The mining industry's exploration financing model leaves junior companies ill-equipped to address environmental and social challenges that subsequently delay mine approvals, according to a new report from the Washington, D.C.-based Trust, Accountability and Inclusion (TAI) Collaborative. The findings come as Western governments push to accelerate critical minerals production to meet energy transition demand and reduce reliance on Chinese supply chains, placing unprecedented pressure on permitting timelines worldwide.

In the report, titled Mined The Gaps: Trust and Critical Minerals and issued Tuesday, author Sefton Darby argues that many permitting disputes actually originate years before formal regulatory reviews begin. During the exploration phase, companies are incentivized for mineral discoveries rather than community engagement or environmental planning, creating risks that remain unaddressed until projects reach the permitting stage — when disputes become significantly more difficult and costly to resolve. Junior miners, which typically raise capital through equity markets to fund exploration and then sell promising prospects to larger operators, operate under a business model that rewards geological findings over social license.

Drawing on global data, sentiment surveys, and case studies, Darby contends that stronger regulation combined with earlier community engagement can help identify risks before they escalate into legal challenges and project delays. The full report is available here.

"The market for developing new mines is structurally broken," Darby writes. "The exploration phase is dominated by small, under-capitalised junior mining companies whose technical focus is almost entirely geological."

Root Causes in the Exploration Phase

Darby emphasizes that environmental and social risks are routinely created during exploration but go unaddressed because junior companies lack the resources, incentives, and regulatory obligations to consider them. "By the time a project reaches the mine permitting stage, those risks are deeply embedded," he said.

These findings challenge the perspective that simply reducing regulation will accelerate critical minerals development — a argument that has gained traction among policymakers in the United States, Canada, Australia, and the European Union as they seek to secure supplies of lithium, cobalt, nickel, copper, and rare earth elements. Instead, Darby argues that projects advance most quickly when communities have confidence in the permitting process and regulators are empowered to resolve issues before they become entrenched.

"When people have a meaningful voice, confidence in oversight and assurance that environmental and social concerns will be addressed, problems can be identified earlier and resolved before they escalate," Darby said.

Proposed Adaptive Governance Partnership

As a remedy, TAI proposes creating an adaptive governance partnership that would bring regulators, mining companies, and community representatives together throughout a project's entire lifecycle. This framework would aim to identify and resolve environmental, social, and cultural concerns before they become major obstacles.

"The fastest project is not necessarily the one with the fewest rules," Darby said. "It is the one that identifies risks early, gives communities a genuine role in decisions and creates confidence that commitments will be honored throughout the life of the mine. Fairness and speed are not competing objectives. Done properly, each makes the other possible."

Reforming the Financing Model

TAI recommends that the industry's financing model be reformed by linking exploration funding to environmental and social initiatives from the earliest stages of project development, rather than deferring those matters until permitting begins.

"It will require changing the way governments, companies and funders work with the people who live alongside mining operations," said TAI executive director Michael Jarvis. "A transition that ignores community rights will not only be unjust; it will also be slower, more expensive and less sustainable."