Friday, February 26, 2021
The world is finally waking up to the climate crisis that experts have long warned about. Suddenly, the whole world is looking towards renewable energy and electric vehicles that will make current combustion engines obsolete. However what is not always accounted for is the increasing demand for metals such as copper, lithium, cobalt, and nickel which are critical for a global low-carbon energy transition, but come with substantial social and environmental impacts.
According to a 2020 World Bank study titled, "Minerals for Climate Action", at least 29 million tons of copper will be needed by 2050 to achieve IPCC's "Two Degrees Scenario" to avert climate change. This means 1.378 million tons of copper needs to be produced annually in addition to current supply levels. The same report also notes that even if recycling rates were improved by 100% (which is highly unlikely), it will only reduce demand for new minerals by 23%. Thus, over 50% increase in production rates across the board is inevitable.
Currently, the world's top copper producing mine in Chile produces 1.4 million tons annually, eclipsing any other large scale copper mines typically scaling around annual production capacities of 300,000 tons. Therefore, a monstrously large mine or multiple large scale mines will need to be in operation in order to meet the increasing demand to power a global energy transition. The same story is true for nickel with an additional 2.2 million tons needing to be added to annual production levels. This means nearly doubling current production rates which are already at roughly 2.3 million tons per year.
The increasing demand for these metals are aggravating already massive pressures onto mining companies and the communities impacted by mining activities. For example, nickel mines that can produce for the next thirty years seem a sure bet for investors with almost assured returns, for now. However, if these mines come with massive social and environmental impacts, then the investments could result in costly court cases and cleanups of polluted areas.
Unfortunately, the rush for production is fueled by the lack of long term vision for sustainability, and short term greed for financial gains, resulting in weak due diligence in the mining industry throughout the world as highlighted in this report.
The full report in Japanese is available here.
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