Carbon transition means global development must learn to love mining

Decarbonization does not mean de-mineralization. To realize the carbon transition, we are going to have to ramp up mining all around the world.

Over the next few decades, metal outputs for aluminum, copper, lithium, cobalt, nickel, and other metals will have to increase exponentially. As such, by 2050, the world will need 160 million tons of aluminum and 20 million tons of copper to produce the necessary clean energy technologies and batteries for the carbon transition. Given the current technologies, the world will need to mine 40 times the current quantities of metals to phase out internal combustion engines in gas-powered vehicles. Demand for cobalt and lithium — essential ingredients in electric vehicle batteries — are predicted to increase 500 and 900 percent respectively. 

Much of this mining is going to happen in developing countries, which will include mining on indigenous lands. To mitigate the adverse effects of mining, the global development community is going to have to spend a lot more of its people, time and money on mining activities or around mining.

If the carbon transition is to happen at all, there will need to be ways to support cleaner, better-governed mining extraction activities for the next several decades. 

Given the potential carbon transition, mining will be a critical source of growth and tax revenues for economies of developing countries. Mining projects generate tax revenues for national governments and can provide good livelihoods. Tax revenues generated by mining can be used to finance roads, pay for teachers and other public goods.

However, the global development community so far has not reconciled the necessity of mining for the carbon transition. The aid world has been conflicted at best on the issue. Many development finance institutions and multilateral banks do not finance mining. Some parts of the aid community completely boycott mining projects.  

Many avoid the topic of mining because it is considered a “dirty” word. But it is important to acknowledge that all forms of energy have challenges, including what is deemed “clean” energy-things like wind, solar and electric vehicles. After all, everything in modern life comes from the earth in some way; either mined or grown agriculturally. Clean energy is no different. In this way, clean energy raises increased dilemmas over human rights, the environment, governance, and corruption. It evokes questions such as: How are the revenues earned from mining going to be allocated among national and local governments? How can we ensure local communities impacted by mining are also beneficiaries? What sort of infrastructure and power projects need to be built to support mining operations? How can we properly use water? 

There is undoubtedly a question of maintaining human rights when it comes to mining. Take the case study of cobalt. Cobalt is crucial to produce batteries for electric vehicles and other electric devices like phones and computers; 70 percent of the world’s cobalt comes from the Democratic Republic of Congo (DRC), but the cobalt industry has documented and pervasive human rights problems with child labor, few safety standards, and violence between small scale artisanal miners and larger mining companies. If we are to realize a 500 percent increase in cobalt mining to meet the demand for electric vehicles alone, major interventions must occur to address the human rights issue. Stakeholders up and down the cobalt supply chain must ensure that companies are holding cobalt miners to fair and ethical standards, including preventing child labor and ensuring safety protections are in place.

On the environmental side, mining can have an impact on soil, water, and air quality. Mining is often a very water intensive endeavor and often happens near water sources, including rivers, streams, and groundwater. If waste left behind from mining is not properly disposed of, metals and chemicals can pollute the nearby water and damage ecosystems. In addition, substandard smelting operations can release gases and particulate matter that are harmful to the environment and local communities. Again, the global development community should play a constructive role to promote responsible mining. With today’s technologies, mining does not have to be pollution heavy. There are ways to mitigate and dispose of mining pollution properly. 

There are significant issues around mining and governance. When there is a lack of proper governance and regulations there can be human rights issues and environmental problems. How monies are managed matters. Corruption and bribery often prevent governments at the national, state, and local level from enforcing safety and ethical policies at mining sites. To address problems in mining, international organizations, aid agencies, and multilateral banks should work together to raise standards. This can help encourage better governance by holding companies accountable on how they are implementing local workforces and mining operations. This will can also support local regulators in cracking down on unsafe and unhealthy practices.

Many companies are sensitized to these issues and follow ESG principles, which is influencing them to restructure portfolios, commit to carbon reduction, and promote better governance.  

China is becoming a major leader in mining. China is already a major player in processing minerals and is in the process of aggressively buying up mineral deposits around the world. It’s environmental record is not the best. If the U.S. and our allies do not engage more actively on mining — including in developing countries — the U.S. could switch from being largely beholden to the OPEC cartel to a cartel made up of China and Russia.

All the dilemmas presented above can be mitigated — not necessarily solved — by various forms of development assistance, including foreign aid and development finance. Governments, starting with the United States, need to signal their commitments to work more intensively around mining and with mining companies given the changes in the world today.

Daniel F. Runde is a senior vice president and William A. Schreyer chair in Global Analysis at CSIS. He previously worked for the U.S. Agency for International Development, the World Bank Group, and in investment banking, with experience in Africa, Asia, Europe, Latin America and the Middle East.