The perceived 'dirty' face of mining makes it challenging for companies operating in the sector to secure the investment and support needed to deliver the raw materials required for a clean energy future.
When people talk about energy transition, their first thoughts might turn to wind turbines, electric cars or battery storage. But rarely will they consider the minerals that go into manufacturing the essential components of a move to a low carbon energy future.
Much of the conversation around the energy transition focuses on the shift away from oil, gas and coal as electricity generation sources, as well as the ‘greenification’ of transport and power.
Mining, it is often assumed, is another 'dirty' industry that will die away in tandem with the demise of fossil fuels.
But without the extraction of vital minerals and metals used in clean energy technologies (such as lithium, nickel, cobalt and graphite for EV batteries, rare earths for wind turbines and copper for solar panels and electricity grid lines), comprehensive energy transition along the path politicians have chosen to get there is a dead end.
A 2020 World Bank Report - ‘Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition’ outlines how previously niche critical elements such as graphite, lithium and cobalt are vital to the successful deployment of clean energy technologies in wind, solar and geothermal power, as well as the batteries needed for energy storage and the electrification of transport.
Crucially, the report acknowledges that unless extraction of these elements is rapidly scaled up, the prospect of a 2-degree future is a pipe dream.
Digging mining out of a reputational hole
While investment is flowing into the battery metals sector (albeit without the strategic coordination that would ensure a fast and sustainable increase in output), public perception of mining remains negative.
Many believe that mining is part of the problem, not the solution.
This negative perception, which the mining industry has arguably partly brought upon itself through past environmental wrongdoing, permeates beyond public consciousness to legal and political spheres, where it impacts upon decision making around permitting and environmental approvals for new projects.
Mining projects, rightly, take time to be fully scoped, planned, approved, funded, built and commissioned, but further interruptions caused by misconceptions about the role of raw materials need to be avoided if policy makers are to fulfil their commitments to the green economy.
With predicted demand of around three billion tonnes of metals and six times more of mineral inputs needed to hit net-zero emissions globally by 2050, delays in getting new mining projects off the ground could put the brakes on the energy transition – with potentially catastrophic consequences.
The mining industry is aware of the challenges it faces in terms of perception and most sector participants now regard the need to mitigate their impact on the environment as an opportunity to rehabilitate the sector's reputation and enhance their contribution to a net zero future.
Companies are implementing a range of measures, both long and short term, to reduce their carbon emissions and make positive changes to their operating environments. These include replacing on-site fossil fuel generation (such as oil-fired generators) with renewable sources of electricity, utilising fuel cell technology running on green hydrogen to power machinery and haulage, and switching their fleets from Internal Combustion Engine (ICE) vehicles to EVs.
Technological, process and cultural improvements to efficiency in power, water, chemicals and raw materials consumption and waste are also well underway across the whole mining supply chain.
Investors are also putting pressure on the mining sector to decarbonise, as they themselves are pressurised to channel their funds towards sustainable goals.
For the past few years, miners have found that capital is increasingly hard to come by without a fully worked out ESG plan.
‘Supply chain pull’ is tugging mining companies towards even better environmental performance, with battery and renewable power manufacturers looking to purchase carbon neutral raw materials to develop their products. Even more traditional consumers such as car makers are seeking green steel and aluminium to shore up their own environmental claims.
Overarching these changes, governments are recognising the need to provide policy and regulatory clarity for companies operating in the mining sector. Political leaders seem to be persuaded that energy transition will require a step up in the production of vital minerals, the difficulty is explaining to voters and opponents with contrary vested interests why this needs to happen.
For more information on how Fieldfisher is helping its mining industry clients surmount regulatory and financing obstacles to developing projects, please see some of our published guidance on this topic:
For further assistance, please contact the Fieldfisher mining and metals team.
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