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UQ study highlights ESG challenges for critical metals supplies

In a new study published in ACS’ Environmental Science & Technology, University of Queensland researchers have highlighted the effects environmental, social and governance (ESG) risks will have on the global supply of metals without major innovations in the mining industry.

Research on metal criticality has predominately assessed the supply risk for metals at a macro-scale. Our methodology expands current thinking about resource criticality by including source-based risks. Criticality studies focus on the likelihood of supply disruption and its consequences for importing nations. Scholars have called for a restructuring of global supply and demand networks, and propose strategies of supply diversification, subsidies for national production, and development of strategic stockpiles. Our methodology assesses source risks for the supplying regions of the globe. Without this, understandings of metal criticality are incomplete.

This research has major implications for the mining industry, investors, governments and downstream users of metals. The results indicate the presence of multiple concurrent risks and raise concerns about the ability of the mining industry to meet demand, which has been projected to grow significantly for copper and iron as well as for aluminium. To address the complexity associated with these factors, major innovations are required in the design and development of resource projects. Innovations will not only need to “cut across” disciplines but also stakeholder groups to ensure that the responsibility for solutions extends beyond governments and individual companies.

—Lèbre et al.

Researchers from UQ’s Sustainable Minerals Institute (SMI) designed a matrix to assess the ESG context of more than 600 individual copper, iron and bauxite orebodies and then analyzed how it may affect global supply.

SMI’s Dr Eléonore Lèbre, said the findings demonstrate that ESG challenges have the potential to significantly impact the global supply of metals.

The majority of the 296 copper orebodies, 324 iron orebodies and 50 bauxite orebodies we examined are in complex ESG contexts which could either prevent, delay or disrupt mining operations. This has major implications for the mining industry, investors, governments, and downstream users of metals, who will all become dependent on access to these complex orebodies.

Iron, copper and bauxite—the main source of aluminum—are already the three most widely used metals in the world, representing 95 percent of all industrial metals produced annually, but demand is expected to double, if not triple, by 2050. Even now numerous mining projects stall or are abandoned due to materialised ESG risk, so it will become more frequent if there isn’t major innovation in project design and development.

—Dr Lèbre

The study was produced by SMI’s Complex Orebodies Research Program, which focuses on unlocking orebodies necessary to meet future demand, but unviable due to low grades, technical challenges, political unrest, social outrage, or environmental barriers.

SMI Complex Orebodies program leader Professor Rick Valenta said the researchers judged each orebody against eight risks: waste, water, biodiversity, land uses, indigenous peoples, social vulnerability, political fragility, and approval and permitting.

When more than one risk category is identified in an orebody, it gives us a clue that accessing that orebody may be complex. It’s also notable that each of the three metals vary in their risks because they are being mined in different areas of the globe and in different orebody types.

Iron orebodies show a mix of low and high risks, with the high risk orebodies generally characterized by social vulnerability, political fragility, and approval and permitting challenges. Almost all the bauxite orebodies we studied are located in high risk contexts, making it the highest risk of the three commodities. Copper orebodies are more evenly distributed but water and waste risks are prevalent, with 65 percent of orebodies located in regions with medium to extremely high water risk.

Our intention is for this methodology to be used by a range of stakeholders, such as governments at the approval stage of new mining projects, and by investors or multinational mining companies.

—Professor Valenta

Resources

  • Éléonore Lèbre, John R. Owen, Glen D. Corder, Deanna Kemp, Martin Stringer, and Rick K. Valenta (2019) “Source Risks As Constraints to Future Metal Supply” Environmental Science & Technology 53 (18), 10571-10579 doi: 10.1021/acs.est.9b02808

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