Advantages of Private Investment in the Mining Sector
Private sector investments in mining are expanding rapidly, with billions raised globally. Key funds and emerging opportunities highlight the sector's growth potential amid resource scarcity, making now a strategic time for investors seeking long-term gains. Despite inherent risks, the industry’s future appears promising as natural resources become increasingly scarce, driving prices higher and creating lucrative opportunities for private funds engaged in mining investments.
Advantages of Private Investment in the Mining Sector
Private equity funds differ from hedge funds primarily in structure and investor base. Hedge funds are offshore entities with limited investors, typically under 100, while private equity funds attract larger investments from affluent individuals and institutions. Private funds often allocate substantial capital across various industries, including energy, mining, stocks, and bonds. The mining industry, in particular, receives significant financial backing, with millions flowing into related funds.
Historically, in 2016, around 74 funds raised approximately $60 billion for natural resource investments. This figure increased in 2017 to over 250 funds raising $105 billion, with projections indicating further growth of nearly $6 billion within the current year. China's mining-focused fundraising efforts stand out, seeking $3 billion, while U.S.-based energy and mineral groups aim for $4 billion in capital.
Mining investments carry inherent risks, and returns are not guaranteed. Leading private funds in the sector include Resource Capital Funds (Denver), raising $3.1 billion; Orion Resource Partners (New York), with $2 billion; Waterton Global Resources (Toronto), gathering $1.9 billion; EMR Capital (Grand Cayman), with $1.3 billion; and The Sentient Group (Grand Cayman), also at $1.3 billion. Additionally, diversified funds managing $12.3 billion are channeling funds into natural resources and mining.
Overall, in 2016, 1,228 funds raised over $602 billion for mining, and current estimates suggest total investments could reach $4.5 trillion. Despite the challenge in deploying new capital efficiently in the current environment, the outlook for mining investments remains promising, especially as natural resource scarcity is likely to drive prices upward, marking a favorable era for sector investors.
