont is trying to create a blueprint through its “zero-emissions” mine in Canada. Its Borden Gold Project mine already has 35 electric vehicles operating since Oct. 2019.
  • Currently only 0.5% of mining equipment globally is electric (McKinsey).
  • Newmont’s CEO Tom Palmer says “ESG leadership and performance is going to become an increasingly important differentiator within the industry.”

Global markets are transitioning to an environmentally friendly arena. Environmental Social and Governance (ESG) metrics are the key drivers, as they are increasingly used by portfolio managers as the first filters for investment opportunities.

The way in which the ESG filter trend is gaining momentum suggests to us that there will be a flipping or tipping point. If there is an ESG filter tipping point, we suspect it will catch many smaller and mid-cap companies off guard and this could be fatal to them.

ESG is positive for mining companies and the communities where the mining companies are based.

Investors are dictating these changes. Companies from all sectors, but not all companies, are now aware. Proactive forward thinking businesses are shifting their focus toward ESG.

In mining finally an industry giant, NEM, has taken a step towards net-zero emissions. Newmont has created a blueprint that small, mid and large companies can follow.

Exhibit 1 illustrates the effect Newmont and other top gold miners [Barrick Gold Corporation (NYSE:GOLD) AngloGold Ashanti (NYSE:AU)] have on the markets.

Their approximate market caps are as follows: NEM = $50bn, GOLD = $50bn, NYSE:AU = $10bn.

The chart in exhibit 1 below shows that NEM, GOLD and AU shares are outperforming the New York Stock Exchange. The three large Gold Miners’ adoption of an ESG policy can only support the growth of investor interest and fund flows towards.

Newmont’s adoption of ESG also raises the profile of this mining sub-sector and the mining sector at large. We expect this to happen because more speculative investors and longer term investors transitioning to ESG bargain hunt and take the view that mining will follow the ESG trend in other sectors.


Exhibit 1 – Top three gold miners vs. NYSE, 20/10/18 – 19/10/20

Exhibit 1 - Top three gold miners vs NYSE, 20/10/18 - 19/10/20Sources: ACF Equity Research; Yahoo Finance




Author: Anda Onu – Anda is part of ACF’s Sales & Strategy team. See Anda’s profile