Böll.Thema Blendwerk: Wo wir stehen

Yes, we can (do better)

On a new and intelligent use of resources.

«The race (for raw materials) is on.» This is how Ursula von der Leyen, President of the EU Commission, presented the Critical Raw Materials Act (CRMA) on March 16 of this year. The new law is designed to improve Europe’s access to metallic raw materials. The war of aggression against Ukraine highlighted – once again – how problematic it can be for the EU economy to depend on individual countries for its raw material imports. While Germany and the EU have achieved near-independence from Russian gas imports since the beginning of the war, Germany, according to current information from the German Mineral Resources Agency (DERA), continues to purchase some metallic raw materials from Russia, albeit in smaller quantities than before. The greatest dependence in the area of metallic and mineral resources is on China, however. Up to 80 percent of rare earths are mined there; and, even if these raw materials are not extracted in China itself, in excess of 50 percent of the world’s supply of (natural) graphite, cobalt, lithium and manganese is refined there, according to a new study by the International Renewable Energy Agency (IRENA).

As recently as 2011, the European Raw Materials Initiative aimed to deploy instruments such as lawsuits against China before the World Trade Organization (WTO) to obtain raw materials. By now, however, many importing countries have made major adjustments and are trying to diversify their sources of metallic raw materials in order to become more independent of China. As a consequence, there has been a shift of interest to a whole new set of countries as potential cooperation partners. It was, for example, hard to miss how many delegation trips the German government has made to Latin America in recent months. Latin America is not the only focus of interest, however: The EU has also begun to conclude partnerships with Namibia, Ukraine, Chile and Argentina, among others. Both the EU and the US are working on new legislation and alliances, such as the one between Canada and the United States, to attain better and more reliable access to raw materials (see also the article by Anna Cavazzini). Some are referring to metallic raw materials as «the new oil»; others, such as Carnegie Europe expert Olivia Lazard, suspect Russia’s interest in Ukraine’s mineral resources as a motive of its brutal war of aggression. One thing is certain: Metallic raw materials have gained center-stage in geopolitics. Demand has seen a massive increase in recent years. According to 2021 data from the International Energy Agency (IEA), by 2040, global demand for rare earths is expected to grow sevenfold, that for lithium more than 40-fold. Forecasts for the demand in other raw materials such as copper and cobalt also show dramatic increases.

Use of metallic raw materials

But what are these raw materials used and needed for? It was not by accident that the Critical Raw Materials Act was presented on March 16th of all days, since this was also the date when the EU’s Net Zero Industry Act was introduced, a proposed law to promote a more climate-friendly industry and energy supply. The energy transition depends on metallic raw materials, but it is not alone in that: Digitalization, global rearmament and the transportation and construction sectors in particular are also devouring large quantities of metallic raw materials. According to a study by the NGO PowerShift, skyrocketing demand in metallic raw materials such as copper and iron – which are used in massive quantities – is not being driven by the energy transition: In Germany, the world’s fifth-largest consumer of raw materials, the transportation sector (and within it the automotive industry) and the construction sector in particular consume raw materials on a large scale. The political discourse thus does not just revolve around metallic raw materials in general; it distinguishes between critical and strategic raw materials that are seen as indispensable for many key projects of our society.

The list of critical raw materials, i.e. the economically most important raw materials with a high supply risk, is continuously updated by the EU. This list in turn serves to guide further decisions, including those on the allocation of research funds. In the context of the new CRMA, a new category has been created, that of strategic raw materials, i.e. raw materials that are in high demand and often used in strategic industries. For both critical and strategic raw materials, strategic projects in mining, processing and recycling can now be applied for on the basis of the CRMA, which may qualify them for fast-tracking and financial support.

Which raw materials exactly are to be classified as critical is not uniformly defined globally and not without controversy; the same applies to the newly proposed measures to obtain them. The German Federal Environment Agency (UBA) has long been recommending that this assessment should not just be based on economic aspects but also take research findings on the consequences of the extraction for the environment and local communities into consideration. Such an assessment could then promote the search for substitute materials or technologies for ecologically very problematic raw materials. Unfortunately, this proposal has met with little response so far. At least – and for the first time – a system is to be developed in the context of the CRMA that identifies the environmental impact.

Indicators for Environmental Hazard Potential (UGP)
Indicators for Environmental Hazard Potential (UGP), Quelle: Ressourcenbericht für Deutschland 2022, Umweltbundesamt

Insurmountable tensions?

Metallic raw materials are essential for our energy transition. The energy transition can help conserve many resources, especially fossil fuels. Nonetheless, the overall demand for many metallic raw materials is rising sharply (not just due to the energy transition), and their extraction and local processing often come at a very high price in terms of human rights and ecological damage – a price we cannot and must not ignore, but, on the contrary, must look at more closely.

The extraction of raw materials consumes large amounts of water. In many countries, such as Chile and Peru, this has led to conflicts in recent years. In Peru, the protests over mining have become so intense that a change in the legal framework was enacted in 2014. Law no. 30151 permits the police to fire on protesters without fear of legal consequences. This has led to many brutal conflicts with fatalities.

In a number of cases, elevated levels of heavy metals in the blood as a result of irresponsible mining activities have caused massive damage to the health of local communities. However, the people affected usually have no legal means of seeking redress or bringing those responsible to justice (see also the article by Vanessa Schaeffer Manrique and Mattes Tempelmann). Elsewhere, locals are forcibly relocated and receive very little compensation. Deprived of their livelihoods, they become impoverished. Furthermore, the overall economic benefit to the mining countries is often much lower than initially expected, primarily due to the low level of processing done in these countries. In Peru, materials derived from mining account for 61 percent of all exports. By contrast, according to a study by Misereor and others, the mining sector contributed just 6.7 percent of state revenues in 2016. There was also a negative tax balance and just one percent of the population was directly employed in the sector. The profits are made by others.

The EU aims to make its mark

The European Union now wants to do things differently. The creation of strategic partnerships is intended to ensure that it will gain access to raw materials and simultaneously promote value creation in the mining country. Ursula von der Leyen emphasized this aspect with regard to the strong human rights and environmental standards enshrined in the CRMA. This is supposed to distinguish the EU as a trading partner compared to China. In recent decades, the latter has not only greatly expanded its own mining industry, but also invested heavily in mining in other world regions such as Latin America and Africa. Whether the EU’s approach is sufficient to establish it as a preferable trading partner remains to be seen.

Its efforts may be counteracted by the fact that the EU is simultaneously suing countries like Indonesia before the WTO because they are expanding their own processing industry and thus no longer wish to export their raw materials in unprocessed form. This may not be the best way of strengthening the trust of potential partner countries in the EU. The fact that the CRMA allows for significantly abbreviated approval processes for strategic projects without standards for participation of the potentially affected communities could further damage Europe’s credibility. Similarly, the rights of indigenous peoples, as set out in ILO Standard 169 (see also the article by Ingrid Hausinger), did not make it into the final negotiating text of the European Parliament until the last vote, despite pressure from the Green and Left factions. That is concerning, particularly in view of the fact that, according to the latest report by the International Renewable Energy Agency, about 54 percent of the deposits of minerals needed for the energy transition are located in the vicinity of indigenous territories and 80 percent of lithium and more than half of all nickel, copper and zinc deposits actually within indigenous territories. Human Rights Watch and numerous other organizations also sharply criticize the fact that ensuring compliance with human rights and environmental standards in this context is to be largely delegated to private certification initiatives (see also the interview with Matthias Baier).

A more economical use of resources is needed

Schwarzweißfoto einer brennenden Landschaft

The EU’s partnerships and agreements must thus be closely monitored. Local stakeholders should already be involved in their negotiation and implementation stages. But further tools are needed to minimize the impact of our resource consumption. As things stand, the rush for raw materials threatens human rights and the livelihoods of current and future generations.

A promising tool in this context is the Batteries Regulation the EU adopted this year, as it contains both measures for the recycling of materials used in batteries and human rights and environmental standards for their production. Many stakeholders who have been calling for more corporate responsibility for people and the environment for years also have great hopes for the EU’s supply chain law, the Corporate Sustainability Due Diligence Directive. The German version of this act already came into force this year (see also the text on supply chain laws). In a parallel development, many civil society organizations, particularly in the Global South, are fighting for an agreement on business and human rights on the United Nations level, some of them in cooperation with their governments. They want the EU to come to the table with a negotiating mandate. The agreement is to finally provide access to legal remedies for those affected (see also interview with Erika Mendes). The strengthening of human-rights and environmental institutions in the mining countries as well as fairer trade policies that open up a national scope to reduce the impact of the extraction of resources for our consumption are further important aims.

Protection for certain areas

Overall, however, it is crucial that we use natural resources more intelligently, because mining is – by definition – not sustainable. Any increase in mining tends to come with an increase in impact on the environment and on human rights. As the mining process progresses, the concentration of ores in the rock decreases. In the search for new deposits, the mining industry is encroaching further and further into protected areas and headwater and glacier regions. Not even the deep sea appears safe any longer. It is therefore important that certain regions, such as the unexplored deep sea, headwater regions and particularly biodiverse areas, be protected from mining activities and that we reduce our overall consumption of resources.

The goal of reducing primary raw material consumption forms part of the German government’s coalition agreement; not least, because it also makes sense from a climate-policy perspective. According to the Organisation for Economic Co-operation and Development (OECD), the mining and processing of the seven major metals (iron, aluminum, copper, zinc, lead, nickel and manganese) account for 7 percent of global greenhouse gas emissions (OECD Resource Outlook 2019). In this year’s summary report, the Intergovernmental Panel on Climate Change (IPCC) also stressed the importance of reducing our consumption of materials and energy. A stringent circular economy that actually respects the waste hierarchy that has been enshrined in law for many years and that prioritizes waste avoidance and long-term product use over recycling (see also the article by Johanna Sydow and Luisa Denter) could be a good starting point.

But it is also very important that we actually take the limits of our planet’s ecosystem into account and define guard rails in order to limit resource consumption to a level compatible with the protection of the environment and of human rights. In the area of mobility, for example, it would make sense to expand public transportation in such a manner that private transportation can be reduced and fewer vehicles are on the road (see also the article by Alejandro Gonzalez). Overall, this issue will put our commitment and creativity to the test!

Johanna Sydow heads the International Environmental Policy Division at the Heinrich Böll Foundation. Her fieldwork on mining in Ghana, Peru and Ecuador (2009-2013) turned her into an advocate for the reduction of raw materials consumption and for binding rules for companies. From 2014 to 2022, she was Senior Advisor for Resource Policy at Germanwatch.

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