Mining and the green economy: The cost of pursuing renewable energy

IMAGE CREDIT:
Image credit
iStock

Mining and the green economy: The cost of pursuing renewable energy

Mining and the green economy: The cost of pursuing renewable energy

Subheading text
Renewable energy replacing fossil fuels shows that any significant change comes at a cost.
    • Author:
    • Author name
      Quantumrun Foresight
    • April 15, 2022

    Post text

    As governments and corporations strive to reduce their carbon footprint in alignment with global climate change goals, strategic efforts are underway to introduce sustainable, energy-efficient sources of power production. However, many of these efforts are dependent on the mining industry. 

    Mining context

    The minerals and metals found within the earth's crust are the building blocks of renewable energy generation. For example, wind turbine gearboxes are often engineered with manganese, platinum, and rare earth magnets, while electric vehicle batteries are manufactured with lithium, cobalt, and nickel. A 2020 World Bank report estimated that over three billion tons of minerals and metals would need to be mined to shift to a net-zero carbon world. 

    Copper, in particular, a conduit of electricity, is considered a high-priority transition metal used in renewable energy technologies. Accordingly, demand for copper is expected to increase at a rate of 13 percent annually until 2031. And with prices for these in-demand rare earth minerals (REMs) surging, the concentrated supply chains located in a handful of countries such as Indonesia and the Philippines have received significant investment from Chinese state-owned companies—companies that control the majority of the world's REM supply.

    Disruptive impact

    The race to develop a significant supply of renewable energy often takes place while thousands of hectares of land are destroyed by open-pit mining, biodiverse ecosystems suffer irreparable environmental damage, and indigenous communities suffer infringements on their human rights.

    Transnational mining companies have ramped up their mineral extraction efforts to keep pace with rising renewable energy commodity prices. Global regulations provide limited oversight and supply chain due diligence on transnational mining companies. These companies can be focused on extracting REMs in owned sites while ignoring the adverse effects these operations may have upon predominantly low-income countries and communities in South America and Africa. 

    The increased demand for REMs has fueled competition and led to mining companies purchasing large tracts of land in copper-rich Ecuador, with companies reportedly influencing local courts to legitimize operations that local communities have resisted. Notwithstanding the destruction of environmental ecosystems and the displacement of communities and indigenous peoples, corporations and governments continue to actively encourage mining companies to invest in the resource-rich areas of the developing world that are predominantly found below the equator. 

    The pursuit of renewable energy, while critical to the world's future energy needs, does come at a price that cannot be easily reversed.

    Implications of mining in the green economy

    The broader implications of mining activities in the green economy may include: 

    • China's near-term continued market domination of REM resources, negatively impacting the cost of renewable energy in other parts of the world due to scarcity and inflated market prices.
    • Long-term diversification of REM mining across North and South America, potentially speeding over local environmental concerns to accelerate production of renewable technologies within the Americas to meet carbon reduction targets.
    • REM supply imbalances that may result in potentially negative geopolitical consequences.
    • Increased investment into advanced mineral recycling technologies and facilities to harvest REM from obsolete mobile phones and laptops, thereby reducing the extent of future mining operations.

    Questions to comment on

    • Do you think that mining companies have become too powerful and can influence countries' political systems?
    • Do you think the public at large is sufficiently informed about how the world can achieve zero carbon emissions as well as the near-term environmental mining costs involved in achieving this goal?   

    Community forecast feedback

    View the community's ratings after you leave your own below.

    Average year

    All readers

    Average year

    Qr readers

    --

    Average vote

    All readers

    Average vote

    Qr readers

    --

    Average vote

    All readers

    Average vote

    Qr readers

    --

    Average vote

    All readers

    Average vote

    Quantumrun readers

    --
    --
    --

    Average vote

    Company readers

    Insight references

    The following popular and institutional links were referenced for this insight: