The COVID crisis has set the global economy and the energy industry into unchartered if not chaotic waters. We have seen an unprecedented drop in demand and a sharp plunge in oil prices. Yet, according to the IEA, renewables alone will continue to experience growth in 2020.

This is in large measure the result of a global and very much bottom-up call for cleaner forms of energy.

The Brookings Institute estimates that the global middle class will grow from the current 3.5 billion people to 5.3 billion in just a decade. This is a tremendous transformation and at scale. These populations have agency and insist countries and companies provide cleaner forms of energy.

At the same time, the pandemic has exposed our vulnerabilities. We have seen supply chains strained to their limits, and in some cases break down altogether.

Clean energy supply chains have also suffered. Just last month, the Financial Times reported that of the 75 GW of wind power planned globally for 2020, 30 GW were at risk of delay or cancellation due to supply challenges.

Yet we project that these are temporary delays, but these delays could be an early warning that we should consider going forward.

The World Bank, recently updated an exceptional paper that describes raw materials demand for different renewable deployment scenarios. They conclude that the production of several energy minerals would need to increase more than 500% through 2050. The conclusion is clear: the clean future will require very large shovels.

The World Bank is far from alone with its projection. The IEA provided similar analysis. In particular, minerals for batteries, such as lithium, cobalt, and nickel, will experience an unprecedented increase in demand.

IRENA’s important report on the geopolitics of the energy transformation included an entire chapter dedicated to the importance of minerals for energy storage, electric vehicles, and renewable power generation. It also recommended that countries looking to develop these resources take the time to understand best practices in the global extractives sector.

I was pleased to join Francesco in IRENA’s General Assembly in Abu Dhabi in January.

And was encouraged to see IRENA’s efforts in this space, and our alignment on the issue. Francesco’s leadership and desire to lead and make a meaningful contribution helped to spur today’s event.

Friends, the challenge is clear. The world must dramatically increase the extraction, refining and processing of critical energy minerals to meet the world’s ambitious clean technology demand.

The pandemic has highlighted the severity of this challenge. In some places, mines have even been deemed essential, which I think further underscores how important these minerals are to our future.

But as we build and reinforce the supply chains that fuel the energy transition, we must take extra care to ensure that we respect human rights. This is a transnational problem across multiple industries; there’s no simple answer.

And the current situation is certainly concerning. Too often we hear about resource-rich developing countries falling prey to predatory investment, leading to poor labor conditions and, in extreme cases, abhorrent stories of child labor.

The media has increasingly reported on some of these cases – often involving child labor abuses in the mica industry, or dangerous conditions in cobalt mines. Yet, these are often the most severe and obvious stories that shock the conscious. However, human rights abuse, corruption, ecological harm – these can occur slowly over time to erode the social structures of communities.

I have a global remit, and I can tell you that no government desires these perverse outcomes. Many countries want to ensure their resources are developed appropriately, but may lack experience with best practice and how to create the most advantageous deal for all stakeholders.

If we decide not to act, to just continue as status quo, there are two outcomes. Either the world does not get the minerals it needs for the energy transition, or the technologies we deploy are tainted with labor abuses and predatory investment.

At the State Department, we began to address this problem over a year ago, working to ensure resilient and diverse supply chains for critical energy minerals and through more transparent and open global markets.

This work fits within a broader Administration strategy on critical minerals. This United States is serious about dealing with the issue of critical mineral supply chains and sources of supply.

In 2017 the President issued an Executive Order focused on the U.S. improving its import resilience across 35 critical minerals. The Executive Order, and the subsequent report

released from the Department of Commerce last year, lays out various lines of effort for the U.S. to improve access to critical mineral supply chains.

The U.S. has a strong record and is a leader in extractive industries governance. We believe the American regulatory structure can serve as a global model. Yet, we also know that other countries have comparable records and best practices of their own to share with the world.

It is in that spirit that the United States launched the Energy Resource Governance Initiative, or ERGI, as we call it, alongside Australia, Botswana, Canada, and Peru at the 2019 UN General Assembly. These founding partners have diverse histories, regulatory environments and experiences. Yet, spanning four continents their collective experiences represent a truly global representation of government best practice.

The projected growth of energy mineral demand is opening new mining frontiers. ERGI’s principles were established to address governance challenges in countries with nascent mining sectors.

Ultimately, we would like to affect above-ground conditions to level the playing field and ensure countries benefit from proper development of their mineral wealth.

The ERGI founding partners believe transparent procurement mechanisms and governance models that emphasize social license to operate will enable responsible mineral extraction, both for the environment and the people in the communities that live near mines.

ERGI’s founders catalyze dialogue, but we thought it important to move toward action. We were pleased to launch the ERGI online, interactive toolkit, on the margins of the Prospectors and Developers Association of Canada (PDAC) conference in early March, with our Founding Partners.

The toolkit is a compendium of sound mining governance and regulatory practices for the critical energy minerals sector. It is a tremendous resource for anyone interested in the governance and regulation of the extractives sector, is free and open to anyone. You can see more at www.ERGI.tools.

This toolkit is not a singular exercise. Rather, it is intended to be a living resource with translation and additional tools added over time.

The toolkit is already gaining traction with several governments, including our own. ERGI’s principles are integrated into U.S. foreign policy and development assistance architecture. This may be most significant considering the newly launched, Development Finance Corporation or DFC. The DFC is a critical and powerful tool to leverage U.S. government financing to catalyze private sector capital to advance countries’ development. In determining eligibility for capital, the DFC will now consider whether a country has embraced ERGI principles as a preferred criterion.

In addition, we would like to engage with a broader group of countries; to move beyond the sources of mineral supply to those that are the catalysts for demand growth. We need all parts of the supply chain to step up and embrace best practice.

To do so, we are planning on hosting a series of workshops to discuss these very principles with the global extractives’ community. The ERGI Founding Partners are all mining leaders in their own right, and are committed to share our collective experience and learn from the broader global community.

The cloud of COVID will eventually disperse and we will get back on the road and sponsor workshops on the margins of major mining conferences, venues like Intergovernmental Forum (IGF) or the yearly Mining Indaba conference.

Ultimately, we would like to see ERGI and our broader efforts generally on critical minerals lead to helping countries attract best in class investment in the energy minerals sector.

The United States is committed to this mission. ERGI establishes the tools. The U.S. can help countries implement these principles through technical and capacity building support on the ground. We look forward to developing partnerships with like-minded, well-intentioned countries and want the market to recognize their countries as preferred sources.

This is a critical moment in the energy transition. Not only are we beginning to see the exponential increase in electric vehicle deployment, we are facing a dramatically different investment climate driven by a pandemic.

Historically, when oil prices drop, the corresponding enthusiasm for alternatives drop as well. However, it seems that this precedent may have been broken. For example, we have seen automotive companies double-down on their electric futures, and some countries that plan to use recovery from the pandemic as a catalyst for an electric revolution.

The mining sector necessarily must expand to meet this demand. We must ensure that development is done responsibly, respecting human rights, labor, and environmental standards.

The market is beginning to consider these fundamental considerations. We must collectively ensure that emerging nations are partners in development and not simply targets for predatory investment. Wealthy countries, financiers and global stakeholders must consider the provenance of the minerals supply chains that enable their clean policies.

Together, let’s call for responsible practices and for the market to prioritize responsible sourcing.

U.S. Department of State

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