Ethical investors have generally been divided when it comes to investing in mining companies. Incidents of negative impacts on local communities, such as displacement, loss of land and livelihoods, and exposure to hazardous chemicals and waste are just some of the reasons some investors have shunned the sector. Furthermore, the mining and extraction process itself is energy intensive leading to significant carbon emissions. Mining critical minerals is no exception, but this does not negate the decarbonisation advantages of clean energy technologies.
According to the International Energy Agency, a typical electric car (EV) requires six times more mineral inputs than a conventional car, and an onshore wind plant requires nine times more mineral resources than a gas-fired power plant. However, the total lifecycle greenhouse gas emissions of EVs are around half those of internal combustion engine cars on average, with the potential for a further 25% reduction with low-carbon. The lifecycle greenhouse gas emission of utility-scale electricity generation powered by renewable sources, after taking into account the components up to the end of life, were also less than those powered by fossil fuel by at least 20 times (according to a study by the National Renewable Energy Laboratory in US).
While these minerals carry merits based on their contribution to decarbonisation pursuits, mining operators still need to earn a social licence to operate. The Global Reporting Initiative (GRI) provides a framework for companies to measure and report their impact. The topics range from biodiversity to tax, waste to emissions, diversity and equality to health and safety. It is currently proposing three additional topics for mining operators which discusses tailings facilities and hazardous waste streams; artisanal and small-scale mining; and operating in conflict zones. This follows from the disaster in 2019 where a tailings dam collapsed in Vale SA Brumadinho, Brazil and killed 270 people.
The draft has received support from numerous stakeholders including the International Council on Mining and Metals (ICMM), an industry body representing one third of the global mining industry. Groups like ICMM exist to promote responsible mining approach among its members. It recognises the need for miners to adopt tougher sustainability practices and provide public disclosures on their efforts. Beyond that, it encourages mining operators to consider their approach on issues enlisted in the framework and look beyond economic gains.
In addition to promoting the adoption of reporting standards, groups like ICMM also provide a platform to collaborate and innovate on challenges such as finding ways to extract, process, and transport these critical minerals with minimal carbon emissions and designing recycling solutions. For bulk metals, recycling practices are well established, but this is not yet the case for many energy transition metals such as lithium and rare earth elements. These are some of the ongoing dialogues currently taking place and shaping the progress towards responsible mining.
The rise of critical minerals presents an opportunity for the mining sector to reshape its blemished reputation.