The reality is that our world is facing a future shortage of the minerals required to make the transition to clean energy, writes Frank Giustra.
The mining industry has had its share of abuse over the past few decades. And lately it feels like the world — especially the younger generation — has been convinced that we can all do without it. I’ve heard it all; mining is dirty, it employs child labour, destroys the forests, et cetera. But the facts suggest otherwise.
Not to be confused with illegal and informal miners, industrialized formal mining is one of the most environmentally regulated industries, regardless of jurisdiction. On its own, that may or may not resonate with the younger generation, but one other important fact surely will: Without mining, how do they hope to drive their environmentally sound electric vehicles or take selfies on their iPhones?
The reality is that our world is facing a future shortage of the minerals required to make the transition to clean energy. Copper, arguably the most important energy transition metal, is facing a dire shortage. Copper consumption by green energy sectors globally is expected to jump fivefold in the next decade. And other important metals are also in short supply. According to a report by Wood McKenzie, mining companies will need to spend $1.7 trillion over the next 15 years to supply enough lithium, graphite, cobalt, and nickel to shift to a low-carbon world.
Billionaire mining financier Robert Friedland, a client from my old investment-banking days, recently told me, “We’re sitting on a cliff with most existing copper mines suffering from declining grade and production while discovering and developing new mines is getting ever more difficult due to socio-environmental concerns and a lack of investment in exploration to find the next generation of long-life deposits.