In order to reach their full potential, companies need to be able to balance being a "great company" and a "great stock", according to management consulting firm Boston Consulting Group’s (BCG’s) ‘Great Company, Great Stocks: Miners Must Be Both’ report.

In the report, BCG explains that, regarding the ‘great company’ aspect, mining companies have demonstrated measurable improvement over the past decade, noting that they have generated greater free cash flow relative to comparable points in the commodity price cycle and that they have reduced leverage and stabilised exploration budgets.

Some have also managed to take a steadier, less cyclical approach to mergers and acquisitions (M&As).

BCG explains, however, that these improvements have not yet fully translated into sustained total shareholder return performance, noting that the industry’s relative capitalisation in the global equity markets has shrunk as market cap growth in other sectors has outpaced it.

Meanwhile, as global capital has continued shifting into passive instruments, the company notes that mining has also lost ground within the major indices.

BCG points out that the increasing share of total mining market cap is now concentrated in Mainland China- and Hong Kong-listed companies.

More recently, a surge in precious metals and copper prices has sparked renewed investor attention, especially for the many pure-play miners in Canada and the US — attention that’s critical for securing the capital they need to deliver the next wave of growth, it notes.

In mining, BCG argues, a ‘great company’ involves being both a strong operator and a strong capital allocator.

“The record shows that the industry has advanced in these dimensions over the past ten years.”

Additionally, BCG notes that free cash flow generation has structurally improved, increasing from a below $40-billion a year in the late 2000s to a range of $80-billion to $90-billion a year in the mid-2020s.

The company notes that these figures are 1.5 to 2.5 times greater than those seen 15 to 20 years ago in comparable commodity price indices.

“While the absolute levels are, in part, volume-influenced, the absolute figures are a clear sign of a healthier industry.”

At the same time, BCG notes that leverage – expressed as the net debt:gross investment ratio – has declined by half over the past decade, falling to 9% in 2023, signalling a clear shift in orientation from growth at any cost to resilience and long-term optionality.

In their use of cash flow, the company notes, miners have reined in some of their more procyclical tendencies in the past two decades – such as allocating free cash flow to large capital projects and, to a lesser extent, undisciplined M&A activity.

After a decade of expansion, BCG points out, capital expenditure (capex) spending has returned to its mid-2000 levels and that the use of cash flow shifted from capex and M&As to dividends, which have taken up a growing share.

It notes that buybacks went from being equivalent to about 50% of dividends to less than 15%.

Additionally, major mining companies have also made tangible progress in key areas of sustainability.

“We have seen more organised community engagement efforts and more credible operational safety commitments. Fatality and injury rates have declined by 55% over the past decade among the ICMM members.”

BCG adds that M&A activity has generally become more disciplined and less cycle-driven, as evidenced by the weakening correlation between commodity price peaks and transaction volumes.

The company notes, however, that the degree of discipline varies considerably, depending on industry segment.

In copper, for example, M&A activity has been less influenced by commodity prices since 2017, despite several attempted deals, it notes.

BCG explains that fewer large deals have closed, and more transactions have shown a clear strategic rationale – whether oriented toward a single commodity, the asset base or a region, such as low-risk locations in the western hemisphere, or aimed at potential synergies, for, example, based on commodity or geographic proximity.

“M&A in precious metals remains more procyclical, with activity and premiums closely tracking gold prices,” says BCG, noting, however, that the premiums began to stabilise in 2025 to about 15%, versus 30% to 40% in the previous three years.

“Yet for most miners, growth remains elusive. Organic growth continues to be constrained by long development timelines. It now takes 16 years, on average, to move from discovery to production. Brownfield development is more complex and greenfield development is increasingly risky.”

BGC explains that value-accretive inorganic growth options are limited; noting that the cash flow allocated to growth capex has declined sharply in the past decade – from about 55% to 25%, on average, for the largest miners.

Moreover, it says opportunities are limited, noting that M&A deals with a clear sign of synergies are scarce.

Among the few companies that are doing acquisitions right, BCG says three strategies stand out.

These are focusing on deals that align closely with their capabilities, whether type of mine, commodity exposure or geographic experience; timing their transactions with greater discipline and less procyclicality; and reducing risk, either by favouring discrete asset acquisitions over full or partial takeovers or by executing growth through joint ventures or alliances.

Over the past two decades, BCG says, miners’ efforts to improve their business and financial health have been significant.

“But becoming a great company is not enough. Companies must devote an equal effort to becoming a great stock,” BCG posits.

“This is particularly crucial at a time when the industry’s growth prospects are so promising and when many commodities’ importance to national security is so clear.”

BCG explains that it will take considerable capital to meet the projected growth in demand for an industry that is fundamentally capital intensive, and miners cannot afford to continue to lose a disproportionate share of new capital flows to other sectors.

“Now is the time to double down on discipline and reset approaches that appeal to a broader, more passive, investor base.

“By balancing the two goals – being a great company and a great stock, mining companies can secure the resources they need, solidify their strategic differentiation, and attract the investment that translates into enduring relevance and performance”.