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Lindsey Hall

I'm Lindsey Hall.

Esther Whieldon

And I am Esther Whieldon.

Lindsey Hall

Welcome to All Things Sustainable. A podcast from S&P Global. As your hosts we will dive in to all the sustainability topics that reshaping the business world.

Esther Whieldon

Join us every Friday for in depth analysis and interviews from leaders from around the globe. Together we’ll break down big sustainability headlines and cut through the jargons.

On this podcast, we’ve heard many times, the building out the infrastructure and technologies needed for the low carbon energy transition require us substantial increase in the production of critical minerals and metals, such as copper, nickel, zinc, and lithium.

Lindsey Hall

Mineral plays a key role in the low carbon transition as they are needed for many different technologies including electric vehicles, battery storage, clean hydrogen, geothermal, wind, solar and electricity networks.

In today's episode, we'll hear how one of the biggest producers of critical minerals is approaching this increased demand, and we'll explore how this company thinks about balancing that demand with other sustainability issues, including community engagement, biodiversity, waste management and physical climate risks.

Esther Whieldon

I sat down on the sidelines of CERAWeek last month with Emily Olson, Chief Sustainability and Corporate Affairs Officer at Vale Base Metals, a subsidiary of mining company Vale. CERAWeek is one of the world's largest energy conferences hosted by S&P Global each year in Houston. Vale Base Metals has operations in North and South America, Europe and Asia.

And Emily tells me the company also meets up to 60% of U.S. nickel demand. A couple of terms you'll hear her mention. One is the IRA, that's the U.S. Inflation Reduction Act. She also mentions some technologies that rely on critical minerals, including electric vehicles or EVs and cookers. Those are oil refining units that produce a coal-like product that is used to make such things as aluminum, steel, fertilizer and even paper.

Emily also talks about how the company has operations in the Arctic that require a fly-in, fly-out strategy. That means they schedule workers on a 2-week rotation where they fly in to work for 2 weeks and then leave for 2 weeks and so on. Okay. Here's Emily, who starts off by outlining what the company does.

Emily Olson

So we're a base metals company based out of Toronto. We operate in Canada and Brazil, Japan, Indonesia, the U.K. I come actually from 15 years in oil and gas and have been one of the many lately that have started to make the transition into the mining sector. It's a really exciting time to be in this business. And I think I couldn't imagine being anywhere else but critical minerals right now.

Esther Whieldon

Yes. So what are the minerals that you primarily focus on?

Emily Olson

So for Vale, we are a very large producer of nickel coming out of our Canadian operations. And so nickel, super alloys, right? So nickel is wonderful for energy and defense applications, EV because it is a high temperature. You can put it on lots of things. You can put it in a nice big cooker, you can put it high temperatures. It's really strong, and it's not corrosive.

And so you have a lot of applications for nickel. And then we have copper. And copper is primarily out of our Brazilian operations. So the Amazon where we've operated since the late '80s is a prolific basin for copper, and we're very lucky to have a great endowment of copper down in Brazil. And then we have refineries. All this product has to be processed. So we're vertically integrated in Canada, but we have a footprint in Indonesia in our PT Vale operation.

And then we have a refinery in Japan, and that feeds the Japanese auto market. And then that continues itself on to the U.K. And I always like to tell my British friends and colleagues that we sell and have predominantly sold nickel into the mint in the U.K. So every time you pick up a 20p, you get a little bit of Vale in your pocket. So yes, so it's a great portfolio. And like I said, we're in a very exciting time for the minerals that we produce.

Esther Whieldon

Yes. So talk to me about that, how do minerals and metals fit into the energy transition?

Emily Olson

So I mean when you look at it from a few elements, right? So on the transition side, I think we've come to this critical minerals conversation on the back of EV demand and the IRA was a catalyst for a lot of these conversations. I started my career in Washington. And so over the years, I don't think we've really had strong conversation on minerals policy.

And now we find ourselves where that's all we talk about. The headlines and all the papers are very much dedicated to critical minerals. And so when we think about the transition, nickel and copper are primary inputs and nickel products, right, so be it powders, alloys, et cetera. They're a very big part of an EV vehicle.

So with the transition, IRA as a catalyst, you saw EV demand start to rise. We've seen it start to slow, but we are still fairly bullish on where that demand goes. But for the most part, we provide on a good day, almost 60% of U.S. nickel demand. And we are -- the next supplier down is Norway at 9%. So we are the dominant supplier to the U.S. on nickel, which then feeds defense. So you put drones, ships, tanks, right?

It's a very heavy metal that has gone to reinforce and build a lot of defense applications. So it's transition and security, right? And I think for us, we're seeing demand on all sides start to increase, which right now, the commodity market might not look like that, but we are bullish on the long-term demand, supply-demand changes.

Esther Whieldon

So our price is a little bit lower right now? Is that what you're referring to?

Emily Olson

They are. And so nickel is at about $15,000, which is low. Copper is still relatively strong, could have more room to grow. But the nickel price is predominantly impacted by the current oversupply in the system. Indonesia has upped its production over the last years at a rapid pace. And so we're seeing a much larger volume of supply come out of nickel.

So right now, the price is fairly depressed. But again, we are bullish that as you look long term, we're miners. So it's a very long-term game. We think 20, 50 years. But for us, when we look even in the short term to '28, '29, we see that demand really coming back and the supply getting shorter.

Esther Whieldon

So how do you think about sustainability then?

Emily Olson

So I mean, we are miners, right, first and foremost. And you cannot be a miner without having sustainability in all of its elements integrated into how you run your operations, right? Unlike other sectors, like oil and gas, you can put a drill hole out in the middle of the Gulf and no one sees. But for us, it's a big operation.

We impact the land, we impact communities. And so for us, your social license and how you are willing to create that mutual and shared value, that's the first stop. And we've been doing this for a long time. But the industry, as a sector, right, I think there's a really antiquated version of what we do. Often, people still think they're pick axes with headlamps down on the underground, and they don't understand the sophistication and the innovation that goes into mining these days.

So we're struggling with the narrative perception. And the sector has had challenges over the last 20 years. But community engagement and for us in Canada, particularly and in Brazil, our engagement with indigenous persons and peoples, right? The First Nations that we work and partner with in Canada. I mean we operate on their traditional lands.

And so creating an understanding, a mutual benefit in a long-term strategy, right? You can't just show up and say, hi, I'm here to build a mine, right? Thinking about all the interplays of sustainability from biodiversity and nature, water management, noise. We are miners, we create noise, vibrations, right?

You have to take in the whole holistic view of a mine operation and integrate in everything you do. And when I came to Vale, that was one of the reasons I felt compelled to join the Vale organization. They're incredibly strong on nature and biodiversity when you operate in places like the Amazon. Indonesia, I look after our Indonesia business. In Canada, I mean, these are amazing landscapes, and we've embedded it in how we think about our business.

Esther Whieldon

I asked Emily to provide some examples of how the company works with indigenous peoples. Here she is again.

Emily Olson

Let's start with Canada because I do think Canada is -- as much as there is room for improvement. Canada, I would say, is the jurisdiction globally in mining that is the more sophisticated structures on engagement with First Nations and indigenous peoples. And I'm new to Canada myself, so this has been a learning exercise for me. But mines, we operate a fly-in-fly operation in Labrador and Newfoundland and Labrador, Voisey's Bay, it's Arctic, it's remote.

And the one thing as part of our own social license was to ensure we had an impact benefit agreement, right? So it lines out things like employment, procurement. And so this is something very typical in Canada and how you've started the reconciliation journey with First Nations is ensuring that equity participation. And equity doesn't mean you need buy 15% of a mine. It's how we equitably distributing benefits and thinking about what those benefits are for the community.

In Brazil, too, it's coming, it's at a different phase in its development. So thinking about and listening, right? The whole concept is very simple. You have to engage and be present. So I don't know what people need. And so really having teams on the ground who are part of that fabric of the communities and the First Nations.

For me, learning culture and customs, there's something since I've gone to Canada, too, the importance of well-being meaning like how do you think about how is this creating well-being and impact in Canada, the First Nations thinking 7 generations. So 7 generations from now, where are we going to be? And that's a great guidepost how we think about our own development. But it's a great opportunity to learn and see different perspectives.

Esther Whieldon

Can you talk about how you think about nature and biodiversity in your operations and in your selection for sites and other things?

Emily Olson

Right? So I'm going to talk about Indonesia. Indonesia is near and dear to my heart. We have 2 businesses there that are -- we've been there for 56 years, and we operate in a place called Sorowako South Sulawesi. Remember, Indonesia is a nice long archipelago of many islands, but with high biodiversity, water rain forest.

And the team there, we go in and we do full on flora and fauna surveys, continuously identifying potential impacts, looking at ways to remediate or prevent, thinking how we embed that in our operational plan too, right? It's not an afterthought. It starts at the beginning and really getting in there to ensure that we understand what that biodiversity footprint is, where mining might impact nature, i.e., water in that instance.

And so we -- in Indonesia, we have reforestation program, which when you see it, it's pretty amazing, the amount of trees we put back into the ground at the pace we do. We have a giant nursery. We have Lake Metano, which our nickel operation sits on the bank of a lake. And we have focused so much on water quality and nature and biodiversity management. The water quality of that lake is probably better than most New York City or Chicago or Toronto tap waters, right? But it goes back to having to be at the start, not at the end.

Esther Whieldon

Emily just described some of the ways mining can impact nature. She outlined how Vale Base Metals integrates nature and biodiversity management into its operations and planning from the start. S&P Global Sustainable1 has a nature and biodiversity risk data set that assesses nature-related impacts and dependencies across companies' operations.

The analysis can be applied at the asset company and portfolio level, and it covers all kinds of assets, including the thousands of mines around the world today that are extracting minerals needed for the energy transition. Research, I co-authored last year using that data set found that 71% of all energy 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.

We'll include a link to that research and data set in our show notes in case you'd like to learn more. Turning back to the interview, I asked Emily how Vale Base Metals handles waste that is produced from mining. This waste called tailings is a liquid slurry of polarized rock, water and leftover extraction chemicals that remain on site and must be treated 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 as well as local communities. Here's Emily, talking about how Vale Base Metals approaches waste management, including new technological developments.

Emily Olson

So waste is a big issue for the sector, right? We have tailings deposits. You collect about 2% out of all the ore you mine, 2% of that is metals. The rest is waste. And so we have tailings dams, and we have to really manage our footprint in that regard. And so the sector itself has really started to dive in a much more technical way, thinking about circular solutions. And it's actually a great area for partnership outside the sector.

So I think you bring more innovation into the mining sector is really important. We tend to do things ourselves. So getting that external engagement and thought on innovation and research around waste. And so we have lots of thinking and programs that we're looking at how we can take more out of more metals out of our tailings.

So you're mining your own waste, right, keeping that circularity going. Equally, we have a project in Brazil at one of our nickel refineries or our nickel operations, where we use our slag from our refinery, and we sell it into the fertilizer sector. So we have a partnership with a company down there that process that and makes fertilizer for a very agrarian community.

So creating a little bit of that circular value chain when it comes to mine waste. In Brazil as well, we take our waste and the team has done an amazing job creating an enterprise in which they make pavers, bricks.

So using that and they can sell it into municipality for road paving, buildings, et cetera, that -- so it's been an interesting journey to think outside of the box on what you can do with that waste. There's still a long way to go. And I think for me, when we look at the challenges for the sector moving forward to meet all this growth, we have to crack waste. We have to have a solution for waste.

Esther Whieldon

And you've mentioned circularity. I talked to someone last year who said copper, a lot of it is already recycled and reused. How are you thinking about how to advance circularity in some of these rare metals?

Emily Olson

Right. So it's interesting. The recyclability, recycling -- for a while, like when I first joined mining, everyone -- it's all about recycling. But you can't recycle your way out of demand, right? We need more production. That is clear. There is an increase. I mean copper is highly recyclable. But there also aren't regulatory frameworks necessarily in place to ensure how that material is moved around. Also a really important and challenging thing on recycling metals is provenance.

You want to know where they came from. So you don't know right, it's sourcing. And so you don't want to start purchasing materials that were not sourced responsibly, right? And so getting that transparency into the supply chain and thinking more about how you structure recycling, so you're clear on provenance, you know where it came from.

But there's a real drive to it, right? I think there's research and there's innovators out there trying to think about that. But always more room for recycling. And when you think about battery recycling, right, that is another optionality when you think about black mass and how for us, we have potential in some of our refineries to think about how we could process black mass. We left battery pieces. You need to recycle batteries out of EVs.

And so thinking about how you create a circular structure for processing the black mass back into a refined product. I always say coming in, I think mining is just starting their journey on innovation. We've made leaps and bounds, but there's so much more room to go as we think about potential and optionality. And back to my point, I do think getting input and technology from other sectors, not just oil and gas.

I think there's lots of applications you can look at to think about how we go on that circularity journey. But waste will be incredibly important. There's a value in it. There's a risk in it. And as we look at the ambition of all these countries, right, looking at, is it stockpiling? Is it production? Is it midstream? You need ore. We will have to build and expand. And so you really do have to be thinking about that waste conversation.

Esther Whieldon

The rise in demand for energy transition minerals that Emily described earlier has prompted some countries and regions to adopt laws and policies aimed at shoring up supplies. She also mentioned how Indonesia has increased its production of nickel.

The country has banned the export of raw nickel ore requiring it to be processed domestically before leaving the country to keep some of the value in the supply chain within its borders. I asked Emily how Vale Base Metals navigates changes in country policies. Here she is again.

Emily Olson

It's interesting. We work in very different jurisdictions, right, all with different cultural norms, political ambition value sets. For me, I think I've always spent my career in the natural resources sector. So sometimes they take it for granted, but that's just how it works. You learn how to be flexible. And it's true.

You need to have a resilient business that can withstand changes in governments, changes in commodity prices, just building that resiliency into a structure that is agile and lean and can move with the current is important in the minerals market. On the political side, I think, and you're talking specifically about down streaming and the beneficiation that you're seeing, Indonesia has been a successful case of that. And I get it.

I mean countries want to have a benefit from the natural resources that are being exploited from their country. And so creating that. I don't think we need a smelter in a refinery for every mine. There's capacity out there and particularly in North America, we share capacity. So for instance, there's one operating nickel mine here in the U.S., and it's in Michigan. It's called Eagle, and they send their nickel ore to us and we process it in Canada and then send it back, right?

So nobody -- and it's a footprint thing, like a smaller mine doesn't have the economic scale for a giant smelter, right? So I do think from a political perspective, looking at what Indonesia has been thinking about on beneficiation and keeping the down -- bringing it as far downstream as possible, that is a clear and important policy that's linked to their growth.

They have an 8% target for GDP growth. And so that is connected to that. And so when you look at policies, Brazil is building its critical minerals policy. They've just started that as well and thinking about the endowments, not only of copper, but of iron ore and how they then can really benefit from the value they're creating. And then equally, it's trade.

This is a globalized market. And so we are very dependent upon supply chain. And so that has to be a focus of every government, right, how the supply chains work and keeping them working. Uninterrupted supply chains is something we all love and need. But any disruption in an operation like a mine, we can take up to 20 years to build a mine, permit, explore, permit, et cetera. So disruption just further delays the ability to get the materials out of the ground.

Esther Whieldon

I want to come back to the supply chain thing, but also you just prompted me to think of physical climate risk. To what extent are you seeing those risks manifest or grow across your operations?

Emily Olson

Absolutely. And it's something you have to plan for. You should be reporting against your climate resiliency and your climate risk. And we operate in places that are impacted by climate. You have heavy rains in Brazil. And again, they've always been there, but any change in those patterns could be an impact to our operations. We think of Indonesia, something that has always been front and center there is rising sea levels.

And so thinking about how we are identifying risk, right, that's really important. For me, when people say ESG, it is a risk framework. It is a nontechnical risk framework and how you look at all these component parts that impact your long-term business. And so I think climate resiliency is really important to think about.

You don't need -- it's that long-term planning, right? That scenario planning and really having a view of what those could be access to water. I mean, thankfully, in our business, we are in -- we are not in high water stress environments, but we are in wet environments. And that also has a contributing factor to how we look at risk in our operations.

You -- heat, your temperature rise when you're in Indonesia or in Brazil with high temperatures and how that impacts your workforce. So you have to plan for all these operational elements of how that external climate could really start impacting the way you think about your business. And so I don't think it's a nice to have. I think you must in a sector like the extractives, particularly mining, be thinking very seriously about what your robust climate resiliency would look like.

It can't be a silo, like it can't just be like here's our plan. How does it interact with your biodiversity and nature planning? How do you integrate it into your life of mine planning, right? Bringing it together, I think, is a really, really important value driver for those of us in the sustainability sector. You see the value in a much more tangible way when it's all together driving to a common purpose.

Esther Whieldon

There's been a lot of talk about tariffs in the last few weeks and also here at this conference that I've heard. And I'm curious, to what extent do tariff and tariff wars in the past and potentially in the future kind of affect your supply chains and also other part of market dynamics for you?

Emily Olson

Policy aside. Mining needs dependable supply chains, right? We are a long life, long lead business, having dependable diversified supply chains is really important to ensuring we can keep with pace. Any instability in the market is never good for anyone, right? We all see, it's not just mining. Trade instability hurts everyone, right? And so we've been blessed over the last 80 years to have strong supply chains, strong training partners.

And for us, that is really important to continue because when you're thinking about these places, it's not like you can pop down the road and pick up the equipment you need, right? We're talking about isolated far afield mine sites in emerging economies basically. But even like in Canada for us, our Voisey's Bay operation, it is Arctic.

It is fly in, fly out, and you get supplies in through an icebreaker. So right, supply chains are incredibly important and keeping that uninterrupted supply chain going is really important. We buy goods and services from the U.S. and bring them into Canada. We sell into Canada. And I really am hopeful that, that North American supply chain can really continue because we both depend on it. And we want -- we all want to see more critical mineral development, absolutely.

And so we can do it better and faster when we do it together and have that ecosystem because it's not only goods, it's people, right? You need construction. You need the labor and the talent to come and support the development things. So it's not just as simple as buying parts across different geographies globally. It's being able to move talent and ideas across the value chain as well.

Esther Whieldon

So I'd like to, at a conference, always ask any interesting takeaways that just kind of sticking in your mind at the moment?

Emily Olson

AI. We have been talking about data centers and the power demand and infrastructure build-out that is required on data centers. So I've been coming to CERAWeek for 15 years, and I've watched it evolve over time to a bunch of oil and gas conversations to a much more multifaceted climate innovation, right? And it's changing with the world around us, right?

But this year, I would say the focus on AI and how we start to think about its role in our businesses was really interesting. I've learned a lot from others listening into different sessions on how to think about things. It's not sometimes in my basic mind. I like we'll just buy it and put it -- the software goes into the system, and it's not like that. I mean there's systems build-outs that need to change. And problems that need to be solved.

It is front and center to how we're thinking about the mine in the future. And someone this morning, I was at a women in energy breakfast, and she was saying like if you think you're behind on AI, you're not. Like this is all new. So women learn about AI, think about it differently across your business. And so I've, of course, been thinking about that all morning. And just really the role that minerals plays in that power demand, right?

If you have as much power demand as they're predicting up to 125 megawatts, that's 50 New York City’s worth of power. You need copper, you need nickel. And so how we like strategically drive ourselves versus where the market is today, that's an interesting conversation at the end for next year to see how that has gone because we have a really strong ambition globally, but the market isn't in a position yet to do that.

Esther Whieldon

Great. Well, I think that's like a good way to end this. Great. Thank you so much for taking the time to talk with me.

Emily Olson

Absolutely. Thank you.

Esther Whieldon

Today, we heard how Vale Base Metals thinks about local communities and indigenous peoples in its operations. Emily talked about how the company factors biodiversity and the physical risks of climate change into planning and project management from the start rather than as an afterthought. She also talked about the importance of having dependable supply chains to meet critical mineral demand.

Lindsey Hall

And Emily noted that mining companies need to have a resilient business that can withstand changes in government and commodity prices. This echoes what we've been hearing from other guests in recent episodes that sustainability and energy transition strategies need to be durable enough to withstand changing political wins.

Esther Whieldon

Please stay tuned as we continue to track how companies across sectors are approaching the energy transition.

Lindsey Hall

Thanks for tuning into this episode of All Things Sustainable. If you like what you heard, please subscribe, share and leave us review wherever you get your podcast.

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