Future Availability of Minerals: Sustainable Development & the Research Agenda

Presentation to the Board on Earth Sciences and Resources, National Research Council of the National Academies

By Jim CressDirector

Sustainable Development Strategies Group

Attorney, Holme Roberts & Owen LLP

SDSG: Who We AreSustainable Development Strategies Group (SDSG) is a collaborative group of researchers, consultants and other experts whose goal is to demonstrate the effectiveness of sustainable development concepts in solving real, practical problems at the local, regional, national and international levels.

SDSG is both a research organization and a practical source of policy, institutional, and capacity building advice.

SDSG is headquartered in Gunnison, Colorado, but works with collaborators in many regions of the globe.

SDSG: What We Do Research and teach about sustainable development and its concrete

application in the use and conservation of natural resources, on local, regional, national and global scales.

Collaborate with governments, companies, communities and others to develop solutions and build capacity for wise use and conservation of natural resources.

Utilize interdisciplinary, participative methods in which our partner organizations develop and implement strategies, and SDSG delivers expertise as requested in managing conflict, building dialogue, and sharing experience.

Implement sustainable development ideas and applications to promote positive, broadly supported solutions in mining and mineral resources, oil and gas, timber, energy and other natural resource industries.

Sustainable Development

Development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.”

“Needs” - The obligation to improve the lives of the very poor

What Does “Sustainable Development” Mean in Mineral Development context?

Long-Term Supply of Minerals Mineral development within the

carrying capacity of the biosphere Long-Term Prosperity— mineral

exporting/developing countries as well as mineral using/developed countries

What Does “Sustainable Development” Mean in Mineral Development context?

Long-Term Prosperity— – Direct use of minerals supports human well being

(e.g. concrete for homes, fertilizer for crops)– Minerals are vital to the complex web of our

economy (e.g. rare earths for the “new energy economy”)

– Minerals generate wealth which can be used to alleviate poverty (even if it always hasn’t been)

– Minerals are a generator of livelihoods

Sustainable Development And Minerals:A Research Framework

A sustainable development framework for research incorporates some traditional environmental analysis, but differs from a traditional environmental research framework in a number of ways:

• It is not just about eliminating and minimizing negative impacts, it is about maximizing the positive impacts, and maximizing the value to society throughout the minerals cycle

• It has a focus on development benefits of a project, such as the livelihoods that the project generates

Sustainable Development And Minerals:A Research Framework

A sustainable development framework for research (con’t):

• Aggressively looks for ways to create positive environmental externalities – and finds that there are some, e.g., the use of abandoned mines as habitat for endangered species of bats

• Distinguishes between short term environmental impacts and those that reduce natural capital, i.e., that reduce the ability of ecosystems to produce benefits

• Gives important weight to the social and human impacts of projects; such as health, housing, education, impacts on traditions and cultures

The Research Agenda: Eight Challenges

These are far from the only challenges, but these eight are very difficult:

• World population is increasing –a 300% increase since 1950• Per capita minerals use is increasing, and for some minerals

clearly needs to keep increasing if we are to meet the needs of the poor (e.g., copper for electrification)

• Increased population creates increased competition with other land uses – agriculture, housing, space for biodiversity, watersheds are all under pressure

• Mining is very energy intensive, and somehow needs to produce more with less energy

The Research Agenda: Eight Challenges

(con’t):• Mining is very water intensive, and somehow needs to

produce more with less water• For many minerals, there is an important need to identify

additional sources of supply• Mining moves more material than any other human activity

(except maybe soil erosion). It generates very large volumes of waste and it is not clear how much the biosphere can absorb

• Where are the technologies that can meet our needs with reduced amounts of minerals, to recycle and reuse more easily, or to produce virgin materials with less footprint?

Eight Challenges to Sustainable Development of Minerals

Growing Populations

Growing Per Capita Mineral Use

Physical Availability of Minerals

Competition For Land Competition For Energy

Competition For Water

Technology Development

Biosphere’s Capacity To Absorb Mining Waste Streams

Growing Populations

Who Needs Minerals?

• Developing and Developed Countries

• Greatest need in underdevelopedCountries (growing populations, resource use

intensity)

• Competition between developing and developed countries over minerals is increasing

A Growing World Population

World Population GrowthDeveloping vs. Developed Countries

Global Income Distribution

“Trends in Global Income Distribution 1970 – 2000, and Scenarios for 2015,” UNDP Human Development Report Office Occasional Paper (2005).

The richest 10% of the world gets 53.1% of all the income

The bottom 10% get 0.6%

The richest 20% get 72.9% of the income

Poverty vs. The Environment• Ending extreme poverty is a moral imperative now that the means to achieve this

age old dream are within our grasp. Failing to grasp this opportunity is morally indefensible.

See Jeffrey Sachs, The End of Poverty (2005)

• We have critical world problems of environmental stress – changes in ocean chemistry, loss of biological diversity, massive soil loss in agriculture, marine ‘dead zones,’ collapse of commercial fisheries, climate change – that threaten our ability to survive on the only habitable planet we know. If we don’t solve these problems, it won’t matter if we solve any of the rest.

See Herman Daly, For the Common Good: Redirecting the Economy towarCommunity,the Environment, and a Sustainable Future (1994).

• There is a widely shared idea that the more we reduce poverty, the more we stress environmental systems, and the more we protect the environment the more people must be doomed to poverty.

• Is this choice necessary, or a false choice?

Growing Per Capita Mineral Use

Minerals Drive Development

Copper– Essential for electrification and rising standard of

living. Also important to housing, auto, information technology & alternative energy

Steel (iron, molybdenum, etc.)– Essential for construction/industrialization

Coal– Cheap plentiful source of energy for

industrialization/electricity generation

Copper Consumption per Capita (tons per person, 17 of 20 most populous countries)

• Table 3.  Copper consumption per capita (tons per person) in 17 of the 20 most populous countries in the world.

•                     1970          1975          1980          1985          1990          1995          2000• China         0.00022     0.00016     0.00038     0.00049     0.00051     0.00101     0.00168• India           0.00010     0.00006     0.00009     0.00014     0.00013     0.00013     0.00040• USA            0.01005     0.00794     0.00976     0.00664     0.00794     0.00962     0.01125• Indonesia   0.00001     0.00005     0.00014     0.00009     0.00018     0.00043     0.00030• Brazil         0.00054     0.00121     0.00229     0.00164     0.00119     0.00157     0.00225• Russia        0.00239     0.00270     0.00394     0.00312     0.00342     0.00060     0.00138• Japan         0.00894     0.00794     0.01060     0.01094     0.01279     0.01154     0.01034• Mexico       0.00098     0.00090     0.00191     0.00182     0.00140     0.00053     0.00580• Germany   0.01195     0.01308     0.01278     0.01398     0.01727     0.01255     0.01643• Philippines  0.00011     0.00008     0.00010     0.00001     0.00032     0.00048   0.00022• Iran            0.00012     0.00023     0.00003     0.00030     0.00085     0.00140     0.00159• Egypt          0.00002     0.00009     0.00005     0.00005     0.00006     0.00007     0.00007• Turkey       0.00000     0.00027     0.00060     0.00180     0.000183   0.00250     0.00259• Thailand    0.00000     0.00005     0.00010     0.00053     0.00097     0.00265     0.00259• UK              0.01017     0.01001     0.00795     0.00724     0.00722     0.00509     0.00618• France        0.00678     0.00773     0.0857       0.00684     0.00840     0.00993     0.00988

Some Implications of Changing Patterns of Mineral Consumption By W. David Menzie, John H. DeYoung, Jr., and Walter G. Steblez, USGS (2000)

Steel Consumption

Not All Minerals Are The Same

Over 90 minerals are commonly produced. They vary enormously in:

• Abundance• What substitutes there are for them• The environmental impacts of their

production• How much employment they generate

Drivers of per capita Mineral Consumption

Mineral consumption low in lesser-developed countries with low income levels

Consumption increases very rapidly as countries begin to industrialize and incomes pass threshold level.

Per capita mineral consumption stabilizes at higher levels when countries begin

to develop the service and information sectors of their economies.

Physical Availability of Minerals

Physical Availability of Minerals Minerals are only physically available where we find them

- Lack of portability creates problems Increasing consumption depletes natural capital on which

world economy is based– Increase supply via recycling/substitution– Increase size of mineral reserves

• New discoveries• New technologies• Price cues• Regulatory cues

– National concerns (re: strategic minerals and energy security)

Replacing Reserves

Example: Copper• 1.1 billion tons of copper must be added to reserves to

meet projected copper consumption at present recycling rates

• Maintaining current reserve level will require more than 3 times the amount of copper in the 5 largest deposits currently known

• Big discoveries, big problems (e.g., Oyu Tolgoi, Mongolia)

Replacing Reserves (cont.) Sufficient supplies of copper exist to meet needs

of developing countries However, production of these resources will

depend upon – adequate levels of mineral exploration (where more

and more land is being removed from the resource base)

– development of new technologies for mineral discovery and production

– social and legal environments that allow for mineral exploration and production

Exploration Requires Land and Community Acceptance

Community

Miner

How communities felt aboutUranium, ca. 1954

Competition For Land

Competition for Land Competing Land Uses

– Agriculture– Urban Development– Retaining Land in State of Nature: Preserving Rare or Important

Ecosystems– Tourism– Recreational Use

Relative economic value of competing uses– Effect on land prices, making mining uneconomic– Thus, mining disproportionately affects poor/rural people

Competition for Land (cont.) Comparatively High Impact of Mining on Land

– Current Land Uses– Future Land Uses– Dislocation of Indigenous Peoples and others

Social issues in Land Compensation/Relocation– Defects in land title systems– Effect of corruption/rent-seeking/ disconnect between national and local interests– Perceived fairness of compensation

Competition for Land

From Frontier Settlements. . .

Competition for Land

-Is skiing more important than mining?-In the Gunnison Valley?-In the United States?-To the poor in developing countries?

. . . To Ski Areas

Competition for Land

• “What Every Westerner Should Know About Energy” by Patricia Nelson Limerick, et al., Center for the American West (2003)– “Aren’t there any unloved and unlovely

places left?”– Argues for reconciliation among competing

interests

Access for Expansion & Exploration: the “Roadless Rule”

Competition For Energy

Competition for Energy Mining is energy-intensive.

– Drilling/digging; crushing, milling, refining; pumping out water; transport, etc.

– Competitors for energy include urban users w/ rising standards of living, infrastructure building and other industry

Energy represents about 5% of the value of all mining products.

R&D projects include technologies for energy-efficient mining and processing of coal, metals, and industrial minerals.

Energy Availability per Capita

Cumulative Population (Millions)

Fuel Prices

Competition For Water

Competition for Water Mining is water-intensive

– Dust control– Reduce fire hazard: ex.: underground coal mining– Extracting ore; processing– Transport: mineral slurries

Competing Uses– Agriculture– In-stream flows– Urban/industrial uses – Tourism/recreation

Water: The Black Eye of Mining Effect on water supply of existing communities Use of pristine water where reclaimed water would

suffice Long-term effects of mining

– Pollution of surface water• Acid mine drainage• History of catastrophic spills

– Pollution of groundwater– Altering course of rivers; destroying ecosystems

Technology Development

Improved Technology

More efficient production– Beneficial effects

• Expand supply: now feasible to mine lower-grade ore• Energy efficiency• Possible to minimize ground disturbance

– Negative effects• More mining of marginal deposits: increased impact on land, water, and local communities• Consumptive deep water production

Technology Examples Gold – Bulk heap leaching (1960’s) Copper

– Solvent-extraction/electro-winning method– low-cost production of copper from waste and raw ore

dumps Uranium

– In situ Recovery – Production of marginal resource without milling and

tailings– Potential water impacts

Technology Issues

Socio-Economic Impacts– Reduced need for manpower/local hiring– Increased worker safety

R&D Funding Issues– Low profit margin of mining companies limits

industry R&D– Government technology programs

• Corporate welfare?• Is the public getting its money’s worth?

Biosphere’s Capacity To Absorb Mining Waste Streams

Carrying Capacity of Biosphere

Capacity to absorb waste streams– Mining generates high concentrations of waste and

effluents: long-term waste management and acid mine drainage issues

– Impacts on land, surface water and groundwater, air, forest, biodiversity

Legacy of historic mining sites

Improving Capacity of Biosphere

Reduce waste streams– New technologies to mine, process, transport– Life-cycle pollution management– Shift from high-polluting minerals

Reduce energy consumption– Mining, processing, transport– New sources of energy– Energy-efficient products with mineral components

Improving Capacity of Biosphere Land reclamation & post-mining monitoring

– Improve predictive abilities for water impacts– Funding– Enforcement

Reduce mining– Recycling– Substitution– Place ecologically sensitive areas off limits (exploration vs. mining)

Legal Environment

Voluntary corporate codes Lender policies International Law

– Transboundary impacts– Environmental human rights– Rights of indigenous peoples

Climate Change regimes: national & international

Legal Environment (cont.)

Host country regimes – Evolving regulatory infrastructure and capacity – Gradual priority shift: development--environment

Increasing role of NGOs

Improved Models for Action

Model mining agreements

Model community participation projects

Industry Best Practices

The Research Agenda

Eight Challenges: Examples are Everywhere

• Molybdenum under Mt. Emmons, Colorado• Rare Earths at Mountain Pass, California• Copper/gold deposits at Tampakan,

Philippines

Needed Research• There may be no more important issues for the future of minerals

development than community acceptance, the “social license to operate.” Yet while there is an enormous amount of propaganda out there on all sides, there is almost no rigorous research that shows the impacts on communities:– When they go from a pre-mining state to the potentially disruptive

construction phase– When they move from the large scale construction phase to a more steady

state of production– When the mine closes and the community is left without an activity that is

central to the local economy.

Needed ResearchThere is very little attempt to understand in a rigorous way the risk-benefit calculation for communities

• What costs are going to be externalized onto the community?• What will be the direct and indirect benefits?• What benefits will be externalized?• What risks will the community be asked to run?• Above all, does the community have any kind of say over the

outcome? If so, what?• Can community needs be balanced with tenure systems and

commercial needs and expectations to attract mining investment in the first place?

Needed Research  Community concerns about the distribution of the benefits, risks, and impacts of large

mining projects have led to considerable opposition to mine development in many parts of the world.

Greater access to information and communications technology, more open societies, greater access to legal remedies and other factors, not all of which have been identified, have given communities more leverage, and have in rich and poor countries alike prevented projects from going forward.

Are there things that can be done to improve the balance of risks, benefits, opportunities and impacts so that communities will accept and want these projects when society needs them?

To what extent is the problem simply a function of defects in our systems of consultation and community engagement?

Are these facilities so important that we need legal provisions to facilitate development? Is that politically viable in a democratic context?

 1. Where are the gaps in our knowledge?2. What research do we know of that is relevant to this problem?3. What kind of research approaches make sense?4. Who can undertake this kind of work?

Questions?Luke Danielson, Principle

Sustainable Development Strategies Group108 W. Tomichi Avenue, Suite D

Gunnison, Colorado 80123Phone: (970) 641-4605

danielson@sdsg.orgwww.sdsg.org

Jim Cress, PartnerHolme Roberts & Owen LLP

1700 Lincoln Street, Suite 4100Denver, Colorado 80203-4541

Phone: (303) 866-0290Jim.cress@hro.com

www.hro.com

Special thanks to SDSG intern Kimberly Jackson, 3rd year student at DU law school, for her assistance with this presentation