Will mining ever be considered sustainable?

Latin American mining is striving to be considered a sustainable industry, and at the same time increase production to contribute to the global energy transition. 

The US promulgated the Inflation Reduction Act last year, including several provisions aimed at boosting national and regional production of critical minerals, through tax credits, to increase output of electric vehicles. 

In this context, the Southern Cone is key for the strategy, especially for those countries that have free trade agreements with the US, such as Mexico and Chile. While the US is negotiating deals with countries such as Colombia, Peru, Ecuador and Bolivia, Latin America is in the crosshairs of the likes of China, Canada and Europe that are seeking to secure their mineral supply chains.

BNamericas talked with Melissa Barbanell, director of US-international engagement at Washington, DC-based non-profit organization World Resources Institute (WRI) and an expert in policies to protect biodiversity and mitigate climate change, to learn more about the geopolitical context surrounding the Latin American mining industry, the main factors driving the US to look to the Southern Cone and the sustainability challenges for mining firms.

BNamericas: Do you see a shortage of critical minerals such as copper and lithium in the coming years?

Barbanell: Absolutely. The IEA [International Energy Agency] is predicting we're going to need 40 times as much lithium and getting the materials to market is not easy or quick. In the medium term, in the next five to 15 years, we can certainly expect shortages of these minerals. We're seeing a lot of demand for critical minerals and supply right now is not keeping up. So, putting them into mining production will be a very important part of meeting climate goals. This hot market is going to continue in that way for quite a while.

BNamericas: The US IRA will increase the demand for critical minerals from Latin American mining countries. This further squeezes the market. What do you think?

Barbanell: Given that the US does have FTAs with several Latin American countries, I think that it will be very good. The IRA has a domestic content requirement for the EV tax credit, but it is allowed to be produced with minerals extracted or processed in the US or any FTA country. We're well positioned to continue working very closely with Latin America and it's going to strengthen the relationship, especially with producing countries like Chile, Peru and Argentina. 

In particular, it’s a very good opportunity for Chile´s lithium. The US also has an FTA with Australia, which is another major producer of lithium. But the expense of getting metals from there is often more because transport from Australia is much further away than it is from Chile.

BNamericas: With the IRA, the US seeks to reduce China's dominance in the supply of minerals. Do you think the current government will seek to force this trend with another kind of measure?

Barbanell: I don’t anticipate another type of measure. I mean getting the IRA through congress was very hard, so it’s hard to imagine passing anything else related particularly to climate change, especially with the change in congress now after the midterm elections. The one thing that Democrats and Republicans in the US congress seem to agree upon is that they both don't like China.

BNamericas: Will China continue to dominate the supply and processing of critical minerals?

Barbanell: My expectation is that we’re going to see more processing in the US and FTA countries. Latin America, North America should really develop processing hubs where we can see less shipments going to China and more of it happening in the Americas, which would address the IRA requirements and it would also address the supply chain stability problems and the risks associated with it.

BNamericas: Apart from the promotion of electromobility, what other focus does the IRA have?

Barbanell: The only way that we were going to be able to pass this enormous climate law was to make it focus on US jobs. So, since the goal of the IRA is to increase the clean economy and US jobs with a focus on climate change, it's certainly a positive thing. The challenge will be to actually get enough minerals and get people to buy the electric vehicles. I think we’ll see a greater reliance on our allies with whom we have FTAs, and we’ll probably see additional FTAs of the type that was just created with Japan to facilitate trade in more minerals to meet the targets of the IRA. 

BNamericas: One of the biggest challenges of mining is to increase production while taking increasingly responsible measures with the environment and communities. 

Barbanell: The larger publicly traded companies tend to have stronger practices around environmental and social issues. There is always room for improvement and mining inherently has a lot of risk associated with it. Given the magnitude of mining, how long it takes, how big the footprints are, it's really challenging to do it and not cause damage outside of the boundaries of a mining site. 

We also need more transparency. Part of the industry is doing pretty well, but I do think that signing on to best practice commitments, whether it’s through things like the International Council on Mining and Metals or Canada's Towards Sustainable Mining program, are very important steps to doing that. But we need to do better in terms of understanding all the assurance protocols. There’re so many protocols and it's a challenge to really understand how performance looks when you have a lot of people reporting in different ways. 

BNamericas: What is the role of governments and international organizations in the fight against climate change? 

Barbanell: What's important is the best practices on the ground. I think as governments get involved, for instance the US Mineral Security Partnership, things like that, there are efforts where governments come together and talk about how to secure supply chains. 

But it's important to engage the private sector as well. Governments alone cannot get minerals out of the ground. They need to work with the industry to make sure it's feasible [to mine] and address the challenges. Nobody wants to continue with the same extractive approach that we’ve seen historically. It will be beneficial to increase global processing and not just mining and taking the materials from countries like Peru, Bolivia, Indonesia or Africa without giving something to them in terms of workforce development.

There is more financial interest in seeing the downstream processing in the countries. The US MOU with Zambia and the DRC [Democratic Republic of the Congo] is an example of how to ensure that mining is responsible, while also driving the additional processing that is required. We need to see more stuff like this.

BNamericas: What are the most challenging aspects of sustainability for mining?

Barbanell: An important issue is how the mining industry works with its neighbors and the communities. Air pollution is potentially significant for water pollution and water consumption. There is also waste management, given the significant risks of failures or even water infiltration through waste rock creating groundwater contamination. All these pollution issues, health and security risks are very significant. Then the geopolitical issues around mining, where it’s critical to build partnerships so that everyone gets what they need. We don’t want to see that all the minerals are taken by Europe or the United States to do their own energy transition.

BNamericas: What kind of initiative is the WRI implementing to promote this new kind of industrialization in Latin America? 

Barbanell: There's a lot of work in making cities more sustainable, considering the air quality. More broadly, we’re working on just transitions and getting countries off coal. We also want to make sure that people that were involved in that economy have opportunities to transition into new jobs in mining or clean energy jobs. That’s definitely one of our focuses. 

BNamericas: Do you think the environmental assessment systems are sufficient measures to promote low carbon mining?

Barbanell: At the end of the day, the carbon footprint of mines is not something that’s receiving much consideration, at least not in the US. There’s a lot of opportunities and research emerging on ways to green mining. Probably the best way to achieve this is not through permits, but perhaps through trade measures that require a preference for low carbon metals. There are a lot of issues with traceability and tracking metals from a mine to the finished product. We have to solve these problems to really get there.

BNamericas: Is greenwashing a threat to companies' strategies to adopt real measures of responsible sustainability?

Barbanell: It does impact the credibility of the industry. Everybody wants to look like they're doing the right thing. Here are where potentially assurance protocols can play a role, insofar as there is a third party … out there checking and verifying.