As demand for critical raw materials rises we need a better plan to manage them

This post is by Dr Jack Barrie, research fellow, and Dr Patrick Schröder, senior research fellow, in the Environment and Society Programme at Chatham House.

Plans for a net zero transition rely on deploying a range of technologies. Many of these, such as wind turbines, digital devices, battery storage systems and electric vehicles, depend on critical minerals like lithium, cobalt, gold and rare earth metals. The steel and aluminium sectors also drive demand for critical minerals through their use in alloys.

Despite growing dependence on these materials, the UK’s net zero plans lack attention to their global availability, environmental and social impacts and, in particular, the implications for low and middle income countries.

And our demand for these resources is set to soar. According to the International Energy Agency, to achieve net zero globally by 2050, we will require 600 per cent more mineral inputs in 2040 than today. Demand for lithium, necessary for electric vehicle batteries, will increase over 4,000 per cent, while cobalt and nickel demand will increase by over 2,000 per cent by 2040.

Solutions to the environmental impacts aren’t being deployed
The distribution of critical minerals in the earth’s crust unfortunately overlaps with the location of critical ecosystems (such as the Amazon), so mining them could directly backfire on climate and biodiversity goals. Mining and processing requires a lot of energy and generates large quantities of greenhouse gases, while also frequently causing local pollution.

A particular problem is the waste sludge channelled into tailings ponds, which contains all sorts of toxic and radioactive materials. These can leach into water courses, damaging ecosystems and risking the health of local communities.

Solutions exist to some of these problems, including extracting metals from low grade mining waste and management strategies to ensure water security for local communities. However, we are yet to see these innovations applied at scale, especially in low income countries.

Good governance is necessary but challenging in some countries
Mining for critical minerals such as lithium, cobalt and manganese also has high social risks. Globally, 304 human rights abuse allegations have been recorded since 2010, tied to 115 different mining companies. No doubt many more cases go unreported. Cobalt, used in electric cars, has been linked to inhumane conditions and child labour in unregulated mining.

Yet, if governed correctly, mines can bring jobs, raise taxes and grow the local economy. A range of standards and guidelines have been developed to encourage sustainable governance of mining activities. Examples include those from the OECD, the Responsible Minerals Initiative, Responsible Steel and the Aluminium Stewardship Initiative.

Ensuring good governance is challenging, as many mineral reserves are found in fragile states or areas with high corruption. Increasing demand can amplify these problems, which are very difficult to solve. The temptation is for rich nations to turn a blind eye to secure supply, or worse, to deliberately destabilise regions to control supply, as we have seen with oil.

Demand reduction and circularity would lower the risks
Green Alliance’s recent report highlights the supply chain risks to the UK associated with meeting its demand for critical raw materials. And, as we have outlined, this demand has social, environmental and economic consequences for low and middle income countries. So how can the UK address these two challenges in its net zero transition strategy? The answer is to prioritise energy and material demand reduction measures and a just transition for all.

A recent study by the Centre for Research into Energy Demand Solutions (CREDS) suggests that, if the UK implemented measures to reduce its energy use, it could more than halve its energy demand by 2050. This would also significantly cut material consumption (including critical raw materials) as it would reduce the need for technologies and infrastructure. This strategy would tackle a significant chunk of the problem.

As Green Alliance highlights, even with demand reduction measures the UK could still use up to three times its fair share of reserves of some critical raw materials by 2050. For the energy infrastructure that we simply cannot avoid, circular economy approaches are needed to keep renewable energy technologies (and critical raw materials) in use for as long as possible. This could include activities such as designing them to be more durable and more easily repaired and remanufactured, and to recapture the valuable materials they contain so they can be circled back into the economy, reducing demand for virgin materials.

Net zero strategy has to prioritise a just transition
Simultaneously, we need to mitigate adverse economic and social impacts on those countries that produce the virgin critical raw materials we rely on.

The idea of a ‘just transition’ has gained significant traction in international and national debates, particularly around climate action and energy systems, but this concept also needs to extend to the circular economy. The politics around the transition from a linear to a circular economy has a number of similarities with that of the low carbon transition.

In the context of critical raw materials and impacts of mining on low income countries and communities, existing inequities need rectifying at an international level, and emerging conflicts between countries should be mitigated through enhanced collaboration and support mechanisms.

This could be through capacity building, to help countries reduce their economic reliance on extraction and establish higher value economic activities. It could also be through a global ‘just transition fund’ (akin to the proposed $100 billion a year climate fund) to help low income countries manage the material impacts of the global net zero transition.

Leasing models allow countries to retain control of materials
New leasing models for critical raw materials could also be explored. Leasing is already an established practice for traders and refining companies in the precious metals sectors. In an advanced net zero circular economy, a range of mined minerals and manufactured metals could be leased, rather than sold, to companies by producer countries, with the country of origin retaining ownership. The idea is that the resource, in whichever form, is leased for a certain period of time and then ‘returned’. This would also provide greater incentives for recycling and improved design of the products they are used in, to facilitate their recovery.

In recognising the need for some level of mining, even after energy and material demand reduction measures have been implemented, governments and companies should apply stricter laws and regulations that give communities rights of consultation and the ability to reject mining proposals.

Finally, critical raw materials are a small proportion of the total virgin materials the UK will import for net zero technologies and infrastructure. So, although measures are essential to manage the use of critical raw materials, for the UK to play its part in a global just transition to a more sustainable society, the same principles should apply to all the other mineral and metal resources which make up the lion’s share of the UK’s ecological footprint.

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