Metals, Mining & Sustainability
Metals are key to the success of the Energy Transition. They are subject to intense superpower competition, as nations struggle for secure access to the essential metals and minerals needed for future industries: for batteries, electric vehicles, wind turbines, solar panels, mobile phones and much else.
Yet the sustainability of the methods of production, mining and consumption of metals is highly questionable. All mining involves the extraction of finite resources. Too often, mining entails environmental destruction on a scale that can be seen from space, and social degradation of mineworkers and their families and dependents.
Equally, the consumption of metals is often accompanied by surprising levels of waste, both in production processes and in consumer behaviour. If this ever did make sense, it does so no longer, at a time of supply shortages, exacerbated by wars and sanctions, huge price volatility, and the growing scrutiny of governments, regulators, sustainability investors and civil society.
This article considers some of the key challenges in achieving sustainability in mining and the production and consumption of metals - and some of the key factors that may bring about changes for the better, from legislation, improved monitoring, investor pressure and action from civil society.
The race to secure supplies of key metals
Governments, funders, regulators and industry sources and journals appear to agree on the extent of the international competition for secure access to key metals and minerals needed to support the Energy Transition.
For example, the World Bank report on ‘Climate Smart Mining’ anticipates that demand for key metals by 2050 will increase as follows –
Lithium 965%
Cobalt 585%
Graphite 383%
Indium 241%
Vanadium 173%
Nickel 108%
The competition of major manufacturing nations for key metals and mineral resources has intensified. The New York Times had coverage of “A Power Struggle Over Cobalt Rattles the Energy Revolution” in November 2021 and Forbes on published a feature on “Copper and Lithium Compete for the Title of ‘New Oil” in April 2021.
Increasingly, competition for metals resources affects politics from Chile to Peru, from the Democratic Republic of Congo to Greenland.
Unsustainable metal mining: Environmental Destruction
In some ways, the mining industry has been able to escape detailed monitoring and public scrutiny by being “out of sight, out of mind”; in that, while major companies may be listed on the stock exchanges of New York, London, Australia, typically their largest mining operations are in remote areas which are a long way from centres of population and effective regulatory scrutiny.
In our article on 23 October 2020 on Electrification and the Sustainability of Minerals we tried to show how this contributed to some of the mining industry’s worst environmental and social disasters, such as BHP Billiton’s management of the Ok Tedi mine in Papua New Guinea, where contaminated tailings were simply poured into a nearby river for nearly a decade.
In our later article on 19 March 2021 on Net Zero and Ethical Supply Chains – An Urgent Issue for the Energy Transition, we also noted the social implications of the mine tailings dam collapses at Samarco, and the Vale mine tailings at Brumadinho, where the collapse led directly to 270 deaths.
Yet conventional mining without these spectacular disasters also has tremendous environmental impacts because of the scale on which it operates. In my book on Making Environmental Laws Work I describe a visit to a copper mine in Arizona, with ...”hundreds of thousands of tons of rock being shovelled out of the mountainside, put in open and often unlined pits, and sprayed continuously, 24 hours a day, with sulphuric acid, to wash out copper in solution.”
Not surprisingly, the acid contaminated the underlying groundwater, and helped make this a Superfund contaminated land site.
The scale of conventional mining is hard to take in without seeing it first hand.
A further, urgent, environmental challenge (on which we expect to report further in future posts) will be the imminent proposals for seabed mining. This has the potential to do irreparable damage to the seabed and marine environment and biodiversity. The 27th Session of the International Seabed Authority was held between 21 March and 1 April 2022, and focussed on draft regulations for deep seabed mineral resource exploitation.
Unsustainable metal consumption
The resources and the energy required to produce metals on this worldwide scale are not always reflected in sustainable patterns of consumption. For example, this is the Karahnjukar hydroelectric scheme in Iceland, which flooded a glacial valley of great historic and cultural importance in order to provide energy for aluminium smelting.
As the noted Icelandic environmentalist and poet Andrij Snaer Magnason has commented, we do not always consider this when discarding our aluminium drinks cans. Nor is it fully accounted for when some primary industrial aluminium users waste as much as 70% of the primary product in their production processes.
Change is in the air
Having said all of that, there are real opportunities for mining to be conducted in a far more sustainable manner, and several factors could influence that development for the better.
First, the “out of sight, out of mind” approach to the monitoring of mines and mining could be significantly affected by the ready availability of reasonably priced satellite surveillance of mineworkings. If national or local governments, regulators or affected communities used these techniques more widely, they could get real time information about any emerging problems.
Secondly, ‘ethical investors’ are showing increasing awareness of the environmental and social costs of mining, as instanced by the pressure applied by the Church of England Pension Board and the Swedish Council of Ethics of the EP Funds after the series of lethal mine tailings dam collapses in South America. There is a wide difference between best practice, as reflected in mining regulations applied in Canada and Australia, and those applied elsewhere.
Thirdly, the mass movement of billions of dollars of funds to Environmental, Social and Governance or ‘ESG’ investing offers real hope that these issues can be placed on the agenda of the banks, asset managers, pension funds and insurers backing the global mining industry.
ESG stands for Environmental, Social and Governance. These are non-financial factors investors use to measure an investment or company's sustainability. Environmental factors look at the conservation of the natural world, social factors examine how a company treats people both inside and outside the company and governance factors consider how a company is run.”
A review of the published policies of even Russian conglomerates such as the RUSAL aluminium giant or Norilsk Nickel shows that these industrial behomoths are at least reflecting the language of ESG investing and sustainability. Whether that means an outbreak of environmental concern in the mining regions of Kamchatka and the Kola Peninsula, amidst industrial miners which are in many cases now affected by Russian sanctions, it may be a hopeful sign that at least investors expectations are widely understood.
Fourthly, legislative expectations, particularly in the EU and to a lesser extent elsewhere, are become clearer in expecting higher standards of sustainability, and better outcomes for both the environment and human rights and social protection. The EU Corporate Sustainability Due Diligence Directive overtakes and consolidates legislation in several EU Member States, and would be a powerful means to promote progress.
Fifthly, the ideas of the Circular Economy, pioneered by the likes of William McDonough and Michael Braungart, powerfully promoted by leading environmental campaigners like Ellen McArthur are coming of age.
In Making Environmental Laws Work I quoted William McDonough’s description of production processes which generated large amounts of pollution and waste as design which was “still in the steamship mode”. His inspiring critiques of the ”Take, Make, Waste” linear economy and leadership of the “Cradle to Cradle” approach are now taking shape in key legislation. The influence of these ideas runs through the EU Circular Economy Action Plan, published in March 2022 which will be a key part of the EU’s Green Deal.
Sixthly, both mining and minerals firms and the wide swathe of other companies reliant on their products, may come to reflect on the changing patterns of reputational risk involved in methods of mining which are environmentally destructive or socially irresponsible. Reputational risk can be affected both “top down” (from failure to meet the expectations of governments, regulators or legislation) and “bottom up” (through challenges from civil society, effective use of social media, and litigation.
A Checklist for ESG and Sustainability Managers
As more companies produce the Energy Transition Plans that regulators, government and legislation increasingly require, respond to the pressures of ‘ESG’ investing and publish glossy brochures on their Sustainability principles, here are just some of the questions that they could be asking about their own uses of metals, as a means of influencing better outcomes for the environmental and human rights:
For the metals that we use, are we able to answer the questions, “Where does this come from? How was it produced?”
What proportion of the metals purchased comes from autocracies, and what effect does that, or should that, have on our reporting?
What level of environmental degradation is acceptable in order the supply what our company needs?
How does our use of metals square with our published policies on child labour and modern slavery?
Will we base future metals use on production from deep seabed mining?
Do economic sanctions on Russia have implications for our company’s security of supply?
Are our company’s supplies of metals subject to price volatility or supply shortages?
Are our production processes properly aligned with a Circular Economy approach or are they still based on “Take, Make, Waste”?
Will the way that our company uses metals meet the expectations of (i) governments (ii) regulators (iii) new and emerging legislation (iv) ethical and ESG investors (v) civil society and potential litigants?