We need a race to the top in the supply of critical minerals

Demand for materials like cobalt and lithium is rising as low-carbon technologies begin to proliferate. Now is a make or break moment in whether that demand can be met sustainably, ICMM’s president and CEO Rohitesh Dhawan explains.

We need a race to the top in the supply of critical minerals

Image: BHP

The mining industry’s sustainability performance is firmly in the spotlight – and quite rightly, as the world grapples with how to meet skyrocketing demands for metals and minerals while tackling climate change, nature loss and inequality.

The scale of the challenge is laid bare in the International Energy Agency’s (IEA) recent Global Critical Minerals Outlook for 2024. It found that demand for lithium rose by 30% in 2023 alone, as nickel, cobalt, graphite and rare earth elements all saw demand increases ranging from 8% to 15% driven mostly by clean energy technologies.

By 2040, the need for these materials is expected to increase between two and nine times, with total investment in new mining projects necessary to meet the goals of the Paris Agreement estimated to be around $800bn.

There are three scenarios for this huge increase in the need for mined materials could play out with radically different outcomes.

Scenario 1: More of the same

Like any industry, there are responsible and irresponsible ways to produce minerals, and today’s mining industry has plenty examples of both. In this scenario, the current model is simply scaled up, warts and all.

This would be a missed opportunity. The gap between the least and most responsible operators must be closed for the sake of the people and environments who would otherwise continue to be harmed through poor practices. Nowhere is this clearer than in the management of tailings- the left-over rock once the target mineral has been extracted, which are stored in large dams.

Well-managed dams are indefinitely stable and pose little to no risk. In fact, they can be a source of new materials by reprocessing the rock to extract more metal, and by using the residue for construction materials like bricks. Well-rehabilitated dams also become new habitats with thriving plant and animal life.

But managed poorly, these dams can be disastrous. 272 people lost their lives when a tailings dam collapsed in Brumadinho in Brazil in 2019, and other breaches globally have occurred with unacceptable frequency.

The Brumadinho tragedy led to the development of the Global Industry Standard on Tailings Management (GISTM) which all responsible operators, including all members of ICMM, have embraced. Many companies however have not done so, and to scale the current model with this kind of varied performance would be unfortunate.

Scenario 2: Race to the bottom

Even worse would be if the gap between the best and worst closed, but in the wrong direction. In this scenario, a “mine at all costs” mentality takes hold, and the average standard drops.

This would be a tragedy. For instance, there has been little to no accountability for companies that don’t close mines responsibly. The result is thousands of unrehabilitated mine sites around the world that, aside from being a blight on the Earth’s surface, can cause long-term environmental damage.

While many new mines will need to be opened in future, several will need to be closed too, especially those that produced coal for power generation. Without a change in the enforcement of regulatory and voluntary codes of good closure practices, there is a very real risk that the rush for critical minerals makes these problems worse.

Scenario 3: Race to the top

In contrast, the best practices from across the industry could become the norm, and this is what we must collectively aim for.

For instance, the most responsible miners have committed to net-zero emissions as near as 2030, and many have already achieved net-zero Scope 2 (power-related) emissions.

And when it comes to nature, the best companies restore, conserve or protect an area up to 11 times larger than that disturbed by their operations, while aiming for no net loss of biodiversity at the site itself.

This applies equally to matters of social performance. The most responsible companies respect human rights at all times, and transparently disclose their contracts with governments and the taxes they pay. They also share and reinvest a significant portion of their earnings in their host countries and communities and enable those impacted by their operations to have a real say in decisions that affect them.

Responsible miners also help to develop a circular economy to reduce the total pressure on the need for new mining by recycling process materials and products.

A collective choice

The path we choose will be the sum of choices made by each of us. The 24 company members of ICMM are committed to Mining with Principles and encouraging our industry peers to do the same. We are also helping to harmonise different voluntary standards for responsible mining; an initiative specifically called out in the IEA report.

Governments must choose to enforce regulations, which themselves should create a level playing field at the level of high standards. Investors need to actively push their investee companies towards responsible practices and or else to withhold their capital. Buyers of materials such as car companies must exercise their choice on who they do business with, and to eliminate irresponsibly produced materials from their supply chains.

A race to the top is the only way to ensure that the growth in critical minerals helps create a more just, safe and sustainable world.

Rohitesh Dhawan is the President and CEO of the International Council on Mining and Metals (ICMM)

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