Mining’s Role in the Energy Transition

The mining industry has been historically criticized for its environmental impact. However, recently it has been recognized for its role in helping the green energy transition to move forward. Experts have warned that if mining production does not increase significantly in the coming years, the global energy transition will be at risk. Moreover, the green revolution is expected to depend on key mining countries like Mexico. 

The transition from fossil fuels to clean power will see an increase in demand for certain minerals for electric vehicles (EV), wind turbines, solar panels and batteries. According to the International Energy Agency (IEA), a typical EV will need six times more minerals than a conventional car and an onshore wind plant nine times more minerals than a gas-fired plant. “With current projections of demand for some minerals increasing more than twentyfold by 2040, IEA predicts that with current investments, production will not be able to keep up,” highlights Energy Monitor. 

Major challenges faced by extractive industries related to the energy transition were highlighted during the Energy Transition and Extractive Industries Development in Asia-Pacific Region United Nations roundtable. Most extractive industries focus on the production and processing of fossil fuels which will have to be phased out as a part of the transition process. According to a study by Malte Meinshausen et al., Potsdam Institute for Climate Impact Research, limiting the global temperature rise to only 2°C requires more than half of the world’s proven fossil fuel reserves not to be extracted between 2007 and 2050. Moreover, the Paris Agreement establishes that an 80 percent reduction in coal generation by 2030 worldwide and a complete phase-out of coal before 2040 is required to limit the global temperature increase to 1.5℃.   

Extractive industries themselves are energy-intensive and release high CO2 volumes, both from the energy they consume directly and from non-energy-related activities like deforestation during the mining processes. “The extraction and processing of natural resources account for 53 percent of global greenhouse gas emissions, including 26 percent from extraction and primary processing of metals and other minerals,” mentioned UN experts.  

The US Agency for International Development (USAID) reports that to meet the 2015 Paris Agreement goal of keeping global warming below the 2°C mark, the world’s energy systems need to shift their reliance from fossil fuels to alternative energy sources. Nonetheless, these new technological solutions from photovoltaic cells to lithium-ion batteries may be less fuel-intensive and more material intensive. Global studies predict an increase in demand of up to ten times the current production levels for minerals like cobalt, graphite and lithium. 

A report by the World Bank Group forecasts a 965 percent increase in lithium production, 585 percent for cobalt, 383 percent for graphite, 241 percent for indium and 173 percent for vanadium by 2050. USAID reports that the high-impact minerals used for major green energy technologies will be cobalt, graphite, lithium and aluminum, while rare earth elements, silver, titanium and vanadium will be medium-impact minerals important for specific green energy technologies.  

Mining’s role in making a just and sustainable energy transition will be imperative. According to an analysis by the World Economic Forum (WEF), the mining industry should start taking into account social risks and can expect to be required to do more stringent reporting on the social impacts of individual projects. “Social considerations – such as community opposition, local community impact, working conditions, demand for mining jobs, land resettlements, security and indigenous groups and their right to free, prior and informed consent – will intensify,” according to the WEF. “The need going forward is for the rebalancing of the ‘S’ in ESG, integrating it correctly in how all companies involved in the energy transition go about their business, not just mining ones. This is the path to making the energy transition both sustainable and just.”

Armando Ernesto Alatorre, President, CIMMGM, wrote for MBN that mining has been the backbone of human civilization and, again, it is going to be the solution to achieving a greener economy and a greener world. “It is our duty, first, to continue providing as many deposits as needed and, second and most importantly, to make sure the general public understands that eliminating all mining would lead to an extremely difficult living situation for all of us and our descendants,” he said.