Paris, 6 August 2024
- Joyce Raboca, Legal and Regulatory Analyst
- C. Michaels, Legal Advisor, Office of Legal Counsel
- Erica Westenberg, Director of Governance Programs, Natural Resource Governance Institute
- Susannah Fitzgerald, Governance Officer, Natural Resource Governance Institute
IEA Commentary
As governments look to transition away from fossil fuels and accelerate the deployment of clean energy, policy makers are dedicating more attention to securing supplies of critical minerals.
Materials such as copper, lithium, nickel, cobalt and rare earth elements are essential to components in many fast-growing clean energy technologies, such as wind turbines and electric vehicles. As demand for them grows, government-to-government partnerships focused on mineral supply are becoming an increasingly popular policy tool, helping establish frameworks of cooperation between producing and consuming countries. However, many of these arrangements are described in broad language without supporting details. By making partnerships more concrete and transparent, governments could send an important signal about how they will ensure that new mining projects are developed responsibly.
Strategic partnerships on critical minerals are often struck between the government of a major consumer market and that of a major critical mineral producing country – such as those between the European Union and the Democratic Republic of Congo and between the United Kingdom and Zambia. There have also been a growing number of partnership announcements between consuming countries, such as the agreement between the United States and Japan.
Thus far, these deals have typically been motivated by economic and national security concerns and ostensibly lay the groundwork for future collaboration or investment incentives. They are rarely binding, but often reference high-level intentions to collaborate on:
- Identifying projects to prioritise for financing.
- Supporting open, competitive markets.
- Building capacity and transferring knowledge through technical assistance programmes.
- Facilitating cooperation on research, development and innovation.
- Developing domestic processing capacity to ensure producing countries can add value to raw materials before they are exported.
Many of these partnership agreements also incorporate or reference a commitment to responsibly and sustainably manage supply chains. Delivering on this promise would require advancing the sustainable development ambitions of low- and middle-income producer countries and mitigating the risk of environmental, social and governance failures, which can cause harm and ultimately lead to supply disruptions. By prioritising transparency, incorporating criteria that require sustainable and responsible practices, and ensuring that affected communities and stakeholders are systematically consulted when negotiating and implementing these partnerships, countries can work together to strengthen secure critical mineral supply chains in a cooperative and responsible manner.
Enhanced transparency on the content and implementation of strategic partnerships can help build credibility
Government-to-government partnerships on critical minerals raise expectations of new investment, with an increase in funding for projects that embed higher environmental, social and governance standards and support producing countries’ development ambitions. Yet information on the content of partnership agreements, the projects they may support, and the feasibility of such plans is not always publicly disclosed, making it difficult for stakeholders to fully assess the potential benefits and costs.
Research from the Natural Resource Governance Institute found that in about two-thirds of partnerships on critical minerals, no information is disclosed beyond an initial press release. Meanwhile, the strategic partnerships identified by the IEA in its Critical Minerals Policy Tracker are mostly preliminary agreements or Memoranda of Understanding that lack details about follow-up steps and implementation.
More proactive disclosure on the objectives of strategic partnerships, the terms of the agreements and their implementation could help to build credibility among trading partners, industry actors, civil society and the public. This would also align with the global emphasis on improving transparency in the extractive sector, as highlighted in the Extractive Industries Transparency Initiative (EITI) Standard and in industry commitments, such as the one on contract transparency by members of the International Council on Mining and Metals (ICMM). The need for stakeholders to have sufficient transparency is also recognised in certain legislative frameworks, such as the EU Critical Raw Materials Act and the EU Global Gateway Strategy. However, policy makers will need to ensure this is carried forward at the implementation stage.
- Number of strategic partnerships announced by year and level of detail publicly available, 2020-2024 – Open
Partnerships should support mineral producing countries in pursuing their long-term sustainable development goals
Transparency is important, but on its own it is insufficient to guarantee that these partnerships deliver for all parties involved; content and implementation are also key.
Partnerships are an opportunity to address global imbalances in energy access and development opportunities. Consumer countries can support their partners by providing assistance on geological data management, prioritising environmental and social protections, and aiding in the development of supportive laws and regulations. And they should further consider how these partnerships can contribute to the broader ambitions of mineral producers beyond mining – including around infrastructure investment, economic diversification, and addressing domestic gaps around energy access and transitions.
Attention is increasing on ensuring that mineral-producing countries can also develop related industries such as refining and processing, rather than just exporting raw ore. This can provide additional quality jobs and generate further economic development. But integrating transparency and accountability is important here so that stakeholders can make informed decisions about different approaches. Civil society actors in Ghana have pushed for independent and publicly disclosed feasibility studies on value addition, while Congolese and Zambian civil society actors have established a forum to monitor and engage their governments on plans for a cross-border battery value chain.
More generally, adopting consultative processes can increase the likelihood that projects stemming from strategic partnerships obtain and maintain the social licence to operate, receiving ongoing acceptance or approval from the local community beyond what is required by legal or regulatory processes. With a seat at the table, local communities, Indigenous Peoples and civil society can play an accountability role in scrutinising whether mining projects meet relevant international standards, while also putting forward ideas on how to make these partnerships more meaningful for citizens.
Underpinning all of this is the pressing need to address the many environmental, social and governance risks associated with mining development – including water overuse and pollution, greenhouse gas emissions, biodiversity loss, human rights abuses, lack of community support, corruption, and the heightened risks faced by Indigenous Peoples, environmental defenders and women. If details about the content of strategic partnerships and the projects that follow were more publicly available, third parties would be able to effectively assess these issues. Additionally, if agreements incorporate criteria that require the adoption of sustainable and responsible practices, they could actively contribute to reducing these risks.
These partnerships should also require companies and financing institutions to demonstrate how they are adopting due diligence practices, ensuring that the projects they support do not lead to harm. A lack of clarity over responsibilities or weak assessment criteria could lead to this important work falling through the gaps.
Improving strategic partnerships can make them a more useful tool
As high-level announcements translate into concrete projects and money starts to flow, stakeholders will be better placed to assess how useful these partnerships will be at meeting the needs of consumers and producers alike. Yet with the following improvements, partnerships stand a better chance of aligning and balancing concerns about energy security with the need to promote responsible development and people-centred transitions.
Enhanced transparency: Disclosing information on roadmaps for strategic partnerships and the projects they might support can build domestic credibility and bolster engagement with civil society and other stakeholders.
Greater attention to the needs of mineral producing countries: Emerging and developing economies may require support in meeting sustainable development goals. Strategic partnerships can facilitate new investments in the mineral sector that meet the policy objectives of producing countries while maintaining robust regulatory protections.
Incentives for responsible mining practices: Agreements that incorporate commitments to robust due diligence requirements and environmental, social and governance criteria can incentivise follow-on projects that implement responsible practices. This could also lay the groundwork for financial institutions to link financing decisions to meeting specified criteria.
Consultation with relevant stakeholders: Offering rightsholders and civil society a seat at the table and the opportunity to shape the priorities and implementation of strategic partnerships would be a key step towards obtaining and maintaining a social licence to operate for follow-on projects.
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Supported by our respective members, this work is part of an ongoing collaboration between the IEA and NRGI. Both organisations have recently entered into a Memorandum of Understanding to enhance cooperation on governance-related topics, including on critical minerals, methane emissions from fossil fuels, and people-centred transitions.
Source – IEA