Exploitation of critical energy elements needs to be equitable

As the world races toward energy transition, there has been a sharp rise in demand for critical elements, such as copper, cobalt, and lithium, which are essential to the production of renewable energy technologies. In the past 10 years, this has led to a mad rush of companies trying to gain control over the entire ecosystem of critical elements, from mining to refining, as well as use in renewable energy generation.
Many governments, especially those sitting on huge reserves of these relatively rare elements, have also seen the opportunity to make a quick buck, and are auctioning mining rights of these at ever-increasing rates, while some have seen the opportunity to help their own crony capitalists by imposing numerous conditions, especially over foreign companies involved in mining and refining.
These conditions involve a degree of localization, which could certainly help the local communities that live on or near the lands where the mines or the refining and manufacturing facilities for these materials are located.
However, for an overwhelming part, the entire process, from mining and refining to manufacturing, is bypassing the communities, or even entire countries, where these key resources are tapped by the companies in renewable energy sector, most of which are from distant lands.
At a global level, there is intense competition between companies from the US, EU, and China, with Western countries trying to weaken the stranglehold that the latter has over the current global supplies of critical energy elements and, indeed, the entire renewable energy sector, from automobiles to batteries and wind turbines. The race is set to get more complicated and competitive as other countries look to join in. The demand for these elements will likely triple within the next six years.
But in this race, the interests of the local communities and the poor are being ignored, and the world seems to be headed for a rerun of the colonial era when natural resources from the colonized countries were greedily over-exploited by the colonizers, with little regard to the environmental and social impact of their activities, and also totally excluded the people from the colonized nations, who simply watched their natural resources being looted by outsiders who garnered immense wealth, while leaving the locals not just poorer but also with a destroyed land.
In this context, a recent decision by the UN to set up a panel to monitor the entire process is highly welcome and timely. According to the UN, the Secretary-General’s Panel on Critical Energy Transition Minerals seeks to build trust between governments, local communities, and industry, by addressing issues relating to equity, transparency, investment, sustainability, and human rights.

In the race for critical energy elements, the interests of the local communities and the poor are being ignored.

Ranvir S. Nayar

UN Secretary-General Antonio Guterres has rightly said that for developing countries, critical minerals are a critical opportunity to create jobs, diversify economies, and dramatically boost revenues. He also cautioned that these natural resources must be managed properly, and the race to get these materials cannot trample over the poor. As most of these mines are located in remote and underdeveloped parts of the poorest countries, the world must ensure that the use of these resources ought to first and foremost benefit the communities that are the guardians of these elements.
In many ways, this race toward net zero represents both a huge opportunity and a major threat for the world as a whole, but especially for the developing countries endowed with these highly sought after resources.
The setting up of the panel is certainly a timely and right step, but it is also important that the message of equitable distribution reaches the various private companies and governments involved in the exploitation of these resources. Complex as it may sound, the world needs to develop a common standard operating procedure for the exploitation of these resources for many reasons. First and foremost, as we are potentially looking at mining billions of tons of earth and using trillions of liters of water, the impact on the environment and the societies near the mining sites will be unprecedented.
For instance, for 1 metric ton of lithium, about 2 million liters of water is consumed. In 2022, 77,000 tons of lithium was produced globally, and about 154 billion liters of water consumed — a figure that is likely to rise to almost 1 trillion liters by 2030. And this is just for lithium. Extraction of other minerals also requires large amounts of water and the digging up of vast amounts of soil.
In view of the large-scale impact of mining and refining, it is crucial that companies, as well as the relevant governments, immediately establish clear practices to minimize the ecological footprint.
The second issue is to ensure that the hundreds of thousands, or even millions, of people directly affected by the mining and refining processes are not only properly compensated, but also provided with suitable alternatives for livelihoods and living arrangements.
Another important issue is the likely lifecycle impact of critical elements, or products with these elements, on human and animal health.
If companies and governments can rapidly agree on a common approach toward critical elements, it could prove to be a boon to the communities and countries endowed with these elements, and also ensure that the collateral damage is minimized and managed properly.
However, if these measures are not agreed on and implemented rigorously, then one could be looking at a repeat of the past two centuries in which a few have benefitted from nature’s bounty, while ravaging the earth and leaving hundreds of millions of people mired in extreme poverty.

• Ranvir S. Nayar is the managing editor of Media India Group and founder-director of the Europe India Foundation for Excellence.