Mining is a massive global fault line

Mining is a massive global fault line

Plus: Guyana sells its carbon, Salvadorian troops surround a city, and Argentina’s most powerful politician might be going to jail

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Today’s briefing is a ~5.0 min read:

  • ⛏️ Mining battles: Putting the critical in critical minerals.
  • ➕ Plus: Peru’s president stages a coup, Salvadorian troops surround a city, and Argentina’s most powerful politician might go to jail.

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Mining is still contentious

In brief:

  • Critical minerals and rare earth metals are essential components in electric car batteries, smartphones, and defence technology.
  • But mining these materials can be environmentally destructive, morally contentious, and the source of intense geopolitical battles.

A lithium field in Chile’s Atacama Desert, a cobalt miner in the Congo, and an F-35 in flight. Credits: Paz Olivares Droguett/NPR; Junior Hannah/ AFP; Lockheed Martin.

Word to the wise

Rare earth metals and critical minerals are – to borrow a word – critical to the green energy transition.

  • According to the International Energy Agency, the average electric car requires more than 200 kilograms of critical minerals, six times that of a conventional combustion vehicle.
  • If policymakers pursue ambitious emissions reduction plans, there could be up to a six-fold increase in critical minerals demand by 2040.

That sort of swell in demand won’t be easy to meet. Minerals like lithium, cobalt, and copper are geographically concentrated in a few countries, and mining for them can be politically divisive and environmentally destructive.

The big dig

Here are some mining challenges to keep an eye out for.

1. 🌎 Latin America – Political challenges

Lithium is a key component in the rechargeable lithium-ion batteries that power electric vehicles, smartphones, and solar panels. And Latin America has a lot of it. 

But political and environmental battles are discouraging the inflow of capital investment needed to develop mines across the region.

  • Chilean regulators have levied hefty fines against mining companies in the lithium-rich Atacama Desert for over-extracting groundwater.

Plus, activists argue that using the Atacama’s groundwater for lithium production starves local communities of much-needed water supplies.

2. 🇨🇩 DR Congo – Human rights challenges

The Democratic Republic of the Congo produces 70% of the world’s cobalt, an extremely rare mineral which keeps lithium-ion batteries from catching fire.

But DR Congo is a war-torn country with poor labour laws, and a large percentage of cobalt extraction is done by unregulated artisanal miners called creuseurs.

  • As reported by the New Yorker, creuseurs are often killed by mine cave-ins and experience violence and sexual abuse by local militants.

This poses an obvious ethical dilemma for Western companies that use Congo-based cobalt to power their green technologies.

3. 🇨🇳 China – Geopolitical challenges

The US-made F-35 bills itself as the most advanced fighter jet ever made and will be a corner stone of ‘western’ countries’ defence plans in the coming decades.

  • The problem is, a single F-35 uses 417 kilograms of rare earth metals to power its targeting radar and electronic systems.

And about 60% of rare earth mining and 85% of its processing occurs in China, which gives it enormous leverage over the US and Western allies:

What’s next?

Governments and companies are rethinking their supply chains in response to these challenges but are facing challenges of their own:

  • Some environmentalists and indigenous groups oppose mining in Nevada’s lithium-rich desert.
  • Electric car companies’ cobalt-free batteries have lower performance.
  • And China will remain the world’s pre-eminent rare earth supplier for decades.

As trying as they may be, these efforts to near-shore rare earth and critical mineral production will continue, with governments in free-market countries playing an increasingly important role in securing supplies.

“This is a critical defence issue, like the shipyards in the Second World War. Rare earths lends itself to a state capitalist solution more than just about anything.” 

David Hammond, rare earths expert

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The Americas

🇨🇦 Canada

Amnesty International’s Canadian office was targeted by Beijing-backed hackers, according to Canadian investigators.

  • The hack is the latest in a series of incidents that have damaged China-Canada relations.

🇸🇻 El Salvador

About 10,000 Salvadorian troops have surrounded the city of Soyapango (population: 290,000) in the latest effort to crack down on gangs.

  • Around 58,000 people have been arrested since President Nayib Bukele declared a state of emergency in March.

🇬🇾 Guyana

The US-based Hess Corporation has agreed to buy $750M of carbon credits from Guyana over the next decade in an effort to protect its rainforests.

  • Hess is a partner in the consortium developing Guyana’s Stabroek Block, one of the world’s largest oil and gas fields.

🇲🇽 Mexico

US officials are threatening to initiate a trade war if Mexico, America’s second-largest corn export partner, goes through with a ban on genetically modified corn.

  • US Agriculture Secretary Tom Vilsack travelled to Mexico last week to meet with President López Obrador to resolve the dispute.

🇵🇪 Peru

In a still-developing story, Peruvian President Pedro Castillo was impeached yesterday after attempting to dissolve Congress and rule by decree. Several news outlets reported that the (former) President was being held at a police station in Lima.

  • The chaos unfolding in Peru will reverberate through Latin America; a Pacific Alliance meeting set to be held in Peru next week has already been postponed.

Argentina’s vice president is sentenced to jail

Time will tell if Cristina Fernández de Kirchner’s story ends the same way ‘Seinfeld’ did.

The news: Argentina’s Vice President Cristina Fernández de Kirchner was sentenced to six years in prison after a three-year corruption trial concluded on Tuesday.

  • The three-judge panel also barred Kirchner and several aides from holding public office.

The crime: Ms Kirchner was standing trial for awarding public contracts to close business associates.

  • Almost half of the contracts – for roads in Patagonia – were never finished and cost the Argentine government more than $1B.

Kind of a big deal: Cristina Fernandez de Kirchner isn’t your average politician: she was Argentina’s first lady from 2003-2007, its President from 2007-2015, and its Vice President since 2019.

  • Not everyone loves Kirchner. In September, she was nearly killed during an assassination attempt in Buenos Aires.
  • Still, her left-wing populist Kirchnerismo movement is among the most popular political ideologies in the country.

And Kirchner’s trial was a dividing line in Latin American politics.

  • In August, Kirchner’s left-wing allies in Bolivia, Colombia and Mexico accused prosecutors of trying to “bury the values and ideals [Kirchner] represents, with the ultimate goal of implementing a neoliberal model.”

It’s (not) over: Kirchner will continue serving as Vice President while her case is being appealed.

  • But without plans to continue holding public office, Kirchner’s 30-year political career looks set to end, one way or another, when her term ends next year.

Earlier this year, Turkish President Recep Tayyip Erdoğan asked the UN to refer to his country by a name many might not recognise: Türkiye (pronounced: tour-key-yeh).

A country changing its name isn’t as uncommon as you might think, particularly when names have colonial overtones:

  • Namibia supplanted “South West Africa.”
  • Calling Cambodia “Kampuchea” feels like a relic of the past.
  • And unless you’re Elaine’s boss J Peterman on a spiritual journey (can you tell we’ve been rewatching Seinfeld?), you most likely use the name Myanmar, not “Burma”.

In a move we’ll definitely use as a trivia question in the future, the Netherlands officially dropped all mention of “Holland” from its name in 2020.

As for North Macedonia, a geopolitical spat forced that name change. Greece accused its northern neighbour of using “Macedonia” to appropriate the legacy of Alexander the Great, and vetoed NATO and EU accession talks with the former Yugoslav state until the change was made in 2019.

✏️ Note: there is some controversy around Erdoğan’s rebranding plans, with critics accusing him of using the name change to distract from domestic issues ahead of next year’s election. Primarily for that reason, we’ll continue to follow the lead of most major media outlets and refer to the country as ‘Turkey’.

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