Critical Energy Transition Minerals to Accelerate Progress Towards the SDGs

Critical energy transition minerals are essential for low-carbon technologies, and are thus crucial for achieving the climate ambitions outlined in the Paris Agreement and the Sustainable Development Goals (SDGs). 

The demand for critical energy transition minerals is expected to rise significantly, posing both opportunities and challenges for sustainable development, particularly in resource-rich countries.

This side-event at the meeting of the United Nations High-Level Political Forum on Sustainable Development examined the different regional perspectives, as well as the economic and development implications of the extraction, processing and industrialization of these minerals. Participants discussed how these critical minerals can drive economic diversification, value addition and sustainable development, while mitigating socioenvironmental conflicts and ensuring fair benefit-sharing. The event also highlighted the role of United Nations initiatives, such as the Working Group on Transforming the Extractive Industries for Sustainable Development and the Panel on Critical Energy Transition Minerals, showcasing efforts to support just transitions and enhance global governance.

Remarks by NRGI director for governance programs Erica Westenberg

The Natural Resource Governance Institute has been honored to participate in the Secretary-General’s Panel on Critical Energy Transition Minerals and we appreciate the opportunity to discuss these important issues.

As other speakers have noted, there are strong linkages between transition minerals and the five Sustainable Development Goals (SDGs) of which the High-Level Political Forum has been conducting in-depth review over the past week. Unpacking just a few of these linkages can highlight some of the key priorities that are emerging from the panel's work and beyond.

On SDG 1, on poverty reduction, it's notable that the terms of reference for the panel tasked the body with ensuring that developing producer countries benefit most—that's how it’s worded— from their mineral resources. In our view, the goal of benefiting most should be viewed in a holistic way. Part of benefiting most means not suffering environmental, social and cultural harms as a result of mining activities, including by protecting and respecting Indigenous peoples’ rights to self-determination and to free, prior and informed consent.

Another part of benefiting most should be that stakeholders in developing producer countries enjoy reliable and affordable renewable energy access domestically themselves, not just producing inputs so that other parts of the world can have clean energy.

And at its core, benefiting most should mean developing producer countries get a maximally good deal economically for their minerals, which, if governed well, can then help reduce poverty and ensure sustainable development. In the panel discussions we’ve been calling this a principle of economic equity.

And we’ve proposed several concrete actions that we think would align with the principle of economic equity. For example, the current IMF guidance on what's considered a reasonably achievable effective tax rate for mining countries is a decade old, and it was produced based on an assessment of fiscal regimes that existed even further back in history. So there’s a real risk that previous imbalances of power and inequity have been built into this baseline.

Now we have a chance to learn from mining history and call for a new vision of partnership between governments and companies that can define a more equitable future. Governments and companies can also avoid signing up to tax holidays and withholding tax relief—particularly risky types of tax incentives. Development finance institutions and donors can create a fund for tax authorities in developing producer countries to ensure that they have the resources, the skills, the databases they need to effectively measure and collect the revenues that they're owed.

Value addition is another key action area that could advance the principle of economic equity. We’ve proposed that development finance institutions and donors should provide concessional financing, including to governments, to support value addition facilities and to address infrastructure bottlenecks. Mining companies could support independent, publicly disclosed value addition feasibility studies. This is something that, for example, civil society in Ghana has really been pushing for.

In general, we hope that the panel can do even more to engage civil society in developing producer countries and get their inputs on what sorts of principles and reforms are really needed to address challenges on the ground. Governments and mining companies should also explore whether and how regional coordination of value addition efforts can help overcome some individual country constraints, and it’s been great to hear from the various executive secretaries today about the regional efforts that are already underway.

A key component of SDG 16 on justice and strong institutions is addressing corruption, and in the mining sector we know that corruption diverts public money towards private hands. The executive secretary mentioned illicit financial flows and the challenges that they pose. We know that corruption jeopardizes crucial environmental and social safeguards that put people, particularly youth, women and Indigenous peoples—and the environment—at risk. So we've proposed that the panel should pursue a cross-cutting principle on tackling mining-sector corruption and that it should be driven by actions for increasing transparency and screening; preventing undue influence and conflicts of interest; strengthening accountability measures; reducing the role of high-risk actors in the sector; and supporting downstream supply chain actors and investors to integrate checks of anticorruption practices into responsible sourcing and due diligence systems.

And last, the linkage between transition mineral principles and SDG 13 on climate change are many. We’ve talked about the very direct role that transition minerals play as inputs into wind and solar technologies and electric vehicle batteries, but there are also more cross-cutting lenses that link transition minerals to broader climate issues of planetary boundaries and consumption levels.

A letter addressed to the panel from over 200 civil society organizations advocates for a principle to reduce demand equitably, calling on governments, especially in developed countries, to reduce overconsumption of transition minerals, including in the transport sector, and enable equitable, efficient and sufficient energy for all. The letter calls for responsible use practices such as increased circularity, enabling the highest and best use of materials, and requiring appropriate recycling. And it calls for governments in developed countries to ensure their policies do not lead to industrial waste from processing facilities and outdated technologies being discarded in developing countries.