The global energy transition towards renewable sources faces a significant hurdle due to insufficient investment in the mining sector, according to Rio Tinto Chairman Dominic Barton. Speaking at the Ecosperity conference in Singapore, Barton highlighted the critical shortage of essential minerals such as copper, which threatens to impede efforts to combat climate change.
The supply gap dilemma
Barton expressed deep concern over the widening supply gap for crucial minerals like copper, lithium, and cobalt, essential for the production of electric vehicles, solar panels, and wind turbines. This shortage poses a significant challenge to achieving the ambitious targets set to reduce carbon emissions globally.
Growing demand for minerals
The demand for minerals has surged in tandem with the push for renewable energy solutions. According to the International Energy Agency, the amount of metals required for each kilowatt of generation capacity has increased by 50% since 2010. Additionally, electric vehicles demand six times more minerals than traditional combustion engine vehicles.
Investment deficit in mining sector
Barton highlighted a significant reduction in investments in the mining industry since 2015-2016, resulting in a substantial shortfall of capital needed to develop new mines. He emphasised that the industry is hundreds of billions of dollars below the required investment level to meet the growing demand for critical minerals.
Building trust and public perception
To address the investment shortfall, Barton stressed the importance of building trust and improving public perception of the mining sector. He acknowledged the industry’s failure to communicate its vital role in the global decarbonisation effort effectively. Barton cited Rio Tinto’s own missteps, such as the destruction of sacred Aboriginal rock shelters in 2020, as damaging to the industry’s reputation.
Opportunities amid challenges
Scott Clements, a partner at Tribeca Capital, highlighted significant opportunities in the mining sector despite the challenges. He emphasised the potential for substantial returns on investment but cautioned that the industry must position itself as part of the solution to environmental challenges rather than exacerbating them.
Navigating the path forward
As the global push towards renewable energy intensifies, the mining sector faces a critical juncture. Addressing the investment deficit and rebuilding public trust are essential steps in ensuring the sustainable supply of minerals vital for the energy transition. By embracing responsible practices and positioning themselves as allies in the fight against climate change, mining companies can contribute positively to a greener future.