Supply chain considerations in today’s globalized economy have expanded beyond minimizing costs. As Duncan Wood, Vice President for Strategy and New Initiatives and Senior Advisor to the Mexico Institute at the Wilson Center, noted at a recent panel hosted by the Environmental Change & Security Program as part of the Transatlantic Climate Bridge conference, issues ranging from environmental, social, and corporate governance (ESG) to national security and geopolitics, have transformed critical mineral supply chains into something that is now “inherently political.”

The panel brought together experts from Latin America, North America, and Europe gathered to discuss the challenges, risks, and opportunities in responding to the projected demand for critical minerals from both sides of the Atlantic. At the center of the conversation was the question of which strategies might help nations navigate the powerful currents of politicization in the supply chain.

Western countries are “simply not present”

 The dominance of China in the critical mineral supply chain globally was highlighted by panelists as a key challenge facing transatlantic bridge countries. In addition to potential national security and geopolitical risks posed for these nations, the lax environmental and social standards of Chinese operations is also a matter of concern. Chris Heron, the Communication and Public Affairs Director at Eurometaux, the European metals association, proposed that Western actors must considerably expand their presence in the global mining sector in order to avoid overdependence on China (and Russia) as they seek to generate clean energy.

Greater presence brings greater risks, however. In contrast to Europe’s risk-averse approach, the Chinese have been able to secure a dominant presence in the critical mineral supply chain in Latin America. Patricia Vásquez, a Global Fellow at the Wilson Center and a Research Associate at the Centre on Conflict, said China has secured a more favorable position because they “have been willing to take some of those political and economic risks.” While transatlantic cooperation can provide a new model of partnership to address ESG concerns, she stated that investors from the United States and Europe need to demonstrate a greater willingness to take risks.

Vásquez highlighted two key risks in Latin America. First, many Latin American countries have grappled with persistent periods of political and economic vulnerability throughout their history. A new Chilean constitution—which is currently being drafted and will be voted on by Chileans—had promised to transform the way strategic resources like lithium are developed. Two months ago, however, that proposal was rejected by the constitutional assembly after facing intense opposition from the mining industry.

The second risk is that development projects face increasing local opposition. Mark Myers, a principal at Myenergies and former director of the United States Geological Survey (USGS), noted that local opposition has stymied mining projects that already have completed their front-end work. This delay in approval incurs huge costs both to companies and governments. 

Invest in data management and human capital

Vásquez observed that better access to information on the real and potential impacts of development projects will empower governments and local communities to make better decisions surrounding the risks that accompany these issues. Myers added that policymakers need to invest more in obtaining baseline environmental information, as well as social and economic perspectives. Obtaining such information will ensure that these factors are integrated early on in the planning process for projects.

Governments can also play a useful role. With sufficient funding and capacity, agencies like the USGS can help by conducting comprehensive assessments of a country’s resources to better inform project developments. New technologies such as remote sensing and autonomous vehicles, could bring about what Myers called a “whole paradigm shift” in how environments can be modeled and monitored—and ultimately, better understood.

 Myers said that making such information open source and publicly available will increase transparency. He added that access to datasets also will help to attract new partnerships, while also providing a crucial element in building public trust. 

Vasquez concurred with this assessment. She said that in many contexts, local opposition can be attributed to a lack of information. Greater disclosure can help mining companies overcome the industry’s “baggage of negative environmental and social footprints in the region”—and would go a long way in addressing local opposition concerns.

Wood noted that green energy mining projects are also facing an imminent “human capital crunch.” He said that the lack of graduates entering the mining, geology, and related Science, Technology, Engineering, and Math (STEM) fields is creating a huge deficit of technically qualified people to regulate the industry.

Myers agreed, adding that more resources should be invested into developing a technical workforce that can meet the challenges of the growing industry.

Opportunities in recycling and the private sector

Transatlantic partnerships should also explore ways to secure their critical minerals supply beyond the mining sector. Specifically, the European Union could offer its expertise in recycling to help reduce reliance on primary exports from China, said Heron. With the capacity to recycle 25 percent of the world’s metals and recover 20 different types of critical minerals from complex products, Europe could develop into a recycling hub for the region. 

Heron said that large European companies like Aurubis are already investing in opening new recycling facilities in the United States, demonstrating an increasing interest in using recycling to build “strategic autonomy” in the sector. And Wood added that as huge amounts of minerals become available for recycling in the next few decades, governments need to tap on this window of opportunity to establish all the necessary infrastructure and protocols.

 Vásquez cited private sector collaboration with Chinese companies as another avenue to improve the mining sector’s ESG standards, while Myers observed that this sort of partnership might circumvent the obstacles to government-level collaboration, including high geopolitical tensions and divergent national policies and goals between the Chinese state and Western democracies.

Vásquez pointed to successful private sector partnerships that are already a reality in Argentina, adding that joint ventures between Western and Chinese companies are the driving force behind improvements in the sector’s ESG standards. With the increased politicization of critical mineral supply chains, such partnerships might also provide the necessary impetus for progress on the political front.

Myers observed that as we find ourselves amidst an “energy paradigm shift,” all actors must keep an open mind about emerging approaches, strategies, and technologies. 

But Lauren Risi, moderator of the panel and Program Director for the Wilson Center’s Environmental Change and Security Program, cautioned that minerals extraction remains a “dirty business” that can have an “outsized impact on marginalized communities around the world.” While new transatlantic partnerships offer the promise of a more sustainable and socially just model of operations in the mining sector, this can only be achieved when the experiences and concerns of marginalized communities are not understated or ignored.