The International Energy Agency (IEA) hosted a Critical Minerals and Clean Energy Summit at the end of September at its headquarters in Paris. Ministers from 50 key producing and consuming nations gathered with around 40 business leaders, investors and heads of international organizations to discuss effective courses of action to ensure rapid and secure energy transitions. The event, according to the IEA, sought to build consensus on priorities to diversify mineral supply chains, enhance market transparency, accelerate technological innovation and recycling, and promote sustainable and responsible development practices.
If the world continues to consume greater amounts of electricity, and it will, climate goals and clean energy ambitions will rely on significantly greater supplies of many minerals and metals. The problem for these 50 nations is that the current supply rests with a handful of nations with China being the outsized leader. They acknowledged the urgent need to reverse this trend by bringing new projects online, facilitating cross-investment opportunities between producer and consumer countries, strengthening cooperation and introducing financial tools to de-risk investment.
BHP’s CEO Mike Henry was at the meeting and he delivered a dose of reality. Using copper as an example, he said BHP estimates that, under a plausible 1.5° scenario, the copper industry could require around $250 billion in growth capital over the next seven years (to 2030), and that is over and above sustaining capital. Currently committed growth projects over this period, he explained, only amount to around $40 or $50 billion today.
“More projects need to be identified, permitted and given the green light by those who will invest in them,” Henry said. “Governments must provide predictability and stability to attract capital at the lowest possible cost and as quickly as possible. This means stable fiscal settings, streamlined planning and permitting processes, and harmonized standards.”
Too often governments base policy on short-term thinking or near-term political objectives, showing limited understanding of what drives investment, he said. “And, this slows up deployment of capital and will ultimately make the energy transition harder and more expensive,” Henry said. “The flip side, of course, is that governments that do provide this certainty and stability will be the winners in this race to meet the world’s need for critical minerals.”
Opening a mine creates sustainable wealth. Henry explained the benefits of tax revenues, which in turn fund public services, like health and education. Opening new mines creates jobs, both directly and indirectly. And it generates a base of skills that can be leveraged into other industries.
This must be done with the least possible impact to the environment, he explained. “We need a small set of common standards, upheld by all, and where performance against those standards is an increasing determinant of access to capital,” Henry said. “We also have too many standards for the same ESG dimensions, which leads to confusion and dissipated effort. The mining business would welcome convergence on this front.”
Hopefully his message did not fall on deaf ears.
