Critical minerals and supply chains
“The energy transition also relies on sourcing minerals from countries where corruption is a severe challenge. (…) Large amounts of the world’s cobalt, nickel, copper and lithium is mined in countries that rank poorly in Transparency International’s Corruption Perceptions Index (…), while some transition minerals, including rare earth elements, are found in countries with contested governments or ongoing conflict.”
As renewable energy increasingly powers our lives, the demand for battery storage and other infrastructure components to produce, transport, store, and power new electricity and electricity-powered devices, such as cars, has grown exponentially. The global transfer of resources required to keep up with this pace — beginning with raw material producers in the Global South, through supply chains leading to manufacturers, and later to end consumers, at the outset, mostly in the Global North — creates new wealth and numerous opportunities for capture, thus aggravating the risk of corruption — including theft and the diversion of resources.
The Natural Resources Governance Institute (NRGI) has followed the energy transition closely, particularly regarding corruption in mineral supply chains. “The International Energy Agency (IEA) projects that meeting Paris Agreement goals will require a quadrupling by 2040 of demand for minerals used in technologies like solar panels, wind turbines and electric vehicles. (…) New mines will need to swing into production much faster than the current industry average of 16 years to meet oncoming demand, but this must not come at the price of environmental, social and governance (ESG) safeguards. Corruption will undermine the mining and metals sector’s ability to meet this surging demand responsibly, if at all.”
Transparency International has also studied grand corruption in the energy transition, including illustrative examples fromGuatemalaandDemocratic Republic of the Congo(DRC):
“In Guatemala, the revolving door between the Ministry of Energy and Mines and the Ministry of Environment and Natural Resources on the one hand and top-level positions in national mining companies, which are subsidiaries of multinationals, on the other, increase risks of regulatory capture. (…) A number of former political officeholders in Guatemala had links to mining companies, either directly or indirectly through their family members, which blurs the boundaries between public and private interests. (…) For example, ties were discovered between the ex-minister of energy and mines, Erick Archila Dehesa, his family and companies in the extractive sector, and decisions they made while in these positions may have benefited the private sector.
In the DRC, the mining code of 2002 officially aimed to liberalise the sector and create a level playing field for mining companies. However, it further entrenched the privileged position of state-owned companies as they could keep most of their valuable permits and sell them for concessions to other firms. (…)
State-owned firms typically had most of the mining rights "in commercially exploitable and profitable deposits." (…) As a consequence, it became common for firms to obtain mining rights by getting into joint ventures with these state-owned companies.”
Corporate capture and grand corruption, not to mention heinous examples of child and forced labor, deforestation, sexual violence, and land and indigenous rights violations typical of natural resources supply chains, are precisely the issues that undermine hope for a just transition.