This research was authored by S&P Global Sustainable1.
Published: September 17, 2024
Analysis by S&P Global Sustainable1 finds that 71% of all transition mineral mines are in ecosystems that are significant for the preservation of biodiversity and the provision of ecosystem services that benefit society on a local and global scale.
Lithium and graphite mines pose the greatest risk to ecosystems globally despite comprising a small share of all transition mineral mines.
Few mining companies have robust practices related to reducing the impact of mining and mining waste management on biodiversity.
Building out the infrastructure and technologies needed for the low-carbon energy transition will require a substantial increase in the production of critical minerals and metals such as copper, nickel, zinc and lithium.
Minerals play a key role in the low-carbon transition as they are needed for many different technologies including electric vehicles and battery storage, clean hydrogen, geothermal, wind, solar and electricity networks. Yet many mineral deposits are in areas that are also critical to preserving biodiversity and providing the ecosystem services underpinning the global economy.
Since many companies around the world have a significant dependency on nature across their direct operations, this presents a complicated problem: How does the world attain the mineral resources needed to enable the energy transition while managing the potential negative impacts of mines on biodiversity and ecosystem services? Understanding the risk that transition mineral mines pose to ecosystems can help inform policymakers, companies, investors and the public about options for balancing climate- and nature-related priorities.
Nature and the energy transition will be in focus at two upcoming international gatherings in fall 2024: the UN's Biodiversity Conference (COP16) in Cali, Colombia, and the UN's Climate Change conference in Baku, Azerbaijan. For example, at COP16 countries are expected to provide updates on their progress toward preparing targets and updating strategies in line with the goals of the 2022 Kunming-Montreal Global Biodiversity Framework, which aims to halt and reverse nature loss by 2030.
Another factor driving greater attention to this topic is the Taskforce on Nature-related Financial Disclosures, which in September 2023 published its final recommendations for nature-related risk management and disclosure by companies and financial institutions.
Global biodiversity is in rapid decline due to climate change and human activities such as clearing land for agriculture and mining.
A new analysis from S&P Global Sustainable1 finds that 71% of the 5,282 operational and under-development mines and exploration sites in this analysis that are for extracting minerals needed for the low-carbon energy transition (transition mineral mines) are in areas that are needed to preserve biodiversity and that benefit society on a local and global scale. Those 3,752 transition mineral mines are in ecosystems that are valued at 0.1 or above on the S&P Global Sustainable1 ecosystem significance index (see key definition and terms). The average ecosystem significance index of transition mineral mines globally is 0.38.
The ecosystem significance index reflects the relative environmental significance of a specific area in terms of preserving biodiversity and nature's contribution to people via ecosystem services on a local and global scale. The ecosystem significance index is expressed as a value ranging from 0 to 1, with values of 0.1 or greater considered significant in this analysis.
This analysis builds on a 2022 report by S&P Global Sustainable1 that found transition mineral mines overlap with areas that are key to protecting biodiversity in 65 countries. The analysis provided in this updated report builds on that research using S&P Global Sustainable1's latest Nature & Biodiversity Risk dataset, which offers additional insights into the scope of risks and impacts that mines pose to biodiversity and ecosystem services more broadly. S&P Global Sustainable1 also finds that lithium and graphite mines pose the greatest risk to ecosystems globally even though they make up a relatively small share of total transition mineral mines.
Transition mineral mines that pose a threat to significant ecosystems — those located in areas with an ecosystem significance index of 0.1 or greater — can be found in many parts of the world, with the most mines located in Canada (1,112), followed by Australia (373), the US (323), China (319) and Peru (149).
For many countries, a majority of transition mineral mines are in significant ecosystems. Countries with the highest concentration of transition mineral mines in significant ecosystems are found in Africa, South America, Europe, Asia-Pacific and Oceania.
The S&P Global Sustainable1 analysis in the rest of this report focuses on transition mineral mines that are in significant ecosystems, defined here as those with an ecosystem significance index of 0.1 or greater.
Mining has the potential to degrade habitats and harm biodiversity directly and indirectly, not only at a mining site itself but also through road and railway development in nearby areas. Building this infrastructure can increase access to remote, biologically diverse areas and lead to significantly higher human populations as well as hunting and other business activities that otherwise might not have occurred.
S&P Global Sustainable1 has several metrics for quantifying the magnitude of environmental damage an asset or business activity is causing in a particular location. They include the headline metric "ecosystem footprint" and a component metric called "ecosystem integrity footprint."
Ecosystem footprint is a composite metric that combines the physical size of the asset’s local footprint (land use), the extent of land degradation the asset creates (ecosystem integrity footprint), and the significance of local ecosystems in that area in terms of biodiversity and provision of ecosystem services to humans. It is measured in hectares-equivalent of highest significant area (ha HSA eq).
Transition mineral mines in China have the highest total ecosystem footprint of nearly 25,000 ha HSA eq, which is 3.5 times greater than those of Canada. Other countries with high total ecosystem footprints for transition mineral mines include Peru, Zambia and the Philippines.
Ecosystem integrity footprint is included in the ecosystem footprint formula but also provides insights on a stand-alone basis as it captures the extent to which ecosystem integrity is being degraded by an asset or activity. Ecosystem integrity footprint expresses how much an asset or activity is impacting the local ecosystem, comparing the current state of the land used for an asset or activity to how the land would be if it were intact and in a natural, pristine state. The larger the ecosystem integrity footprint, the greater the damage to the ecosystem.
Transition mineral mines in Ecuador, Guatemala and the Philippines have the highest average ecosystem significance index and also have relatively larger ecosystem footprints on average
Although lithium and graphite mines make up a small share of all transition mineral mines, they pose an outsize risk to ecosystems globally.
Lithium is used for a variety of clean energy technologies, primarily in electric vehicle batteries and stationary battery storage systems. Demand for lithium is largely driven by the transition from internal combustion engines to electric vehicles.
Yet the process for mining lithium from hard rock or brine uses large amounts of land and significant amounts of water and has potential for groundwater pollution and other environmental impacts, Lithium mines have the largest average ecosystem integrity footprint globally of all minerals in this analysis.
Countries that have the most lithium mines in significant ecosystems are Canada, the US, Australia and China.
Graphite is the energy transition-related mineral with the highest average ecosystem significance index globally. Graphite is used for making anodes for manufacturing steel and is the largest component in lithium-ion electric vehicle batteries. Graphite is a crystalline form of carbon and can be mined from open pits or underground mines, which can impact ecosystem integrity. Graphite has an additional connection to the energy transition in that it can be produced synthetically from fossil fuels, including oil byproducts such as calcined petroleum coke and coal tar pitch. Those byproducts must be heated to at least 3,000 degrees C in furnaces that are often powered by coal, according to S&P Global Market Intelligence.
The 196 graphite mines reviewed for this report have an average ecosystem significance index of 0.42, which is higher than the global average for all transition mineral mines. Canada has the most graphite mines in significant ecosystems, followed by Tanzania, Sri Lanka and Australia.
Another notable transition mineral is copper, which accounts for the majority of transition metal mines that S&P Global Sustainable1 reviewed. Copper is a ubiquitous metal used in everyday life that is also fundamental to low-carbon technologies and infrastructure including wind and solar generation, bioenergy, electric vehicles and battery storage, and electricity networks.
Copper is typically extracted via open pit mining, which can cause many of the environmental impacts common to mining processes. The copper mines reviewed in this research collectively have the third-highest average ecosystem integrity footprint but are in areas with a lower average ecosystem significance index (0.28) compared to other transition minerals.
Data from the 2023 S&P Global Corporate Sustainability Assessment (CSA) shows that few companies follow key sustainability practices related to the management of mining facilities and waste storage sites, the disclosures of future risks, and local stakeholder engagement.
One direct risk mines pose to biodiversity comes from a mining waste byproduct called tailings. Tailings are a liquid slurry of pulverized rock, water and leftover extraction chemicals that remain on-site and must be stored after the target minerals are separated from the ore. Tailings are stored in dams that, if they fail, can pollute downstream waters and wreak havoc on ecosystems. Major tailings dam failures have caused fatalities and catastrophic damage to local communities, economies and nature.
Only a small share of companies in the metals and mining, aluminum, steel, and coal and consumable fuels industries disclose how many tailings storage sites they have. Even fewer publish details about their tailings' risk potential.
Similarly, little progress has been made on aspects of tailings management that are relevant to avoiding biodiversity impacts and maintaining dams into the future, such as decommissioning procedures. Better tailings management could have a twofold benefit: lessening the impact of tailings dams on the local ecosystem and lowering the chance of failure, which can cost companies billions of dollars in cleanup costs and serious reputational damage in addition to harm to people and biodiversity.
Less than one-quarter of companies in the metals and mining, aluminum, steel, and coal and consumable fuels industries have a tailings management program. A slightly larger percentage (28%) have their tailings facilities management audited by an independent entity. As for the measures included in their tailings programs, 17% have procedures for decommissioning and closing tailings facilities while 25% include measures to minimize impacts and risks through responsible site selection, design and construction for the tailings. Only 19%of companies implement the voluntary 2020 Global Industry Standard on Tailings Management, created by the International Council on Mining and Metals, the United Nations Environment Programme, and the Principles for Responsible Investment.
The trend is similar when it comes to how many companies engage with and apply feedback from local communities and Indigenous peoples on the potential biodiversity impacts of mining projects. These stakeholders are likely to be directly impacted by ecosystem degradation and are often the most familiar with nearby ecosystems.
Many Indigenous cultures treat nature with great respect and have strong conservation practices that have helped preserve biodiversity. For example, a 2020 study found that at least 36% of all intact forest landscapes are within Indigenous peoples’ lands and that the rate of loss of these landscapes had been "considerably lower" on Indigenous peoples’ lands compared to other lands. Practices such as seeking local support and applying the principles of free, prior and informed consent can also reduce the likelihood of permitting delays tied to litigation and protests, as has been seen in a number of countries.
Data from the 2023 S&P Global CSA shows that about one-third of companies in the metals and mining, aluminum, steel, coal and consumable fuels, oil and gas, paper and forest products, and oil and gas pipelines industries have processes for identifying affected communities and implementing a stakeholder engagement plan. About 29% of companies provide grievance mechanisms for affected communities. However, it remains uncommon for companies to follow the principle of free, prior and informed consent — a key aspect of respecting the rights of Indigenous peoples and local communities. Only 17% of companies in our analysis follow these principles.
One country where pushback from local communities has contributed to delaying new projects is Ecuador, which is also where transition mineral mines have the highest overall average ecosystem significance index (0.85) of all countries globally.
Ecuador is home to a number of ecosystems known for their rich biodiversity, including the Andes mountains, tropical rainforests of the Amazon, and the Galapagos Islands. The Andes, which run North to South down the center of Ecuador, take up a quarter of the country's land.
Ecuador's current mining landscape is riddled with sociopolitical challenges including protests from local communities and Indigenous peoples, illegal mining operations, and a complicated legal and regulatory system. Moreover, the country has a backlog of mining permit requests, given that its office in charge of processing mining concession (permitting) requests has been closed since 2018.
Ecuador is also the only country globally to recognize the rights of nature in its constitution. These rights were first applied by courts in Ecuador in 2021 in a lawsuit brought by local communities seeking to prohibit mining in the Los Cedros Protected Forest. Since that ruling, the legal rights that Ecuador's constitution affords nature have been used in dozens of court cases in the country.
The Philippines has also prioritized protecting biodiversity. The country's Department of Environment and Natural Resources in 2022 adopted an order that requires companies to have "adequate measures for responsible mining" to enhance biodiversity conservation and protection across all stages of onshore and offshore mining.
In February 2024, the Chamber of Mines of the Philippines announced that all 19 of its member companies would fully implement the Towards Sustainable Mining initiative, originally created by the Mining Association of Canada in 2004. The initiative includes protocols regarding social and environmental issues covering such topics as Indigenous and community relationships, tailings management, biodiversity conservation, water management, exploration practices and handling of mine closures.
About 86% of all transition mineral mines in the Philippines are in significant ecosystems. Those 60 mines have the third-highest average ecosystem significance index (0.75) and have larger ecosystem footprints on average (88 ha HSA eq.) than most countries.
The International Energy Agency found in its 2024 Global Critical Minerals Outlook that significantly more new investments in mining for critical minerals will be needed over the long term as demand grows. S&P Global Market Intelligence forecast that the mining of lithium, nickel, cobalt, aluminum, zinc, copper and other non-iron based metals will double by the middle of the next decade.
S&P Global Market Intelligence reported in January 2024 that companies' budgets for exploring potential new mining sites for nickel, lithium and cobalt — key to electric vehicle battery production — are on the rise. Total budgets for the three minerals climbed from about $319.5 million in 2016 to $1.6 billion in 2023.
Given the rise in demand for energy transition minerals, some countries and regions have adopted laws and policies aimed at shoring up supplies and speeding up mine permitting, which could put global biodiversity at further risk.
The US Inflation Reduction Act, for example, provides tax incentives for the mining of critical minerals and for electric vehicle purchases. However, it stipulates that electric vehicle tax credits can be used only for vehicles that source at least 50% of minerals from the US or a trade partner country.
S&P Global Sustainable1 data shows that 76% of transition mineral mines in the US are in significant ecosystems.
Similarly, the EU in May 2024 passed the European Critical Raw Materials Act, which sets targets to increase domestic production of strategic raw materials such as lithium, cobalt and nickel; streamlines permitting procedures for associated mines; and increases recycling of those minerals while ensuring that Europe maintains high social and environmental protection. The EU has set out a biodiversity strategy with a 2030 target date that includes turning at least 30% of its land and sea area into protected areas.
More than 80% (146 out of 178) of transition mineral mines in EU member countries are in significant ecosystems, according to S&P Global Sustainable1 data. The average ecosystem significance index of those 146 mines is 0.52, which is higher than the global average.
|
Key terms and definitions
Ecosystem integrity footprint expresses the overall extent of an asset's or activity's impact on the local ecosystem, measured in hectares-equivalent. It compares the current state of the land used for an asset or activity to its intactness in a natural, pristine state. The larger the footprint, the greater the damage to the integrity of an ecosystem. Ecosystem services: Ecosystem services are the benefits that nature provides people on a local and global scale. The economy is reliant on the ecosystem services that nature provides in many ways. For example, ecosystem services provide wood for timber harvest; groundwater or fresh water for drinking, cooling power plants or irrigation; and animal or plant fibers for fabrics or fertilizer. Nature also provides ecosystem services by modulating the climate and hydrological, ecological and soil processes. Examples include pollination, carbon sequestration, erosion control, flood and storm protection, disease control and soil quality. Ecosystem significance index is a composite index reflecting the significance for biodiversity conservation (species significance) and for the contribution of ecosystem services to humans (ecosystem contribution) of an area. The index is expressed as a value of 0 to 1, with values of 0.1 or greater considered significant. Energy transition minerals: The analysis covers nine minerals and metals (collectively referred to as minerals throughout this report) that are key to the energy transition: copper, nickel, zinc, lithium, graphite, molybdenum, cobalt, manganese and chromite. Hectares (ha): Hectares are a unit of measure of an area of land. One hectare is equal to 10,000 square meters, or about 2.471 acres. Land use: Extent to which land is used for, or affected by, an asset or company's business activity measured in hectares. Transition mineral mines: Transition mineral mines are those that are primarily focused on extracting and processing energy transition minerals on land. Transition mineral mines in this report include mines in operation or under development and sites undergoing early exploration or late exploration. Methodology note for transition mineral mines: Country-level and regional-level findings regarding transition mineral mines in this report focus on the subset of transition mineral mines that are in significant ecosystems valued at 0.1 or higher on the ecosystem significance index. |
