Extraction of vital minerals is key to the green transition, but experts warn there are reputational risks

An electric truck in a mine in PT Vale Indonesia. The Chinese-made CXMG-type XDR-80-TE truck has a towing capacity of 70 tons.

sofa image | Light Rocket

Industry experts warn that critical mineral extraction plays an important role in the global green transition, but the broader industry’s poor reputation and other challenges are hindering investment.

Important minerals include metals such as copper, lithium, nickel, cobalt and rare earth elements, which are important components of emerging green technologies such as wind turbines and electric vehicles.

Growing demand for green technology makes it necessary to increase government support and capital flows to the vital mining industry, mining industry experts and investors said during a panel speech at Singapore’s annual Eco-Prosperity Week, which ended on Wednesday.

Adam Matthews, chairman of the Global Mining Investors Council 2030, said: “Simply put, we cannot meet our carbon emissions targets without reforming the mining industry to address sustainability risks and increase mining volume.” .

According to the agency, the Royal Bank of Canada will need more than $200 billion in capital to meet copper demand alone over the next decade.

However, as the core mining industry has struggled to convince investors of the vision, the industry faces the threat of not being able to meet the billions of dollars in investment needed to meet future demand, the committee said.

Dominic Burton, chairman of Australian mining giant Rio Tinto, said a major barrier to capital and support was the industry’s connection to disasters and environmental damage.

While many stakeholders agree on the need to extract more vital minerals, “nobody wants a mine in their backyard,” said Burton, who is also chairman of Leapfrog Investments.

The industry’s track record includes one of Brazil’s deadliest and most environmentally damaging disasters.In 2019, a dam owned by mining company Vale collapsed with mining waste. This is the second accident for the company in three years.

“Suddenly being seen as a vital resource or savior is a bit of a stretch,” Burton said.

“But it’s in everyone’s interest that we do better at it because the gap in the amount of minerals needed is getting wider and wider.”

Experts say that achieving this narrative change involves improving relations between mining companies and local communities.

An analysis by an international renewable energy agency found that approximately 54% of critical materials are located near indigenous lands.

In one example of questionable practices, a nickel mine linked to a Chinese electric car battery maker was accused by environmental groups on Tuesday of destroying protected forests in Indonesia’s Sulawesi region, endangering the lives and livelihoods of the indigenous Bajau people.

2020, Rio Tinto sparked public outrage after the company blew up part of Jukan Gorge, a 46,000-year-old sacred Aboriginal site in Western Australia, as part of plans to mine iron ore worth $135 million. Burton called the incident “deeply embarrassing”, leading to executives and the chairman leaving the company before taking over.

Speakers at the Eco-Prosperity conference said the industry must acknowledge past mistakes, increase transparency and highlight the positive economic impacts of extracting important minerals, such as increased jobs and economic potential.

According to the World Bank, critical mineral extraction can have serious environmental consequences in the form of carbon emissions as well as impacts on biodiversity.

Many companies that mine important minerals also mine environmentally harmful fossil fuels such as coal.

Industry observers say reducing the industry’s environmental impact, such as the thousands of dams around the world that store mining waste, should be a priority going forward.

Addressing biodiversity and water management risks requires increased spending on research and development and better talent for technological innovation, they added.

One area that has seen recent progress and investment is the recycling of critical minerals, which reduces the need for extraction.

Tribeca Capital partner Scott Clements said the mining industry needs to do a better job of appealing to governments around the world to attract public funding and support and make the industry more investable.

He said that while governments around the world, such as the United States, have provided more funding for downstream projects such as lithium battery production, there is a lack of support for activities such as lithium mineral mining.

Additionally, experts point out that the lengthy process of obtaining a mining license scares off investors looking for quick returns, saying that mines need an average of about 16 years to start production after a discovery.

Improvements in process efficiency can benefit critical material supply due to the implementation of more global regulations and standards to ensure good practice.

“Ultimately, the industry, working with investors, local communities and other stakeholders in government, will ensure we have a mining model that addresses (industry) challenges while meeting demand,” Matthews said.