Source: World Economic Forum
Date: June 20, 2024
By: Benjamin Gibson, Joel Frijhoff, Katie Fedosenko
- A renewable energy future will require large scale-up of critical minerals and metals, but it will be less resource-intensive than today’s fossil fuel-based energy system.
- As an industry with both significant impacts and benefits, mining needs to seek and maintain social license to operate.
- Companies looking to mine responsibility can look to a growing number of international standards and guidelines.
A renewable energy transition will increase demand for critical minerals and metals, such as lithium, copper, manganese and rare earth elements. The market for key energy transition minerals has already doubled over the past five years, and the total demand for these materials in clean energy technologies is expected to increase between twofold or fourfold by 2040.
While continued growth will require more materials mining, the total amount of extraction needed to build a world that runs entirely on green energy by 2040 is far lower than that needed to maintain a fossil-fuelled energy system. In addition, energy production from fossil fuels needs continuous supply flows for combustion and is non-recyclable, whereas critical materials for energy transition are installed in equipment that can be used for years and then recycled at end of product life. While the renewable energy transition will lead to a decrease in extracted materials, it is vital that we ensure these metals are mined responsibly.
One key metal for which demand will grow more than most others in absolute terms is copper. This is due to its wide range of applications, unique conductive properties and ubiquitous use in electrification technologies. Consequently, annual copper demand is forecast to increase from 25 million tonnes currently to 55.1 million tonnes in 2050 under a 1.5°C scenario. New supplies will be needed to close the demand gap and avoid the worst impacts of the climate crisis.
Availability of metals
The good news is that the required volumes of many metals are geographically well-distributed in known terrestrial reserves. Copper is distributed across Chile (23.6%), Peru (10%), the Democratic Republic of Congo (10%), China (8.6%), the United States (5.9%), and several other countries.
In the short term, the volumes of copper and most metals will come primarily from the same countries that mine them today, as it typically takes 10+ years to open new commercial mining operations. Processing capacity can be geographically diversified much faster than finding new mining locations with sound investment conditions and infrastructure. The US and the EU are implementing new initiatives and standards to promote the development of domestic mining operations and are also establishing strategic partnerships with other countries to build up new supply.
Mining’s social license
Mining can disrupt large amounts of land, impacting biodiversity and ecosystems. It also uses vast quantities of water and creates tailings. In some cases, there have been catastrophic events that have had a major impact on human and environmental health, including the tailings dam failures at Samarco in 2015 and Brumadinho in 2019, both in Brazil.
In certain instances, both mining and processing can create emissions that can be harmful to the environment and human health. Mining is inherently regional – you can’t change where the deposit is, and the vast majority of mines are located within or adjacent to Indigenous Peoples territories or local communities. Just over 50% of the metals required for renewable energy transition are on or near Indigenous lands.
Health and safety, opportunities for employment and procurement, and protecting the rights of local and Indigenous Peoples are paramount. If these issues aren’t managed properly, they can create pushback by impacted communities.
Mining the responsible way
The first way to do responsible mining is through robust internal management systems, strong corporate governance and a well-established process for dialogue and grievances. The second is by implementing and getting external assurance against recognized standards.
There are a number of standards currently in practice: for example, the Mining Association of Canada’s Towards Sustainable Mining programme, covering biodiversity, climate change, crisis management, mine closure, Indigenous and community relations, among others.
Another standard is the Initiative for Responsible Mining Assurance (IRMA), which was developed by a multistakeholder board and is being implemented in South America and Africa. A final example is the CopperMark, an independent assurance framework to promote responsible practices across the copper, molybdenum, nickel and zinc value chains.
While these standards differ in their approach, they all share the same intent of improving the state of mining around the world. Regardless of the evaluation method, one fundamental aspect to responsible mining for the energy transition is transparency and reporting, with a new GRI standard for mining to guide the way.
End users of metals can also take action to work towards more responsible practices by increasing supply chain transparency and promoting responsible mining practices. Companies can also work towards increasing circular resources and support R&D on innovative solutions. Ørsted and Teck support these activities and are engaging with others across sectors and different parts of the value chain to help us strengthen the social license to operate.
