05/12/2024
Mining News

The rise of critical minerals: Navigating the new era of resource geopolitics and strategic cooperation

The age of “big oil” has waned, ushering in the era of “big shovels” as critical minerals become central to the global economy. Governments are increasingly recognizing the economic and strategic risks of lacking access to these vital resources.

The shift towards renewable energy, digitalization, and technological advancement hinges on a handful of crucial minerals. Lithium, cobalt, copper, graphite, nickel and rare earths are often highlighted as the key players, with others like zinc and manganese also holding significant value. Effective critical mineral strategies must foster international cooperation while avoiding fragmentation driven by geopolitical rivalries.

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The minerals trilemma

Policy-makers face a challenging trilemma when crafting mineral strategies:

  1. Security: Ensuring a reliable supply and strategic autonomy of critical minerals.
  2. Cost: Balancing affordability with equitable access to resources.
  3. Sustainability: Promoting environmentally and socially responsible extraction and use.

Balancing these priorities is crucial. Countries should not sacrifice environmental standards for national security or allow low-cost minerals to perpetuate harmful mining practices. For instance, while fossil fuels are economically attractive, their carbon emissions pose significant sustainability challenges and security risks, as highlighted by Europe’s dependence on Russian hydrocarbons during the Ukraine conflict.

Transitioning to renewable energy addresses security and sustainability concerns but comes with high short-term costs. The critical minerals required for green energy are part of complex and nascent supply chains, with estimates suggesting a quadrupling in demand by 2040. The environmental impact of mining these resources further complicates the transition, raising concerns about whether extraction practices can meet high environmental and social standards.

Fragmentation or collaboration?

The competition for critical minerals has intensified, leading to numerous national policies aimed at securing supply and enhancing resilience. However, many of these policies lack multilateral focus and risk exacerbating geopolitical fragmentation.

Increased strategic competition, including “decoupling,” “de-risking,” “friendshoring,” and “onshoring” strategies, could lead to a “tragedy of the commons,” where competing blocs exploit scarce resources and overlook environmental costs. To avoid this, international cooperation must be prioritized to ensure sustainable and equitable mineral availability. As Stephen Scalet from Trends Research & Advisory notes, a global convener on critical minerals and enhanced knowledge production from think tanks, universities, and industry are essential for fostering meaningful collaboration.

Centering Developing Countries

A truly international approach to critical minerals must prioritize the interests of developing countries, which hold a significant portion of these resources. For example, sub-Saharan Africa contains 30% of the world’s mineral reserves, with the Democratic Republic of the Congo alone supplying 70% of cobalt. The interests of these nations are at risk of being overshadowed by the developed world’s geopolitical and economic priorities.

Questions arise about the true value of critical minerals when their extraction impacts local populations and ecosystems. Over 80% of lithium projects and more than half of nickel and copper projects are located within indigenous lands, potentially leading to displacement and environmental destruction. Professor Sophia Kalantzakos emphasizes the need for implementing ESG standards to ensure that the developing world is not exploited for the benefit of industrial nations and to protect vulnerable ecosystems and local livelihoods.

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