International Resource Politics

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Executive Summary

This paper underlines a new dimension of international relations and pleads for new approaches, called international resource politics. What is new and will be stressed throughout the paper is the interconnectivity across critical resource shortages and with two challenges:

• The environmental challenge to cope with impacts from using resources along their life-cycle
• The social-political challenge to cope with human rights, poverty and freedom internationally.

These two dimensions are often neglected in strategic studies. However, this paper emphasizes their strategic character for the worldwide endeavor of a green economy and the forthcoming Rio+20 Summit in Rio de Janeiro: Firstly, environmental benefits in industrialized countries may coincide with a problem shifting towards the poorer regions in the world. Biofuels have been one example for such problem shifting lately. Many of the key sectors in transition (for example energy, transport, agriculture) and innovative green technologies (solar, wind, electric cars, etc.) will continue to rely on the use of finite mineral resources that are often mined in countries with a weak governance and poor record of human rights. Secondly, economic benefits of resource efficiency measures in manufacturing sectors are dissatisfactory as long as the corresponding products end up as hazardous waste in poorer regions. Without an explicit international dimension, resource efficiency strategies face an uphill battle against existing distortions and unfair competition. Thirdly, a finite planet with “planetary boundaries” for key environmental parameters (some of which are already transgressed) sets limits to substituting one finite resource (such as land) with another (such as fossil fuels) or vice versa. Business as usual is not an option, not for any actor nor for any country.

This paper attempts to raise awareness for an international resource politics as a new element for ongoing debates around a green economy and transition strategies.

Chapter 2 explains the multidimensionality of critical resources and illustrates profiles of five minerals with relevance for a green economy: Phosphorus is a mineral, which is indispensable for the agriculture sector and world food production; Coltan/Tantalum is a so-called conflict mineral due to illicit trade and the fuelling of regional conflicts especially in Africa. Rare Earths Elements (REE) show a strong reliance on one exporting country, China; Platin Groups Metals (PGM) (here Platinum and Palladium) are materials that are hard to substitute at present; Copper is a mass material with great importance for green high-tech products but also indispensable for all energy infrastructures.

The key message is that criticality is a multidimensional concept that should also include the environmental dimension as well as human rights. Critical metals are increasingly relevant for green technologies; phosphorus is essential for food supply. However, risks and threats of the extraction of those resources are to be derived from a holistic concept that takes into account geopolitics, the governance of using this material as well as climate change and other challenges.

Chapter 3 addresses potential goal conflicts and competing interests among a variety of actors. This is thought to also stimulate the debate about opportunities, synergies, trade-offs and transformations strategies. Along the supply chain of resources one sees a large variety of actors: mining companies and ministries, refineries, smelters and processors, manufacturing industry, green industry, NGOs, concerned citizens, end consumers. Resource management interconnects the globe; understanding resource governance should follow a bottom-up approach of multi-level and polycentric governance where the variety of actors and institutions on different levels is taken into account. A key is to acknowledge the global shifts from the OECD countries to new actors in the rest of the world. The complexity of global supply chains hinders the transparency: while a main responsibility is upstream in the mining sector where profits and innovations are often low, main credibility is associated with industries downstream in the technology sector where innovation is high and growth is created. Thus, the ability to act requires an enhanced cooperation with incentives along the systems of material flows.

Chapter 4 discusses the need for visions and proposes principles for a fair future of using natural resources. The need for visions follows basically from current disorientation: will prices continue to go up? Shall developed countries reduce their use of resources even if geophysical scarcities are disputed? Given our proposals on the multi-criticality of resources and given the heterogeneity of actors and their interests, such visions and new principles shall provide orientation, help to guide decision-making under uncertainties, and line up normative requirements such as human development and sustainability. The chapter starts with a short discussion of seven practical principles of sustainable resource management. It goes a step further and elaborates on freedom as normative requirement towards elementary preconditions of freedom – the provision and maintenance of an adequate resource base, in particular for food and water supply but also life-supporting functions of natural resources and ecosystem services. Poverty eradication thus goes hand in hand with a provision of adequate supply of natural resources for the poor. Conversely, one can argue in favor of reducing resource consumption in the industrialized countries for the reasons of reducing environmental pressure and providing development space for the poor.

Chapter 5 takes a look at governance and market deficits and lessons-learned from existing initiatives, instruments and approaches. The last years have witnessed a number of initiatives aiming at improving the governance of natural resources. While acknowledging such promising thrust in general, this paper will focus on transparency, certification and the ways of how initiatives and politics interact, surely without being able to give a full-scale evaluation. Discussing EITI, the Dodd-Frank-Act, and a number of tools, their strength is a tight focus on a narrow issue that has pushed action. However, the challenges will require stronger governance mechanism and economic incentives to combat global overuse of resources, rebound effects and problem shiftings and address the corresponding opportunities and responsibilities in industrialized countries. Thus, they will need a serious upgrading towards the principles above if all existing deficits and challenges of the future are to be met. In a broader sense it seems that new hybrid forms of governance emerge where formal regulations and stakeholder driven initiatives co-evolve on the levels of industrialized countries, local groups in developing countries, NGOs and business. Such hybrid forms of governance become more powerful if they leverage market access in the USA and the EU.

Chapter 6 proposes new response options for a number of stakeholders, business, NGO’s, civil society, and governments alike. Germany and the EU have good reasons to accept their responsibility in that regard. The EU is the largest commodity importer of the world (not China or the USA), and Germany is the major manufacturing hub within the EU, meaning that its industries and its agriculture are both importers and exporters of resources. Moreover and against all current odds, the EU is the largest internal consumer market of the world – with numerous leverage capacities for market access.

Leadership indeed will need to be demonstrated at home: Future commitments of the EU and its Member States towards resource savings, i.e. an absolute decoupling of resource use (measured in total material requirements or any similar comprehensive indicator) from GDP should be central in such strategy; similar commitments by major corporations (against sales rather than unit-based) should be encouraged. Putting the own house in order is a key ingredient for credibility and preparing market actors for long-term changes. 

An international resource politics could kick off with a strengthening of existing initiatives and move from knowledge to action via an international data hub, an international resource management agency and a multi-stakeholder forum. Further activities should include policies on phosphorus and an international recovery of metals, and to transform bilateral agreements towards sustainable resource management. The long-term perspective is a transition towards a sustainable world economy.