Are Green Metals the New Organic Food?

The concept of green, or sustainable metals and their economic viability has come up in several times in conversation in recent weeks, notably in discussion with CRU and during the Review of the UK critical Minerals Strategy, I thought it would be timely to articulate some thoughts on it.

Talking with CRU I was asked of the potential and viability of a new stream of green metals and whether people would pay a premium for it. In short my view was that yes they would. I think a perfect analogy is with organic/bio food, and the monumental rise of Wholefoods stateside. The markets, on an individual human level are very willing to spend a little more money (in some cases, a lot more money) to purchase a product that was created in a more humane, environmentally friendly, or sustainable fashion. Free range vs battery farmed eggs for example.

Whole Foods Manhattan: “Whole Foods Market sells only products that meet its self-created quality standards for being "natural," which the store defines as: minimally processed foods that are free of hydrogenated fats as well as artificial flavors, colors, sweeteners, preservatives, and many others as listed on their online "Unacceptable Food Ingredients" list. - Wikipedia.

As with food products, we will probably see a market for ‘ESGreen’ metals (I’m coining that term, you heard it here first!) opening up as more governments and corporations commit to using these more responsibly sourced raw materials. In the UK’s critical metal strategy, the government wish to become a leading player in the push for enhanced environmental, social and governance (ESG) compliance in mining, and other governing bodies worldwide are doing the same.

The switch to ESGreen metals is now being directly driven from the bottom by both government and investment groups who are actively seeking to improve ESG in mining companies, with the Church of England Pensions Board leading the charge in tailings dam safety compliance. Ultimately, mine disasters affect the bottom line of investors also, so they want things to be taken care of properly. Forced compliance/consideration of ESG factors in metal production from investors drives the cost of production up, and therefore the price of the metal.

This discussion appears to be largely a feature of westernised nations who are becoming increasingly ESG focussed, implementing stricter controls on the extractive industry along with greater resposibility expectations (above). This is in contrast to countries like China and Russia, mining super powers, where ESG considerations can fall by the wayside giving a lower cost of production. This results in a divide in both philosopy and production costs between east and west, resulting in two kinds of metals being produced - more expensive ESGreen metals from (not exclusively) Canada, Australia, and the US, and cheaper non-ESGreen metals from less responsible production methods.

The adoption of these ESGreen metals by other organisations such as construction companies, manufacturers etc., is another matter. The use of premium ESGreen metals will undoubtedly cost more, however as we see with organic food, this cost is ultimately passed on to the consumer who is willing or obliged to pay more.

It is likely that we will see legislation promoting use of ESGreen metals, through either carrot or stick, or other levelling tools such as tariffs on metals that do not meet specfic ESG requirements to allow western miners to remain competitive in the the new ESG world.

If we can assume that policy change will happen, the onus is on miners to begin to boost their metals ESG accreditation as soon as possible so they have a first move advantage if and when such policy comes into existence. Companies are already moving to create sustainable metals products such as verdeX, a sustainable steel from US Steel.

After this discussion with CRU, I was glad to hear my thoughts confirmed by Guy Winter during the UK policy review who shared that Robert Friedland (billionaire mining financier and founder of Ivanhoe mines) has suggested the same thing, however I can’t for the life of me find the quote where he shares this sentiment.

Cover image EtiAmmos/Adobe Stock