Critical minerals and their role in achieving energy security

The global shift towards renewable energy and new technologies is increasing the demand for critical minerals, including copper, lithium, cobalt, and rare earth elements. Copper is essential for renewable systems and electrification due to its conductivity. Copper consumption is expected to rise sixfold by 2050, with a market value exceeding USD 400 billion. Mining companies must assess and disclose sustainability impacts and dependencies as capital continues to flow into the sector.

Copper: The metal of electrification

Copper’s conductivity and versatility underpin its use across multiple sectors including electronics, transport, and construction. Identified global copper resources total 2.1 billion metric tonnes, with at least 3.5 billion metric tonnes undiscovered. From 2010 to 2022, global copper consumption increased by approximately 30%, reaching 27 million metric tonnes in 2023—70% of which was used in electrical and communication applications.

Chile, the DRC, and Peru lead global copper production, while China dominates refinery output. Copper demand is projected to increase by 70% by 2050, primarily due to renewable energy and automotive applications. Recycling presents an opportunity, as secondary copper could supply up to 50% of demand by 2050, reducing energy use, emissions, and landfill waste.

Impact and dependencies of copper mining on nature

Mining affects nature at local and global levels, leading to biodiversity loss and reduced groundwater levels. ISS ESG’s Biodiversity Impact Assessment Tool (BIAT) indicates that over 70% of 42 assessed copper mining companies have high or very high biodiversity impact. Key drivers of nature loss include pollution (42%), climate change (38%), and land use change (20%).

Roughly two-thirds of companies rely on regulation and maintenance ecosystem services such as water flow and erosion control, while one-third depend on provisioning services like groundwater access.

Copper mining and human rights implications

Copper mining raises human rights issues including land displacement and modern slavery. ISS ESG’s Norm-Based Research (NBR) identified 31 assessments involving 29 companies allegedly failing to respect Indigenous rights. Common issues include lack of Free, Prior, and Informed Consent and failure to engage in meaningful consultation.

ISS ESG’s Modern Slavery Solution (MSS) found that 69% of 42 assessed companies were high risk, with the remaining 31% at medium risk. Risk is more prevalent in operational locations than supply chains. Only 38% of companies showed strong disclosure and mitigation measures. Twelve of the 23 countries with copper operations were in the high-risk category for modern slavery.

Copper mining and international standards

International standards promote sustainable mining. The International Council on Mining and Metals (ICMM) introduced nature-positive commitments in 2024 aligned with the Global Biodiversity Framework. ICMM collaborates with TNFD and IUCN to support responsible practices.

International standards and sustainability performance

Analysis of 42 companies reveals that ICMM members outperform non-members on biodiversity and social indicators, except in activities near protected areas. ICMM companies also perform better on water intensity and risk metrics. Mines in water-stressed regions may compete with communities, heightening operational risks.

Global regulatory developments in the mining industry

Regulatory frameworks are tightening, requiring integration of ESG metrics in reporting. Proposed changes to the JORC code would mandate ESG disclosures. Nations across Africa, Latin America, and Asia are revising mining laws to balance investment with social and environmental safeguards. Firms are encouraged to improve compliance and efficiency using technologies like AI and energy-saving systems.

Conclusion

Copper’s role in energy transition highlights the need for sustainable mining practices. Investors can use ESG indicators to assess which companies are best positioned to manage risks and contribute to long-term energy goals while mitigating environmental and social harm.