Natural resources investment banking covers companies involved in the extraction, processing, and sale of commodities — including metals and mining, oil and gas, chemicals, paper and packaging, and agricultural products. It is one of the most cyclical and technically demanding sectors in investment banking, with deal activity heavily influenced by commodity prices, supply-demand dynamics, and geopolitical factors.
In this guide, we will walk through what natural resources bankers do, the types of deals they work on, key valuation approaches, which banks are most active in the space, and how to position yourself for a role in this group.
What Does Natural Resources Investment Banking Cover?
Natural resources is a broad coverage area that can be organized into several key sub-sectors. The exact scope varies by bank — some firms group natural resources with energy, while others keep them separate. The main sub-sectors typically include:
- Metals and mining — Companies that explore for, extract, and process metals like gold, copper, iron ore, lithium, nickel, and aluminum. This includes major diversified miners, mid-tier producers, and junior exploration companies.
- Oil and gas — At some banks, upstream and midstream oil and gas companies fall under natural resources rather than a separate energy investment banking group. The line between energy and natural resources varies by institution.
- Chemicals and specialty materials — Companies that produce basic chemicals, specialty chemicals, fertilizers, and industrial gases. These businesses are deeply tied to commodity input costs.
- Paper, packaging, and forest products — Producers of pulp, paper, cardboard, and related packaging materials. This sub-sector has seen significant consolidation in recent years.
- Agriculture and food commodities — Companies involved in crop production, processing, and trading, as well as agricultural inputs like seeds and fertilizers.
Types of Deals in Natural Resources Banking
Mergers and Acquisitions
M&A is the bread and butter of natural resources banking. The sector is inherently fragmented in some areas (like junior mining) and concentrated in others (like major diversified miners), which creates constant opportunities for consolidation. Mining M&A is often driven by the need to replace depleting reserves, gain access to high-quality deposits, or achieve economies of scale.
Natural resources M&A can be uniquely complex. Transactions often involve assets in remote locations across multiple jurisdictions, with regulatory considerations around mining permits, environmental approvals, and indigenous community rights. Understanding enterprise value vs. equity value is essential, as natural resources companies often have complex capital structures with project-level debt, streaming agreements, and royalty interests.
Capital Raises and Equity Offerings
Natural resources companies — particularly in the mining sector — are frequent users of capital markets. Junior miners need to raise money to fund exploration programs. Mid-tier producers raise capital for mine development and expansion. Banks advise on IPOs, follow-on offerings, bought deals, and private placements. The equity capital markets (ECM) component of natural resources banking is more significant than in many other industry groups.
Streaming and Royalty Transactions
One of the most distinctive deal types in natural resources is the streaming or royalty transaction. In a streaming deal, a company (like Franco-Nevada, Wheaton Precious Metals, or Royal Gold) provides upfront capital to a miner in exchange for the right to purchase a percentage of future production at a predetermined price well below market value. Royalty deals are similar but involve a percentage payment on revenue rather than physical delivery of metal. These transactions serve as alternative financing for miners and have become a significant part of the deal landscape.
Debt Financings and Project Finance
Developing a new mine or processing facility requires enormous capital investment. Banks help natural resources companies arrange project finance, revolving credit facilities, high-yield bonds, and other debt instruments. The financing structures can be complex, particularly when they involve multiple lenders, off-take agreements, and hedging arrangements. This connects closely to concepts in leveraged finance.
Restructurings and Distressed Situations
Because natural resources companies are so exposed to commodity price cycles, restructuring work is a recurring theme. When commodity prices drop sharply, highly leveraged producers can find themselves in distress, leading to debt restructurings, asset sales, or bankruptcy proceedings. Banks with strong natural resources practices often handle these situations.
Key Valuation Approaches in Natural Resources
Valuing natural resources companies requires some specialized approaches that differ from standard corporate valuation. While traditional methods like comparable company analysis and DCF are still used, natural resources bankers also rely on industry-specific techniques.
- Net asset value (NAV) — This is the most important valuation methodology in mining. NAV involves building a detailed mine-by-mine DCF model that projects production, costs, and capital expenditures over the full life of each asset. You discount these cash flows to arrive at the present value of each mine, then sum them up (similar to a sum-of-the-parts approach) to get the total NAV. This is the primary basis for valuing mining companies.
- Price-to-NAV multiples — Once you have calculated NAV, mining companies are often compared on a P/NAV basis. A company trading at 0.7x NAV might be considered cheap relative to a peer at 1.2x NAV, though the premium or discount reflects factors like management quality, jurisdiction risk, and project execution track record.
- EV/EBITDA and EV/production multiples — Standard EV/EBITDA multiples are used, but with the caveat that EBITDA is highly sensitive to commodity prices. Bankers often use normalized or mid-cycle commodity price assumptions. Production-based multiples (like EV per ounce of gold reserves or EV per ton of copper production) are also common.
- Commodity price assumptions — Every natural resources valuation is heavily dependent on what you assume for future commodity prices. Banks publish their own commodity price decks (forward curves, long-term consensus estimates) that serve as the basis for valuation work. Small changes in price assumptions can have an enormous impact on value.
- Reserves and resources — Mining companies report their mineral inventories using classification systems like NI 43-101 (in Canada) or JORC (in Australia). Understanding the difference between proven reserves, probable reserves, measured resources, and inferred resources is essential, as each carries a different level of geological confidence and therefore a different implied value.
Which Banks Are Active in Natural Resources?
Natural resources banking is offered by a range of institutions, from bulge brackets to specialist advisory firms. Geography matters more in this sector than in many others because natural resources activity is concentrated in specific regions.
- Bulge brackets — Goldman Sachs, JP Morgan, and Morgan Stanley all have natural resources teams that advise on major transactions globally. Barclays and Citi are also active.
- Canadian banks — Given Canada’s importance in mining, Canadian banks like BMO Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities have some of the strongest natural resources practices in the world. Toronto is arguably the global capital of mining finance.
- Australian banks — Macquarie Capital and the major Australian banks are active in natural resources given Australia’s role as a major mining jurisdiction.
- Boutiques and independents — Firms like Lazard, Rothschild, and Greenhill have historically been active in natural resources advisory. There are also specialist firms focused entirely on mining and metals advisory.
Skills and Knowledge for Natural Resources Bankers
To succeed in natural resources banking, you need the standard investment banking toolkit — strong financial statement analysis skills, modeling proficiency, and the ability to work on fast-paced deal teams. But you also need some sector-specific knowledge.
- Understanding of commodity markets — You should know how commodity prices are determined, what drives supply and demand, and how hedging works. Familiarity with futures markets, spot vs. forward pricing, and the major commodity exchanges is important.
- Geology basics — You do not need to be a geologist, but understanding the fundamentals of mineral deposits, reserve classifications, and mine development stages will help you communicate effectively with clients and analyze assets.
- NAV modeling — Building detailed mine-level NAV models is a core competency. This includes modeling production profiles, operating costs (cash costs, all-in sustaining costs), capital expenditure schedules, and tax regimes across different jurisdictions.
- Awareness of ESG and sustainability issues — Environmental, social, and governance factors are increasingly central to natural resources deals. Mining companies face scrutiny on issues like water use, tailings management, carbon emissions, and community relations. Being conversant in these topics is important for credibility.
How to Recruit for Natural Resources Banking
Recruiting for natural resources groups follows the standard investment banking recruiting process. Here are some tips for positioning yourself effectively.
Demonstrate genuine sector interest. Natural resources bankers are passionate about their sector. In networking conversations and interviews, you should be able to explain why you are specifically interested in mining, metals, or commodities — not just investment banking in general. Following commodity markets, reading industry publications, and being able to discuss recent deals will help you stand out. Our networking guide can help you structure these conversations effectively.
Leverage relevant background. If you have a background in engineering, geology, environmental science, or have worked at a natural resources company, make sure to highlight this on your resume. These backgrounds are valued in natural resources groups.
Consider geography. If you are targeting natural resources banking specifically, consider recruiting in cities where these teams are concentrated — Toronto, Houston, London, and Sydney are all major hubs. New York has natural resources teams at the bulge brackets but less depth than these other centers.
Prepare for technical questions. In addition to standard investment banking interview questions — like walking through a DCF or explaining how to calculate WACC — expect questions about NAV methodology, commodity price drivers, and reserve classification. You should also understand how unlevered free cash flow works in the context of capital-intensive mining operations.
Exit Opportunities from Natural Resources Banking
Natural resources bankers have a strong set of exit opportunities, though they tend to be more specialized than exits from generalist groups. Common paths include:
- Natural resources-focused private equity — Firms that invest specifically in mining, metals, or commodities actively hire from natural resources banking teams.
- Commodity trading firms — Some bankers move into commodity trading at firms like Glencore, Trafigura, or Vitol, where deal-making and market knowledge are valued.
- Corporate development at natural resources companies — Major mining and commodity companies hire bankers into strategy and M&A roles.
- Streaming and royalty companies — Firms like Franco-Nevada and Wheaton Precious Metals hire bankers for their transaction and evaluation teams.
- Mining-focused hedge funds — Some hedge funds specialize in mining and commodity equities, and value the deep sector knowledge that natural resources bankers bring.
If you are interested in keeping your options open, our free investment banking course covers how to think about group selection and exit opportunities in more detail.
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