Metals are a core component of green technology, yet the gathering and refining of metals is far from being environmentally friendly due to air and water pollution, as well as damage to natural habitats. It’s an ongoing quandary for the metals industry and the world.
How Governments Push Back
Governments generally regulate mining to limit its impact on the environment. Certain countries, such as El Salvador and China, have begun to expand regulations in response to environmental factors. China increased its regulation of the metal industry to reduce air pollution, which has led to the country’s ongoing problem with smog. New regulations resulted in the closing of metal refineries, plants and mines.
El Salvador chose to ban all faucets of metal production last month in lieu of revised regulations. The unprecedented move resulted from the country’s limited supply of available clean water, which new mines could potentially pollute.
Decisions such as China’s and El Salvador’s emphasize the growing importance of the environment, renewable energy and environmentally-friendly practices to a government and its constituents.
How Metal Is Giving Back
- Metal is essential for green technology. Companies focused on green technology rely on metals to make products like wind turbines, solar panels and electric vehicles.
- Raw metals, such as copper, aluminum and especially lithium have grown in demand due to their use in environmentally-friendly products. All three of these metals are used by manufacturers of electric cars.
- Metal alloys assist in the production of green products, as well as extending the longevity of items. Since each alloy has unique physical and mechanical properties, they can be used in different ways.
- Aluminum alloy is used for alloy wheels because it’s lightweight and resistant to corrosion, which reduces gas mileage for non-electric cars and extends the lifetime of the wheel for both electric and non-electric cars.
- Metal is a crucial component of green products and initiatives, which complicates its position in a world that’s becoming more conscious of the environment.
How Science Is Fighting Back
Scientists recognize the metal industry’s unique situation and its invaluable role in green technology. Many have begun research into ways to reduce the industry’s sizeable carbon footprint and make it more environmentally friendly.
One method, developed by an MIT researchers, produces metals and other alloys without carbon emissions. Another method creates green technology for cooling products, which release gases that contribute to global warming, through a new type of alloy. A third method makes more durable and longer lasting alloys for large-scale building and engineering projects.
Another series of methods or tactics focus on sustainability practices, which many companies in the metal industry have adopted.
In the U.S., these practices include government programs, such as the Lean and Clean Advantage, which analyzes and reviews a company’s processes and resulting waste and provides alternatives for reducing waste.
The metal industry occupies a unique position in today’s greener world. It’s necessary in a variety of products, including green technology, and it’s often considered the alternative to throwaway, plastic products, such as straws. Its production and refinement contributes to global warming and pollution.
How the industry responds to alternatives and initiatives by scientists and governments will directly impact its future with the governments that control and grant access to resources the industry needs to thrive.
So far, the metal industry is conducive to being more environmentally-conscious. Aside from participating in government initiatives, the industry has begun to publish magazines, host trade shows and support conferences that focus on environmentally-friendly practices.
The biggest mining super-cycle in recent memory, beginning in the early 2000s and fueled by unprecedented emerging market growth, is now history: Head-counts have been slashed, fleets parked and exploration budgets flattened, with profits falling by 71 percent to $20 billion by 2013. This year, with the plunge of copper – and most base metals – the bottom fell out completely.
In the background, a different type of erosion has long since begun: Wholesale sustainability cutbacks – the timing of which could hardly be worse. A 2014 Harvard study crystallized the urgency, reporting projects worth between $3 billion and $5 billion posting $20 million losses from weekly delays. Embedded ever-deeper in frontier nations amid resource depletion, moreover, the true price for community conflicts is increasingly impossible to calculate – not least after production resumes at major operations.
Recognized as crucial to risk, reputation, access to capital and, increasingly, financial performance, sustainability is no stranger to the mainstream – with 72 percent of the S&P 500 and trillions of “responsibly-managed” assets in agreement. In mining, one of the world’s most balance-sheet driven, upstream sectors, meanwhile, the cost-benefit is often far less clear – yielding a unique opening for impact investors and others attuned to shared value in a circular economy.
On a planet hosting more than 2,000 mechanized mines, “writ-large” potential lies in the balance, according to people like Gavin Power, deputy director of the United Nations Global Compact, a partner to the U.N. Principles for Responsible Investment (UNPRI) which represents more than $34 trillion in assets under management.
“The industry has an historic opportunity to be the solution to global problems,” he said. “It covers labor, the environment, anti-corruption; it’s all-encompassing” – as are the UNPRI’s 1,250 signatories which represent 20 percent of global capital markets.
With its massive gold and platinum reserves – and more than 90 major protests over basic services through 2014 – South Africa provides an ecosystem of case studies. Top miner Anglo American, for one, has transformed operations wastewater into potable water for 80,000 villagers east of Johannesburg in a reverse-osmosis project now doubling in size – and being replicated nearby by giants BHP Billiton and Glencore. Other local Anglo initiatives address poverty through business grants in addition to HIV/AIDS prevention and treatment.
Participation by non-traditional investors in such endeavors is emblematic of a true triple bottom line: ensuring lasting positive impacts and maintenance of a social license to operate – ahead of a resurgence in commodities growth. Despite a weak global economy and a stockpiling of metals on the Chinese mainland, prospects for mining have seldom been better for long-term investors – and economic inclusiveness at its best.
Social impact entrepreneurs, whose cross-industry activities advance social performance before financial returns, can make a decisive difference. “Your company may be the first into a market where structures are weak, talent scarce and customers suspicious – while your trial-and-error may develop health care providers that can touch tens of millions of lives,” Matt Bannick, managing partner of Omidyar Network, wrote in the Stanford Social Innovation Review.
Corporate social responsibility (CSR) in mineral extraction itself is relatively new – even newer is the risk mitigation that drives institutional investment decisions, particularly among larger European banks, insurers and pension funds. Yet despite its dire need, systematic, proactive financial engagement remains elusive – even as successful examples abound worldwide.
As a nation, Chile, the world’s leading copper producer, is an innovator: In 2011, for instance, Santiago’s Mining Ministry joined 250 Chilean businesses to transforming them into world-class suppliers. Through $54 billion in investment, the World Bank now forecasts the 709,000 jobs servicing and supplying the mining industry to grow “substantially” – generating across-the-board prosperity any financier could wish for.
Owing to its vast mining industry, Chile is further energizing extractive firms across the continent – and Africa, Australia and beyond – to economize through renewable power. Here, too, opportunities for synergy are limitless – especially given the recent announcement of a global investor coalition committing $600 billion to carbon tracking and reduction by December.
One of the biggest challenges to aligning mining with the impact investing community in institutional terms is purely practical: In recent years, sustainability reporting has made impressive progress, yet beyond voluntary frameworks, categorically concrete and enforceable benchmarks remain elusive – despite extensive global efforts.
But the greatest gap is a socio-cultural one. Impact investors and miners inhabit separate worlds: One is often high-profile and cause-focused with deep commitments to change; miners, on the other hand, are introverted, hardworking and usually stubborn – their data-driven calculations, often bound by convention and legacy, lie almost exclusively below ground.
Yet both are united where it matters most – by a relentless, can-do attitude. And while standards and metrics mature, possibilities stand to resonate amid undeniably cyclical opportunities – and prospects for investment-driven change by the mining sector continues to swell.
Source: Triple Pundit
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