...A boom in metals prices and producer cash flows in 2021 is coinciding with five years of financial discipline that has companies undertaking strategic shifts, contemplating large capital uses, and potentially boosting credit quality. Environmental, social, and governance (ESG) considerations are prominent for capital deployment, which has been restrained through often difficult market conditions since 2014. Now, leverage is at a cyclical low, equity values have risen to decade highs, and companies have built cash balances. We expect increasing scrutiny of marginal capital for the industry's long- standing environmental and social exposures, particularly related to the energy transition and human health. The industry's historical cash flow volatility has made large segments unattractive to financial sponsors amid associated governance considerations around financial policies, debt usage, and shareholder remuneration. In sharp contrast to many industrial sectors, global metals and mining...
