“Only Sustainable Supply Chains Offer Real Security”

by | 13. Dec 2023 - 15:57 | Politics

International Energy Agency presents policy recommendations for the promotion of the raw materials sector.

Global climate protection efforts go hand in hand with a sharp rise in demand for critical minerals, as green technologies such as wind power and electromobility require raw materials such as rare earths and lithium. At the same time, their availability is limited, particularly due to the high concentration of countries in production, which is why increasing supply bottlenecks are feared. Countries such as the USA therefore want to increasingly mine and process their own mineral resources. The first EU law (Critical Raw Materials Act) on the supply of raw materials, which is about to be finalised, also provides for more domestic mining. However, a frequent obstacle to such projects – in addition to the long lead times – is resistance from the local population.

The International Energy Agency (IEA) has now published a series of recommendations for action to involve affected communities better, make the extraction of raw materials more environmentally friendly, and ultimately strengthen the supply situation. According to the core thesis of the report (PDF), supply chains for critical raw materials can only be truly secure and resilient if they are also sustainable and responsible. Consumers and investors increasingly prioritize compliance with high environmental, social, and governance standards, known as ESG factors. While companies are best placed to implement appropriate practices, governments can create a favorable environment in parallel, writes the IEA. For example, existing mining and raw materials processing laws should be updated to protect better the environment, workers, and communities and shorten the lead times for approvals – a vital aspect of the Critical Raw Materials Act. The agency also proposes linking public investment in the sector to sustainability and social criteria and promoting supply chain transparency through incentives and obligations.

A commodities expert of the world’s largest investment company BlackRock recently emphasised the need for new mining projects (we reported). The sector, which is indispensable in the fight against climate change, is currently not very attractive for investors, he said, and the industry therefore needs a reassessment, as a lot has happened, for example in terms of reducing CO2 emissions.

Photo: iStock/jasonbennee

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