Comment

Green targets are empty without tackling destructive mining

Mining risks being the Achilles' heel of the energy transition

Protesters voice their anger over Rio Tinto's destruction of the Juukan Gorge 46,000-year-old heritage site in 2020
Protesters voice their anger over Rio Tinto's destruction of Australia's Juukan Gorge 46,000-year-old heritage site in 2020 Credit: RICHARD WAINWRIGHT/EPA-EFE/Shutterstock

We must dig deeper into the connection between the commitments to a net zero future arriving daily from governments, company boardrooms and financial institutions and the historic story of Achilles, greatest warrior of the Trojan war killed by his only weakness.

That is because the potential Achilles' heel of our net-zero future is becoming clearer. It is the dependence of these decarbonisation targets on the mining sector to safely produce the minerals critical to the low-carbon transition.

Many of the targets assume a rapid rollout of low-carbon technologies such as wind turbines, electric vehicle batteries and solar panels. That is well understood, but underpinning these technologies is a dependency on unprecedented quantities of critical “transition” minerals, such as lithium, cobalt, copper and nickel. However, the challenge is not just a question of whether more can be dug out of the ground, but all the complex social and environmental consequences of doing so.

A leading market analyst that tracks the mining industry and monitors the current and future production from all mine sites recently gave a presentation to me and a group of European investors engaged in an extensive dialogue with the European car industry. 

Our dialogue with the car industry is about their ability to meet their climate targets and growing demand for electric vehicles. However, we wanted to understand the dependency of those car batteries on the minerals that flow into them - and the scenario that was presented was sobering. 

To meet demand for many of the minerals, you wouldn’t need to see a doubling of production but many multiples of that. For example, lithium by 2030 must have increased production by 880pc compared to 2020 levels. For graphite, demand is estimated to surge by a mind-boggling 969pc. Across all critical and even not so critical minerals there is going to be a massive increase in demand.

While mineral supply and demand projections vary and industry will no doubt become more efficient in using minerals, technologies will substitute rare minerals for others, and society will become better at recycling, there is no doubt that we will still face a gaping disconnect between climate ambition and mineral reality. This is not a future problem: shortages of critical minerals and clean energy components are already pushing up low-carbon technology prices and slowing manufacturing.

So what to do? Building out the necessary supply chains for batteries within the necessary timeframe will require a massive and urgent injection of capital for clean technologies of multiple trillions. Investors and other financial institutions will have a vital role to play in mobilising capital to ensure the expansion of low-carbon supply chains, but first we must understand where investment is needed to support government and corporate net-zero commitments.

However, as already mentioned, the task is not just about being able to extract more, but also being able to tackle head-on the many environmental and social issues that have repeatedly called into question the mining sector’s social licence to operate. 

Mining is a practice that, for millennia, has provided the resources that have brought development, connectivity and prosperity to many throughout the globe. However, it is also an industry that can have devastating impacts on communities and the environment when it goes wrong or is badly managed.

Recent disasters have included the destruction of a 46,000-year-old heritage site in Western Australia’s Juukan Gorge that was deeply precious to First Nation peoples; and the horrific tailings dam collapse in Brumadinho, Brazil, in 2019, when millions of cubic metres of mining waste contained in a hillside structure collapsed and killed 270 people and polluted rivers for many miles. These tragedies have prompted investors to seek a different response.

General view from above of a dam owned by Brazilian miner Vale SA that burst, in Brumadinho, Brazil January 25, 2019. REUTERS/Washington Alves
A 2019 dam collapse in Brumadinho, Brazil spilled mining waste over surrounding areas Credit: WASHINGTON ALVES / REUTERS

Good practice exists within the mining industry and there is a new generation of leaders coming through that recognise that their company's social licence depends on getting their relationships with communities and the environment right. However, if there is to be a massive expansion of mining as the global climate transition demands, we need a very different approach to ensure it does not see a proliferation of poor mining practices and resulting conflicts and environmental legacies.

It is for this reason that next week the London Stock Exchange is to host its first dedicated mining event: the launch of a Global Investor Commission on Mining 2030. This initiative will be supported by the Archbishop of Canterbury and the Archbishop of Cape Town, backed by investors and supported by the United Nations. 

It will lead a dedicated process to establish a new path to reshape the mining industry. It aims to create a vision and a practical plan that can drive real-world change in mining practice at every site around the world. And it will support those communities, companies and leaders that are striving for mining not to be the Achilles' heel of the transition and instead an industry that meets the demands of society without harming people and the environment. This will not be an easy path - but one that if taken will ensure mining’s social license and the achievement of the low-carbon transition.


Adam Matthews is chief responsible investment officer at the Church of England pensions board

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