Metals and mining are a critical part of the future of clean energy, and that’s triggering major shifts in a historically dirty industry.
Mined materials such as nickel, cobalt, copper, lithium, gold and rare earths are an integral part of wind turbines as well as electric grids and vehicles. They even power some of the digital technologies allowing many people to work from home. But could these products of mining ever be as sustainable as the clean energy industries they help power?
Copper prices, for example, are up about 24% over the past three months, despite the coronavirus pandemic. And that’s just the beginning, since demand for the metal could increase 90% globally by 2050 amid new underground power lines and electric grid upgrades, according to BloombergNEF. Nickel prices rallied the most in nearly a year this week after Tesla Chief Executive Officer Elon Musk urged miners to boost supply of the critical battery metal.
Musk, who sells electric cars to some of the most sustainably-minded consumers out there, specifically asked for efficiently-mined nickel due to challenges in sustainable sourcing. Already, a tiny Canadian company, Toronto-based Canada Nickel, said it’s working on $1 billion zero-carbon nickel facility that would rely on hydroelectric power. “The electric vehicle chain, and broader market in general, is crying out for zero-carbon product,” Canada Nickel CEO Mark Selby told Bloomberg.
That’s also the case for dozens of other critical metals and minerals, which raises questions about how companies selling clean products source sustainably mined products — or what sustainable mining even means.
“I’ve never heard of a company saying here’s where we paid more for sustainable materials and why,” said James Litinsky, CEO of MP Materials, a large rare earths mine located in Mountain Pass, California—a rarity in North America. “The consumer does care very much about sustainability when they are buying an iPhone or electric vehicle, but in all these cases the decisions are made deep in the supply chain and they are really relying on how responsible corporate America is.”
China is still responsible for providing about 80% of America’s rare earths imports, according to the U.S. Geological Survey, but hasn’t had a great environmental track record. MP, since it’s based in California, is subject to strict environmental and safety standards and has processes that use 1/20th of the fresh water that other, comparable rare earths miners use elsewhere, according to Litinsky. MP announced plans to merge with a special purpose acquisition company this month in a bid to go public. Corporate procurement departments haven’t been as focused on sustainable mining as they have been on recyclable plastic, he said, adding that will need to change.
“Historically, mining is a dirty word, but if we want to replace internal combustion engines with electric vehicles, sustainable mining is critical to our future,” Litinsky said.
Sustainable Finance in Brief
- Socially conscious investing is thriving in the time of pandemic, especially for renewable energy, Bloomberg News Editor-in-Chief Emeritus Matthew Winkler writes in Bloomberg Opinion.
- State Street is now offering an ESG version of its powerhouse SPDR S&P 500 exchange-traded fund.
- Disability rights are the next frontier for ESG investors.
- Canadian property companies are betting overwhelming demand for green bonds has created a pricing advantage.
- Here’s what the mutual fund industry thinks ESG really means.