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1. Behind the Schemes: Anticorruption Gaps in Mining Sector Certifications

Author:
Susannah Fitzgerald, Robert Pitman, Matthieu Salomon, and Phesheya Nxumalo
Publication Date:
11-2024
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Decisionmakers are increasingly looking to certification schemes to provide information on the sustainability of mining operations, yet these schemes have significant room for improvement regarding how they address corruption in their standards. The report assesses the content of the performance standards used by the Aluminium Stewardship Initiative (ASI), the International Council on Mining and Metals (ICMM), the Initiative for Responsible Mining Assurance (IRMA), The Copper Mark, and Towards Sustainable Mining (TSM). Schemes address some topics, such as revenue and payments and anticorruption procedures, relatively well; this may reflect the extent to which legislation and regulations address these topics. Schemes’ standards less frequently covered other issues, such as beneficial ownership and allegations of corruption. Many schemes, and the mining companies that use them, are missing an opportunity to assess the implementation of corporate-level anticorruption policies in mine-site assessments. The quality of certification schemes’ governance and assurance processes is essential to their effectiveness, yet many fall short of best practice. This undermines their credibility. Key governance challenges include the unbalanced representation of different interests within schemes and the risk of conflicts of interest in the auditing process. Decisionmakers risk becoming overreliant on certification schemes as indicators of responsible business conduct, which may be facilitated in part by industry influence over policymaking processes. Certification schemes are not a replacement for ongoing, robust due diligence into the environmental, social, and governance impacts of mining operations, including corruption, and the design and enforcement of robust regulatory frameworks. In a shifting standards landscape where there are efforts to both consolidate and review existing certification schemes, and a moment where the risk of corruption is heightened by growing demand for transition minerals, governments, mining companies, and certification schemes themselves must do more to address the topic of corruption. To do so effectively, they should focus their attention on solutions that will have the most impact in addressing this issue.
Topic:
Corruption, Environment, Governance, Accountability, Mining, Transparency, and Minerals
Political Geography:
Global Focus

2. What needs to change for green funds to be truly green

Author:
Jan Fichtner, Robin Jaspert, and Johannes Petry
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
Green investment funds are growing rapidly. However, their impact on climate change mitigation and sustainability remains unclear. Recent research has identified key shortcomings that need to be addressed in order to reduce greenwashing and make these funds truly green. Green finance is playing an ever more prominent role in recent years. Environmental, social and governance (ESG) funds, which constitute a key pillar of green finance, saw record inflows of hundreds of billions of US-dollars in recent years, primarily by retail investors. Essentially, these ‘green’ funds are integrating environmental, social and governance criteria, such as greenhouse gas emissions, labour rights and gender diversity into their investment strategy. They claim to invest less in the stocks of firms that are highly polluting or have bad governance practices, and instead buy the shares of corporations that appear to be more sustainable. In industry and policy debates, ESG funds are often cited as advancing the promotion of sustainability and helping to address climate change. However, the ESG concept, its underlying criteria, and its potential effects are highly controversial. Many critics see ESG primarily as ‘window dressing’, with no significant positive impact – either for the environment or for investors and employees.
Topic:
Climate Change, Environment, Oil, Gas, Capitalism, Sustainability, and Minerals
Political Geography:
Global Focus

3. Building downstream capacity for critical minerals in Africa: Challenges and opportunities

Author:
Cullen S. Hendrix
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Demand for critical minerals—bauxite, cobalt, copper, lithium, nickel, and other minerals that underpin solar, wind, geothermal, and other forms of renewable energy and electric vehicles—is already booming and is projected to continue to grow at a rapid pace. Africa’s mineral-rich developing economies could benefit greatly from this increase in demand. Many African economies have vast critical mineral reserves, and their nascent industrial sectors imply vast export potential. These countries could increase the benefits they reap from these minerals by building downstream capacity in processing—the steps that turn mined ore (bauxite, iron ore) into refined intermediate goods (aluminum, steel). To do so, however, they need to improve their infrastructure, investment climate, and governance and learn to navigate an increasingly complicated geopolitical environment. Hendrix assesses the challenges facing four critical mineral–rich developing African economies: Guinea (bauxite); the Democratic Republic of Congo (cobalt); Madagascar (graphite and nickel); and Mozambique (graphite). The solutions he offers include (a) embracing hydropower potential—which is vast in these countries—while paying attention to social costs and distributive impacts, (b) exempting refinery-related capital goods and industrial inputs from import duties, (c) locating downstream capacity in areas of relative stability, and (d) leveraging external policy anchors to provide policy stability and transparency.
Topic:
Natural Resources, Economy, Supply Chains, and Minerals
Political Geography:
Africa and Global Focus

4. Green energy depends on critical minerals. Who controls the supply chains?

Author:
Luc Leruth, Adnan Mazarei, Pierre Régibeau, and Luc Renneboog
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
In light of the transition away from fossil fuel–based energy, this paper highlights the importance of understanding who controls vital parts of the global supply chains of critical minerals and rare earth elements (REEs). Analysis of direct ownership does not reveal the real sources of control over the decisions of the company. To identify those sources, the authors use an index that measures the degree to which important shareholders can affect voting decisions. This analysis is not straightforward, because companies along the supply chain are not necessarily incorporated in the countries in which mining and production activities take place, and shareholders can exert influence through multiple layers of subsidiaries. The analysis reveals that China’s control over the global value chains involving critical minerals and REEs extends beyond what is commonly assumed. It also sheds light on environmental, social, and governance issues in the countries in which mining and/or production take place. The paper advocates increasing transparency regarding the sources of control to better assess and manage economic and geopolitical risks; enhancing recycling, to reduce dependency on foreign supply; avoiding protectionist and trade-reducing reactions; and encouraging research and development in order to speed up the adoption of technologies of substitution.
Topic:
Economics, Geopolitics, Supply Chains, Minerals, Energy, and Green Transition
Political Geography:
Global Focus

5. Shift to renewable energy could be a mixed blessing for mineral exporters

Author:
Cullen S. Hendrix
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The world’s transition to sustainable energy systems has suddenly become a boon to countries rich in critical minerals used in clean energy technologies like rechargeable batteries, solar panels, wind turbines, and electric vehicles. Among these critical minerals are aluminum, coltan, copper, aluminum, zinc, tin, rare earths, lithium, tantalum, and cobalt. Given that these minerals are key to building sustainable energy systems, vital for ensuring military might, and often extremely valuable, will countries with large, exportable endowments of these minerals fall prey to the resource curse? Hendrix says these countries may find their newfound wealth to be a mixed blessing. The size of the markets for these resources and their marginal production costs suggest that they do not have the potential to generate massive rents the way that oil and gas production have. Given that these rents are the source of many ills—authoritarianism, reduced investment in human capital, poor human rights records—this is good news. But because several of these minerals can be mined artisanally, they may lead to governance challenges related to armed conflict. Their status as strategic resources will invite major power meddling and interventions—but only if mineral-rich economies are forced to align themselves and access to their resources with a major power, like the United States or China. The 20th century’s scramble to secure oil resources led to cursed dynamics in oil-rich societies, but historical precedent is not destiny. Mineral-rich countries may avoid the resource curse, especially if they develop diverse investment and trading relationships to balance major power interests in their mineral wealth and embrace industry- and civil society–led good governance initiatives around mineral resources.
Topic:
Economy, Exports, Renewable Energy, Sustainability, and Minerals
Political Geography:
Global Focus

6. Preventing Corruption in Energy Transition Mineral Supply Chains

Author:
Natural Resource Governance Institute
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Experts have issued an urgent call for reforms to tackle the pressing issue of corruption in transition mineral supply chains. Corruption undermines key safeguards that protect local communities and the environment, redirects public money into private hands, and disrupts and delays production just when responsibly produced minerals are urgently needed to meet climate goals. Corruption in mineral supply chains threatens a just energy transition and risks derailing global efforts to fight climate change. The global fight against climate change relies on our ability to scale up low-carbon infrastructure, which requires more minerals than fossil-fuel-based systems.
Topic:
Corruption, Supply Chains, Minerals, and Energy Transition
Political Geography:
Global Focus

7. CONFLICT MINERALS LEGISLATION: SHOOTING AT THE WRONG TARGET… AGAIN

Author:
Marijke Verpoorten and Nik Stoop
Publication Date:
01-2021
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
On January 1, 2021, the European Conflict Minerals Act came into force. It aims to regulate the trade in four minerals—tin, tantalum, tungsten, and gold, also known as 3TG—that are often sourced from conflict-affected countries where the profits may allow armed groups to finance their activities. The regulation aims to break the link between minerals and conflict by ensuring that European Union (EU)-based companies only import minerals from conflict-free sources. If companies import minerals from conflict regions, the law requires them to report where the minerals were mined, the location of processing and trade, and the taxes and fees that were paid.
Topic:
Conflict Prevention, Conflict, and Minerals
Political Geography:
Global Focus

8. Eyes on U: Opportunities, Challenges, and Limits of Remote Sensing for Monitoring Uranium Mining and Milling

Author:
Grace Liu, Joseph Rodgers, Scott Milne, Margaret Rowland, Ben McIntosh, Mackenzie Best, Octave Lepinard, and Melissa Hanham
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
James Martin Center for Nonproliferation Studies
Abstract:
The mining and milling of uranium does not generally receive the attention that the subject deserves. Yet this overlooked aspect of the nuclear fuel cycle can offer analysts important clues about a country’s fissile-material production. This, in turn, helps inform highly sensitive inquiries, such as estimates of arsenal size and potential for growth. Geospatial technology is uniquely helpful as a discovery and verification tool. The production of fissile material is often a closely held state secret; even for states that report production levels to the International Atomic Energy Agency, these numbers can be difficult to verify. Remote-sensing technology, such as satellite imagery paired with change-detection algorithms, can help pierce the veil of state secrecy and overcome physical barriers to inform analysts about this vital first step in the nuclear fuel cycle. Occasional Paper #44—the final installment in a four-part series that uses open-source remote-sensing data to identify and monitor uranium mining and milling activities—examines these new tools and technologies in detail to demonstrate how analysts use them to detect, estimate, or verify uranium production. It explores different remote-sensing techniques and their various advantages, including traditional optical imagery, multispectral and hyperspectral images, and thermal and near-infrared images. It also discusses machine-learning algorithms as another tool for analysts examining large quantities of geospatial information in a relatively short amount of time. Though these technologies hold great promise for WMD analysts, there are limitations to their use. CNS Occasional Paper #44 discusses these current and future limits, and concludes by calling for increased collaboration between the commercial satellite industry and analytical organizations and verification regimes alike, as a way f
Topic:
Natural Resources, Mining, Minerals, Uranium, and Milling
Political Geography:
Global Focus

9. Subnational Oil, Gas and Mineral Revenue Management

Author:
Andrew Bauer
Publication Date:
07-2013
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
This paper discusses challenges and approaches in managing resource revenues at the subnational level. Subnational resource-rich governments face distinct challenges in managing revenues from volatile, exhaustible resources. These include: unpredictable and discretionary resource revenue transfers between national and subnational governments, which can undermine development planning; resource revenue volatility which can lead to wasteful spending, poor quality investments; over the longer term, the finite nature of oil, gas and mineral revenues can lead to a long period of economic growth followed by a depression; and difficulty in scaling up public investment efficiently when experiencing a revenue windfall. To address revenue volatility, subnational governments can “smooth” expenditures by delinking revenues from expenditures. When revenues are unexpectedly high, governments can run a surplus, to be saved or used to pay down public debt. When revenues are unexpectedly low, they can draw on those savings or borrow. To prevent long-term booms and busts, governments can also save a portion of resource revenues for future generations, as well as invest in the local economy to generate future growth. Fiscal rules can underpin these policies, constraining government spending decisions and compelling government bodies to adopt a long-term perspective on public finances. Development planning can help prepare resource-rich regions for life after their oil, gas or minerals have been depleted. Planning helps prevent shortsighted reactions to temporary ebbs and flows in oil or mineral revenues, helps define the role of the resource sector in development, and lays the groundwork for a thriving post-extractive economy.
Topic:
Oil, Governance, Gas, Tax Systems, Diversification, Revenue Management, and Minerals
Political Geography:
Global Focus