The CGLN was delighted to once again be a Supporting Association Sponsor for The Natural Resources Forum's ESG Week: Energy and Mining Forum.
Following the attendance of an excellent opening day in-person event at The London Stock Exchange, our Director, Yulia Chekunaeva, led a virtual session 'Supplying Metals for a Sustainable Energy Transition' at 10:30am on Thursday 9th November.
Joining Yulia in conversation was a distinguished panel of experts.
Firstly, Anne-Marie Fleury, who is the Cobalt Responsible Sourcing Director at Glencore International. Secondly, Bernard Raspaut, who is the Chief Executive of The European Copper Institute and, finally, Leonardo Buizza is the Lead Supply Chains and Materials Analyst at The Energy Transitions Commission (ETC).
Yulia set the scene by discussing the pivotal role that metals play when it comes to achieving the energy transition, describing them as the ‘backbone of green technologies.’
The global demand for these materials is skyrocketing and is likely to outstrip available stock but highlighted that the urgent need to scale up presents challenges, especially when it comes to ensuring responsible and sustainable supply chains.
So then, how can we meet the soaring demand for these critical materials all the while ensuring their extraction is done in an ethical and sustainable manner?
Leonardo followed on from Yulia’s remarks by giving an overview of the ETC’s report of the summer, which addresses the key challenges and myths surrounding the material requirements for the energy transition.
Three key cross-cutting challenges emerged from the report; the need to rapidly scale supply of materials, addressing the concentration of supply and ensuring that mining practices are as sustainable as possible.
It is important to differentiate between stocks and flows, understanding that there is indeed a sufficient supply of materials, and that the challenge instead is how we can scale extraction operations up quick enough to meet the necessary demand.
Leonardo explained that investments have been fairly low and must be increased in order to rise up to the challenge – from the current average of between $40 and $50 billion per year to approximately $70 billion each year for at least the next decade.
Speaking specifically to the environmental and social challenges, he pointed out that there are not only obstacles relating to decarbonisation that must be overcome, but considerations regarding water and lase use changes, and the need to engage with local communities in order to build trust and consent.
The question was then posed as to how miners themselves are approaching the challenges of increased demand. Speaking specifically on the copper industry, Bernard outlined the opportunities that have arisen due to the need to achieve the energy transition, explaining that a number of projects that would have been unattainable in the past look realisable now.
Turning to Anne-Marie, Yulia asked for some insight into the feedback Glencore was seeing from supply chains, and how the current and future demands from customers were affecting their operations, given that the materials mined by Glencore and such companies were likely to be in most global supply chains.
Anne-Marie described the importance of rebuilding our energy systems in a clean way, highlighting the need for the mining industry to operate in a wholly different manner than the oil and gas industry did to power our lives in the past.
In terms of consumer awareness of supply chains, there is a level of awareness, engagement and scrutiny that is ‘likely unprecedented’. Responding to what it is that the supply chain itself wants to know, Anne-Marie described a number of topics to be aware of.
Obviously, the carbon footprint of the operations itself, the calculating of which can be tricky, as a number of clients wish to do so themselves, which can result in huge differences between results.
For operations in conflict-torn countries, information on human rights issues are very important. More generally, clients want information relating to child labour and general treatment of the workforce too.
Green technologies are continuing to be developed. Take, for example, the batteries used in electric vehicles, where the chemistries are constantly evolving. Is it a challenge that standards keep changing for the end products? How, asked Yulia, does this affect the miners themselves?
Bernard explained that being at the beginning of the value chain was ‘an advantage’. Also, the versatility of copper as a material itself is an advantage. He explained that while there is a trend to use increasingly thin copper foils, this is balanced by the fact that in order to achieve the thermal management needed for fast charging, copper foil products are needed to help manage the heating issues.
The mining industry has a substantial impact on land and water use. Is the mining industry doing enough to protect and conserve the land it works on?
Anne-Marie pointed out that unlike other supply chains - where they can pick up their operations and move them to a different location, should there be issues – you don’t have this luxury available when it comes to mining. You cannot simply pick up your mine and move it to a different location. Instead, there is the necessity to work with the grid, social context and legacy that is already there.
Secondly, that ‘there is no such thing as a free lunch’. It must be accepted that there are going to be impacts from mining activities. Some of the consequences can be managed, but it is important to note that some impacts, such as those to biodiversity, cannot be avoided entirely.
The industry as a whole is working hard to figure out the best way to protect and conserve the land in which it uses but it is important that the industry is able to keep up with fast evolving expectations and recognise that what was considered good practice twenty years ago is not necessarily the framework for good practice today.
While there are many companies actively doing good, this cannot currently be said across the board for the whole of the mining industry. Something that could continue to push companies in the right direction is the increase in scrutiny from the supply chain.
Bernard echoed this thinking, stating that it was important that in all parts of the world we are working to operate in a proper and responsible manner. The positive news on this front, and one that evidences the industry moving in the right direction, is the decision for several companies to participate in an independent voluntary framework – that of the ‘copper mark’. This assesses whether sites comply with over thirty criteria. The scheme is relatively new, having only been launched around three years ago, and has already been taken up by 25% of worldwide copper production.
Mining operates in a regulated environment, and therefore policymaking also has a role to play in the ability to scale up mining production to meet energy transition needs. Yulia asked the group whether regulators were doing enough, or perhaps in some instances too much, when it came to regulating within this space.
Leonardo explained that there is a role for government and policymakers to step up on this space. Not solely regarding the mining industry, but to provide a clear roadmap for the energy transition as a whole. It is important that policymakers aren’t selecting specific technologies to be ‘winners’ but direction for travel in transparent and predictable way.
Anne-Marie explained that a lot of people believe that the mining industry would like less regulation, or even no regulation at all, but that wasn’t the case, stating that a ‘clear predictable framework is a million times better than no framework at all’. She described the situation akin to a ‘three legged bench’, one whereby you need industry, regulators and civil society to work together for the bench to be able to stand.
For Bernard the most important role that regulators can play is in allowing the permitting of projects to become significantly more efficient. He explained how the approach to permitting is often seen as a ‘phased approach’ which creates lengthy time delays when it comes to the development of projects.
Additionally, there needs to be more support for innovation, particularly when it comes to carbon capture and storage technologies. Policymakers can play a key role in supporting such innovation in order to bring the costs down.
Moreover, there must be incentivization to bring end of life products back into the loop and accelerate the recovery of materials. This is not, Bernard stressed, a ‘fix all solution’, but it will certainly help. Why not start with digging all of our old iPhones out of drawers and recuperating the materials within them?
Finally, the role for policymakers can be to create the opportunities for dialogue between themselves and industry and civil society. It is only by working together that we can overcome this monumental challenge.
The conversation was brought to a close by the final piece of the puzzle – how can the industry securing the funding it needs to rapidly scale up? Of course, mining is a significantly capital-intensive industry. However, there was a general agreement among the group that the money is there and can be found. Bernard insisted that ‘there is enough capital sitting in the banks.’ What needs to be focused on, is ensuring that the projects themselves are set up a way to be profitable.
This is a huge topic, and it was clear that the group could easily have continued to discuss it for hours.
The CGLN is keen to continue bringing leading voices together to find ways to accelerate the transition to a clean economy.
Thank you to The Natural Resources Forum for hosting another excellent ESG week!