Net zero isn’t just a destination; it’s also about the journey – The Intelligent Miner

Panama has seen the latest in a spate of similar…

Panama has seen the latest in a spate of similar protests against mining activities worldwide. 

Peru, the second largest copper producer globally, has experienced protests by Indigenous communities in its mining corridor over the past two years. And, in 2022, Serbia cancelled plans to allow Rio Tinto to explore and mine for lithium, another critical element required for electric vehicles and batteries. 

Activists in Portugal are protesting lithium projects following the resignation of its Prime Minister, with investigations into a lack of transparency in awarding of approvals and contracts. Chile and Brazil, traditionally more favourable mining jurisdictions, have also seen protests recently.

Satish Rao is Managing Director at Clareo

Meeting global metals needs at local expense

These protests are rooted in local issues and are led by communities who have felt marginalised and exploited by their governments and mining companies. 

For example, the protests in Panama began with environmental concerns relating to biodiversity, soil erosion, and water cycles with the Cobre Panama mine site located in its rainforests. But they grew into concerns of economic exploitation, with Panama’s contract of US$375 million in annual revenues, regardless of production volumes and prices, deemed too generous to the First Quantum mining company.

Other mining protests echo similar interconnected concerns. The Serbian protests against lithium mining stem from worries about the amount of pollution that could be created by mining, with Serbia already ranking as one of the top polluters in Europe. 

The protests in Brazil target the potential unprecedented destruction of the Amazon rainforest due to industrial activities of mining, logging, and agribusiness. While protestors in Peru have concerns about both the environmental effects and the economic exploitation of indigenous communities, who see mineral wealth being transported away on their dirt-poor roads.

These events highlight some important lessons; namely that the path to net zero is just as critical as the goal of achieving net zero. 

As industries look to decarbonise their operations, they need critical minerals for electrification and energy transition. However, global concerns and needs cannot justify further marginalisation of local concerns for the environment and community desires for economic growth. 

It is no longer sufficient to aim solely for production increases of critical minerals – increased production must also be inclusive of the priorities of the communities impacted by mining activities.

Finding a better way forward

Mining companies have two approaches to address this new reality. 

The first is an investment in technology and innovation, with environmental concerns prioritised. Organisations have operated far too long with a primary focus on production growth and improving scale, as well as resulting profit margins. 

They will have to increase investment in technologies that can provide new ways to access and separate critical minerals, while minimising the industry’s environmental footprint.

The second is business model innovation, recognising the economic imperative and growing resource nationalism, to build new alliances and create win-win opportunities that enable communities and nations to keep and distribute more of the wealth their critical mineral resources create. 

Without bringing together ingredients from, and investing in technology and business model innovation, mining companies will be stuck in the rut of the industry’s current operating paradigms and forced into relying on their current cash cow operations.

Communities, governments, investors, and industry are taking notice, and it’s unlikely that companies will be able to continue down this route.

Miners must act now

In short, how mining companies act and invest today will determine the fate of the energy tradition, as well as their own future-creating new leaders and yesterdays has-beens.

Satish Rao is managing director at Clareo, a global strategy firm for the natural resources, energy, and food industries. He serves as an expert advisor to some of the world’s leading companies in the industrial sector, focusing on resources, the energy transition, and critical minerals.

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