Critical minerals: What does the future hold?
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So from now until summer break, take advantage of all the ways ChatGPT can make your life easier. Restrictions apply. Hello and welcome to Business Daily from the BBC World Service. I'm Sam Fenwick. Today, it's the final day in our series on critical minerals, the materials at the heart of the green energy transition. They include cobalt, lithium, nickel and copper, and they're used to power electric cars, underpin modern defense systems and keep the global economy moving.

These minerals are in high demand and that's fueling a worldwide scramble to secure supplies, reshaping alliances, driving investment and raising some big questions. So in this episode, we're bringing together a panel of experts to discuss some of the issues.

Can countries really cut their dependence on China? Can places like the Democratic Republic of Congo or Ukraine see more of the benefits from the minerals under their feet? And is it even possible to mine and refine these minerals without damaging the planet or exploiting people? That's all coming up in today's Business Daily.

How far ahead is China? I'd say they have a good 10 years. 10 years? Yes. China has...

This week, we've reported from across the globe on this fast-moving sector. It's now time to bring the series together with a panel of experts.

Mel Sanderson is a former US diplomat with decades of experience in the mining industry. She's also chair of the Critical Minerals Institute, a think tank focused on policy, investment and best practices in critical mineral supply chains.

Ro Dawan is the CEO of the International Council on Mining and Metals, a group of 24 of the world's biggest mining companies. They say they're committed to promoting responsible and sustainable practices across the industry. And Tsepo Mahahani is the founding partner of the Critical Minerals Fund, which invests in advanced-stage mining projects across Africa.

Its aim is to help local communities move beyond just digging up minerals and actually benefit from them. Let's start then with the biggest geopolitical relationship in this story, China and the United States. But before we go to our panel, let's briefly explain what's at stake.

Over the past two decades, China has become a dominant global player in refining and processing critical minerals. Depending on the material, it controls anywhere from 60 to 90% of supply chains, particularly in rare earths, lithium and graphite. And it's not just an economic position, it's a strategic one. So let's go to Mel first. The US no longer wants to rely on China for its supply of critical minerals. It

Is it a fantasy or a political reality? China gained its hegemony due to decisions made in the US 25 to 30 years ago. When we simply didn't want to engage in mining activities, we didn't want to engage in processing facility activities. They were regarded as very dirty activities.

unfriendly to the planet, and certainly not welcome in my backyard. And China saw that as an opportunity, and they actively seized on it, invested in it. And as a result, depending on the material in question, China now has control of anywhere between 70 to 99 percent of the materials in critical mineral space necessary, and particularly rare earths.

So do you think that the U.S. can catch up with China? It is starting from a long way down. But the government has been proactive in trying to alleviate some of the permitting burden, which is part of the reason we don't have a mining industry in America. And also they're now working actively on the financial aspects because money in any aspect of the industry, money is a definite choke point.

So can we catch up? Sure, in 20 years. Are we going to catch up in four? No. Seppo, what do you think about China's dominance? Yes, I agree with Mel on that one. China has perfected its strategy. If you take copper and the DLC of the 18 new projects that have come online, 15 of them are Chinese-controlled or owned. I think the world is leapfrogging into a crisis that will be bigger than Russia and Ukraine when it came to gas going into Germany.

China on a daily basis, it is just solidifying that position across all metals.

Sometimes I think that people are hoping that this transition is not real and they will be able to get away with it. Ro, how do we get that level of capital to be able to break up that monopoly that China has? By helping the end users of metals realise how vulnerable they are upstream in their supply chain if they don't get involved. So, so far, growing mining has been the mining industry's problem.

In the future, growing mining has got to be a shared challenge with the car makers, with the defence sector, with the renewable energy companies. They have taken for granted for too long that the metals and minerals that go into their products are going to be freely available and free from geopolitical competition. The last 12 months have been a wake-up call. That will not be the case unless users of metals and minerals invest capital, both financial and social, into growing responsible mining.

As we explored earlier in the series, Ukraine and the US recently signed a landmark deal that gives American firms access to new mineral licenses. Ukraine keeps ownership of the resources, but 50% of future profits from these projects will go into a joint reconstruction fund. The

The aim is to rebuild Ukraine's economy while helping the US secure critical minerals like lithium and titanium. Ro, are your members willing to invest in Ukraine? Our members would operate in any country where there is a stable economic environment which can guarantee responsible production. At present, it's hard to see that being the case in Ukraine, but things could change.

And even if things did change, it would be a minimum of five years before you could see any production coming out the ground. And so when a company sees an environment that is stable, predictable, which has incentives for producing minerals in that country and where security can be guaranteed, capital will naturally flow. But the conditions are not there yet in Ukraine today. I have to say, having worked with a company that was building a mine in the DRC, it's

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I'm Sam Fenwick, and today with the help of our panel, Mel Sanderson, former US diplomat and co-chair of the Critical Minerals Institute, Ro Dawan, CEO of the International Council on Mining and Metals, and Tsepo Mahahane, founding partner of the Critical Minerals Fund, which backs mining projects in Africa, we're exploring the global race for critical minerals and the risks of relying too heavily on China. It's not just Ukraine striking deals.

The US has also signed an agreement with the UAE. And in the Democratic Republic of Congo, Washington is looking to deepen its involvement, hoping access to materials like cobalt and lithium could come in exchange for infrastructure investment and greater regional stability.

So is this good news for the DRC? Giuseppo thinks it could be. I think it will be a good thing given that the US is the deepest capital pool out there globally. And if you look at the specialist mining funds, they tend to get their money from the American institutions. Yes, if the American government were to sort of have the right intentions, yes, it will be very important.

There is no way we are going to unlock these minerals without American capital. If you think about how deep the capital pool is there, I don't want the U.S. government to be involved directly. I want private capital to be involved.

But the U.S. government can go a long way in enabling this. You know, when you look at the terms of any agreement, the devil is always in the details. So U.S. companies historically are reluctant to enter the African continent. Congo, sadly, is always the land of tomorrow. The infrastructure that enables modern professional minds is not widely available.

Is the United States going to, as part of its interest in the Congo, make a broad-based agreement that would also see us supporting the development of energy infrastructure, of agricultural infrastructure? Is that going to be incorporated? I doubt it. But that's the kind of agreement.

that would be mutually beneficial and would be more likely to attract U.S. companies to come into the Congo and stay. Seppo, do you find that this rush to secure supplies of minerals is actually making Africa's resources more desirable? Yes, it does make Africa's resources more desirable. We have to be careful in Africa as well that you don't still deploy that model that you saw with extractives

whereby still in 1900s, very exploitative, very predatory, whereby it doesn't take into account the economic development of various countries.

I think the opportunity in Africa is quite vast, given the amount of minerals, especially copper. You have copper across Zambia, South Africa, the DRC, and even Namibia and Botswana. So for Africa, it is how do you take advantage of this in terms of how you develop those mines? Because Africa holds vast reserves of critical minerals, yet often misses out, doesn't it, on the full economic benefits of them?

If we are to take advantage of this, we have to think about indigenous man owners.

and indigenous communities whose lands that mining is happening on. It is about how do we actually get the capital to these guys, how they are involved when these companies are producing. We don't want that model whereby you're just extracting and actually putting it on rail and taking it to port without actually thinking about how this actually impacts or how it can potentially be a catalyst for economic development for these communities.

Roe, some of your members will have been responsible for some of the things that Seppo was talking about there, effectively ripping off some of these...

I would respectfully disagree with that characterisation that somehow foreign companies are all exploitative and have ripped off African nations. The data simply shows that's not true. In the last 10 years, the 24 companies that are part of ICMM, for every dollar of profit that we made, we returned 36 cents back to national economies in corporate income tax and royalties. I struggle to think of another sector that's paid that much money back in tax into host country coffers.

That's over and above over 600,000 jobs created, most of which earn significantly above the living wage, let alone the minimum wage. And so I think we've got to be careful to not paint all the mining industry with the same brush and say that foreign companies are bad and indigenous companies are good. It's to say that any company can be a responsible mining company as long as they're committed to the principles of fair, environmentally sustainable production.

Let's take a closer look at the idea of responsibility in the mining sector. Throughout this series, we've heard calls for more protection for the people doing the digging to ensure the benefits of mining are shared more fairly. Like Siddharth Kara, an academic from the United States who's based at the University of Nottingham in the UK. He's been working on the mining sector for a long time and he's been working on the mining sector for a long time.

He's author of Cobalt Red, a Pulitzer Prize-nominated book about cobalt mining in the Democratic Republic of Congo, where around three quarters of the world's supply is mined. It's like an environmental apocalypse has taken place. The entire countryside has been chewed up, gouged, ripped apart by enormous mining operations.

The air is acrid. Your eyes burn. You can taste it in your mouth and your throat. There's a haze of dust that's just suffocating that part of the Congo. Take a family. They will find strips of rebar, maybe a pickaxe, a shovel, or just with their bare hands scrounging in the ground. Mothers with little babies on their backs. There's hundreds of thousands of artisanal miners digging cobalt in the ground. I never saw one with protective equipment.

So can mining really be done in a way that supports local economies and protects the environment? Tsepo, who invests in African mining projects, is confident that it can. I like this term whereby they say it's either mined or grown. Mining is a cornerstone of our civilisation.

It is how do we actually do it. In Africa, you have higher grade deposits. Higher grade deposits means that you are moving less rock. If you are moving less rock, you are going to do it more cheaply. And a lot of these countries, even including Zambia, extending into the DLC, you have a lot of hydropower.

So mining can be done responsibly, but you have to do it right from the minute go. From when the license owner actually is doing the trenching, moving the community of the land, it is how they actually start involving their community. If you do it that way, you create a base to actually do mining responsibly.

So, Ro, you're trying to bring in a global standard, aren't you? How's that going? It's going well. We hope to have it ready in the next one year. Our main challenge is making sure that the maximum number of mining companies embrace these standards, because there are many companies that are operating responsibly, including the ICMM members, but there are far too many that are operating below acceptable standards.

We think there are an estimated 25,000 mining companies globally who operate between them around 30,000 mines. The vast majority of those are not following any responsible practices. And our challenge has got to be to build a consolidated global standard so that all of them can follow good practices, because it is possible to mine in harmony with nature. There are mines today that use 100% renewable energy.

There are mines today that use zero fresh water. There are mines today that protect 11 hectares of land for every hectare they disturb. And how much does that cost to, in your definition, mine responsibly? In some cases, it saves you money.

Because actually, by going to renewable energy, your supplies are much more secure and over time, your cost can be lower. By moving to desalinated water, it means you can return the water back to communities, which, as Stepo says, will improve your relations, reduce stoppages and get you a much better social license to operate. So in some cases, Sam, yes, you might need some more money up front, maybe 10% or 20% more. But in many cases, it actually saves you money. And then

And finally, to all of you, if you could fix one thing in the critical minerals ecosystem tomorrow, what would it be? Sepo? Allocate possibly about 5 to 10 billion US dollars to fund very early stage projects, especially when it comes to copper, because we don't have new copper projects out there. OK, thank you. And Roe?

A green premium mechanism whereby producers of responsible metal get paid more than producers of irresponsible metal, because that will incentivize people to move to responsible production. And Mel? Capital putting its checkbooks where it says its priorities are so that the rare earth junior companies are able to grow into the majors and meet Western demand. Hmm.

So whether it's unlocking early stage capital, rewarding responsible practices, or backing the next generation of miners, the message from our panel is clear. If the world wants a fairer, cleaner supply of critical minerals, the time to act is now.

Thanks to my guests today, Mel Sanderson, former US diplomat and co-chair of the Critical Minerals Institute, Ro Dawan, CEO of the International Council on Mining and Metals, and Tsepo Mahahane, founding partner of the Critical Minerals Fund. This has been the final edition of our Critical Minerals series with me, Sam Fenwick. The producer was Lexi O'Connor. You can catch the full series by searching for Business Daily wherever you get your podcasts. Thanks for listening.

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