Critical minerals boom risks second funding gap as governance support shrinks
Governments are pouring billions of dollars into critical minerals projects in a race to secure new supply chains, but a parallel pullback in funding for governance and community engagement could ultimately slow the very projects policymakers are trying to accelerate, according to a new report by the Trust, Accountability and Inclusion (TAI) Collaborative.
The report, Thinking Strategically About Mineral Governance Funding, was commissioned by the BHP Foundation, a charitable organization registered in the US. The research found that demand for minerals is rising rapidly while funding for mineral governance appears to be tightening, with official development assistance contracting and some legacy philanthropies scaling back support.
The Washington-based donor network says development finance for mines, processing facilities and other critical minerals infrastructure is expanding just as funding for transparency, regulatory capacity, civil society oversight and community participation is being cut.
“Yes, there’s some eye-dropping sums being quoted and money flowing into the project development space and investment pipeline,” TAI executive director Michael Jarvis told MINING.COM in an interview.
“But at the same time, money that used to go to ensuring good outcomes of all those projects — the governance agenda — has been cut.”
Government donors that previously financed transparency and accountability programs around mining are shifting priorities toward strategic investment and dealmaking, Jarvis said. The trend extends beyond the US to donors in Europe, Japan and elsewhere.
The shift comes as geopolitical competition over critical minerals is driving unprecedented government intervention in mining and processing. Government policy is expected to remain one of the biggest drivers of mining investment in 2026, with state-backed financing emerging as a central tool in developed markets.
TAI argues that the resulting imbalance represents a second, largely overlooked financing gap: not the capital required to build mines and processing plants, but the much smaller amount needed to build the institutions and community relationships that allow those projects to operate.
“It only needs to be a fraction of that bigger sum,” Jarvis said. “It’s not like this needs to be on par, but there isn’t even that 5% fraction of what’s going into the investment side that’s going on the good governance institutions around it at the moment.”
$10 million could make a difference
TAI, which has operated since 2010, brings together funders supporting governance work across mining, infrastructure and other sectors. Its work focuses on trust with communities, accountability over public resources and corporate conduct.
The organization recently examined hundreds of funding streams as part of its research into mineral governance. Its March report on mineral governance funding found that demand for critical minerals is increasing while official development assistance and philanthropic support for governance work are tightening.
Jarvis said even a relatively modest injection of capital could begin closing the gap.
“At least a $10 million co-investment around mining governance, to be spent over the next two years, would make a surprising amount of difference,” he said, adding that the amount is roughly equivalent to cuts TAI has observed over the past year.
Longer term, he said industry itself could contribute a small percentage of project investment toward community engagement and governance capacity.
“We don’t need to be on equal firepower with the scale of investment that’s flowing into the sector,” Jarvis said. “But we need that thin layer that can make these things serve everyone’s interests better.”
Among the areas particularly exposed are civil society organizations that work with mining communities and scrutinize project development.
Several million dollars have been cut from support for international and in-country watchdog groups that can flag opaque dealmaking, questions about who benefits from projects and concerns about operators entering communities, Jarvis said.
Those cuts are arriving at “the worst possible moment,” as national security and energy-transition pressures encourage governments to move faster on mineral development.
“A few years from now, we’re going to regret that we made those cuts,” he said.
Deregulation could backfire
The funding pullback also coincides with pressure in several jurisdictions to accelerate permitting and reduce regulatory barriers.
Jarvis questioned the assumption that weaker oversight will necessarily translate into faster mineral production.
“There’s a hypothesis of some that if you deregulate, that speeds up projects, things can happen faster,” he said. “That might work in the short run, but I would argue that lack of good regulation in the long run creates more of these headaches and problems down the road.”
Weakening government capacity can leave regulators without the staff or expertise required to manage projects, while cutting funding for civil society removes another layer of oversight, he said.
TAI’s separate Mined the Gaps: Trust and Critical Minerals report similarly challenges the idea that regulation inherently obstructs development. It argues that procedural fairness, effective oversight and meaningful community participation can prevent conflicts and legal disputes that otherwise delay projects.
One particular vulnerability occurs during exploration.
Junior miners are typically incentivized to find deposits, secure financing and advance projects to the point where larger companies become involved. Environmental and community issues established during those early stages can therefore be inherited by the eventual mine developer.
“In most cases, the communities are the last to know, the last to be engaged,” Jarvis said.
While many juniors manage those relationships well, others do not, he added.
“If there’s no understanding of what the issues and risks are amongst local community leaders — or even amongst the regulators, partly because some of them have been gutted, they don’t have staff anymore — you’re laying the seeds for things to blow up down the road.”
Community relations as investment risk
For investors evaluating early-stage miners, Jarvis said community relationships should therefore be taken seriously alongside geological results.
Companies do not necessarily need huge budgets, he said, but they need staff capable of understanding local issues and engaging communities from the beginning.
Mining projects can operate for decades, making those relationships an ongoing requirement rather than something companies address only during permitting.
Communities may be consulted when a project initially moves forward, but projects subsequently change as costs, designs and management teams evolve. Community engagement needs to evolve with them, Jarvis said.
There should be mechanisms for checking whether promised jobs are materializing, whether water use remains consistent with commitments and whether communities continue to support development.
“We just need to get smarter and better at that interaction on an ongoing basis throughout the life cycle of the project,” he said.
TAI argues the problem is not confined to developing economies. Similar tensions are emerging in Australia, Canada and the US.
Nor is the organization’s objective to prevent mines from being built, Jarvis said.
If he had $50 million to deploy, he said he would direct it toward networks that engage communities around mining projects and transfer knowledge about successful approaches between jurisdictions.
“It’s not to block the mines,” Jarvis said. “It’s to ensure that these things work in a way that serves everyone’s benefit.”
Pressure to get deals done
The governance question also extends to how governments award the rapidly growing pool of public money available for critical minerals.
Jarvis said transparency around funding awards, competitive bidding and contract terms becomes particularly important as governments take a larger role in selecting projects.
“The more you make these things at risk of collusion or favoritism, it tends to not work well for the long-term outcomes for anybody’s benefit, except perhaps some individuals,” he said.
Good operators also benefit from a level playing field, he added, while political pressure to rapidly select winners risks producing poor decisions.
“It’s this trade-off between a push for speed and having announcements against actually what makes long-term good economic sense,” Jarvis said. “And I’m not sure the two match up very well right now.”
With governments pursuing critical minerals for everything from renewable energy and batteries to national defense, TAI does not dispute the urgency of bringing more production online.
Its warning is that financing alone will not get it accomplished.
“For all the hype and boom, we’re not going to see the result we want unless we’re thinking about all the pieces that need to be put in place,” Jarvis said.
“At the moment it’s all focused on the finance and not the rest of it.”
