The world economy is committed to moving from fossil to clean energies and to drastically reduce greenhouse gas emission in all activities. But this transition won’t be possible if we do not change the way we extract critical minerals such as copper, lithium and cobalt. Especially as the transition requires massive amounts of them.
To put it in numbers, “a single electric car battery weighing 1,000 pounds requires extracting and processing some 500,000 pounds of materials”, according to the Manhattan Institute. Basically, these minerals are the new oil, since our economy will increasingly depend on them.
The bad news is that they are far scarcer and concentrated geographically than oil, and on top of this, they are not clean. For instance, producing one tonne of lithium uses 2.2 million litres of water, a huge amount when two thirds of the world face problems of water scarcity. Also, mines are subject to potential disasters if not managed properly. Some 350 people died three years ago in Brumadhino when a dam collapsed in a Brazilian iron ore mine, unleashing 12m cubic metres of mining waste.
Part of a series on economic democracy. Read the series introduction.
The good news is, the growing local resistance to extraction by questioning and limiting the activity might bring pressures for change in the very problematic technologies of governance and extraction that have dominated the activities for decades. These include the principle of free entry, grinding rocks in large mills and the use of dangerous chemicals and, supply chain policies that disqualify local businesses.
My research suggests that in Chile, the world’s largest and second-largest producer of copper and lithium respectively, 50% of mining activities are disputed by local populations. The communities of Coyo and Camar, in the Atacama Desert, recently rejected projects to extract 160,000 tonnes of lithium, which were worth US$121 million and came with the promises of benefit sharing, due to lack of a due process of civil society consultation.
In Argentina in 2022, after the government of Salta reported the discovery of a gold and copper deposit in a mountainous sector of the Alto Valle Calchaquí, the local community came together in an alliance that united representatives from different political parties to declare the town a “Non-Toxic and Environmentally Sustainable Municipality”. A law was passed that “prohibits open-pit metalliferous mining and the use of water for these activities”.
In Peru, a country where 21% of the territory is dedicated to mineral extraction, around 200 conflicts contesting mining activities are reported every year, 50% of all new projects are currently affected by socio-environmental conflicts, and around 30% of them are blocked due to the conflicts.
Socio-environmental conflicts are not new. But the scale, visibility and impact they are having are. Existing estimates indicate that disputes with local communities have currently slowed or halted around US$25 billion in mining projects. For major projects of between US$3 and 5 billion, companies claim that difficulties associated with conflicts with local communities can mean a weekly loss of up to US$20 million. In Chile, between 1998 and 2022, around US$120 billions of investments – 80% of all investments applied to the environmental authority – were contested by civil society, and 21% ended up in the justice system. According to the Observatorio de la Productividad in this country around US$25 billion of investments in the sector were delayed or stopped by social conflicts. In Argentina, due to resistance from civil society, seven provinces have prohibited or seriously limited mining.
An opportunity for a deep institutional change?
The economic impacts of these disputes are creating significant concerns among governments and companies which see their development and energy transition policies and investments seriously challenged. But they are also creating a unique opportunity to rethink the entire governance frameworks for the management of natural resources in resource rich countries and bring democratic practices by involving citizens in economic decisions which were up to now out of reach for society, such as those related to large investment projects. Without these transformations regarding the way decisions are made, indeed, the energy transition will certainly be unjust, environmentally unsustainable and likely also unachievable.
There have been several attempts to involve citizens in the evaluation of large mining and energy projects. However, typically designed from above, heavily shaped by corporate interests and approaching participation mostly as a bureaucratic procedure, they have shown disappointing results. They have rarely provided answers to what seems to be the most fundamental demand for the right to decide over how common and elemental resources such as water and biodiversity are managed.
To respond to this demand, and make sure governance frameworks are designed to make the transition at the same time just and possible, new formal policy institutions at the national and local level must be created, with the explicit objective to increase citizen involvement in decision making and promote changes in business behaviors and technological practices.
A key problem with existing practices of citizen participation is that engagement typically happens only at the end, in association with the stage of environmental assessment, when all decisions about technologies and practices have been taken. This limits the extent to which citizens’ concerns can actually be responded to. Another related problem is that efforts are generally limited to provide accountability, transparency and reach consensus, and at best to agree on some form of redistribution of costs and benefits. In a sector with massive environmental problems, however, the goal should be to promote transformations in technological and productive practices and firm´s behaviours. Citizens should be involved as decision makers, co-producing the investment policies along with the other stakeholders of the policies and not merely in a watchdog role. Importantly, decisions must be binding, and the possibility of a project not going ahead at all should exist.
The most important challenge, however, is implementation. We have little experience of implementing new forms of citizen participation that aims for transformations. We also have little to no experience in involving a full diversity of stakeholders in decision making. We need to have a deeper understanding on possible engagement methods for policymaking related to investment projects, to decide how to deal with the power asymmetries between communities, governments and companies, and establish how to develop an agenda of work when participants have very different knowledge, ideas about the future, visions, and values.
The challenge is massive. But similar challenges have been addressed in the past to adapt the state to new urgencies. In the 1950s and 60s Latin American countries put in place sophisticated state apparatus to implement policies aimed at reducing imports, leading to significant growth and employment creation. The case can be made equally strongly for the institutions that promoted the leap in South Korea and Taiwan in the 1970s and 80s. In all those cases, the capabilities to do so were complex and were built along the way.
The scale of the challenge is now even larger. It is important for local governments and populations, for national governments, as well as global agendas of transition. And it concerns humanity. But without experimentation with new ways of designing and implementing investment policies, more democratic and just, the task might not be possible. The green transition can be the great opportunity for making each mining project a local development project but it requires new forms of citizen participation.
