No Net Zero Without Better Governance of Transition Minerals

If countries that mine critical minerals are to add value through processing, they and their partners must address some key bottlenecks:

1. energy supply for processing
2. infrastructure for transporting processed materials
3. technology/skills accessible to local firms and workers

Economically, producing countries must solve the challenge of addressing bottlenecks in a way that will reduce processing costs, and make their processing operations competitive worldwide. If the processing cost is high then the export of processed materials will be doubly expensive and so lower-income producing countries wouldn’t be able to compete with more advanced processors like China.

One way to address this is to develop a strategic investment plan. Part of the investment incentives package should address the cost of processing. Countries should also integrate domestic processing into a broader national energy transition plan. Officials can use these energy transition plans to mobilize global financing. We have seen countries like S. Africa and recently Senegal developing just energy transition partnerships with international partners as mechanisms to attract financing. Local processing could be part of future mining-oriented JETPs between countries and other public and private sector actors.

Governance is critically important to achieving net zero. Time is of the essence, but the delays in the lead time from exploration to production of minerals for green tech are not only due to technical challenges, but also to governance challenges like corruption as well as lengthy and unclear legal frameworks governing licensing processes.

Unless we make the process a win for the communities and the environment, we cannot dream of having a win for the energy transition.

The above are extracts from comments made by Silas Olan'g at ODI's October 2023 event "The Critical Minerals Race to Net Zero."