Chile offers case study in critical mineral mining

BY: BILL SPINDLE

SANTIAGO, Chile — In high mountain desert lakes and under rocky coastal bluffs, the critical minerals needed for the energy transition are plentiful here in Chile — lithium for batteries, copper for transmission lines, rare earth elements for wind turbines and electric motors.

But they are not unearthed easily. Or inexpensively. Or without disruption to the natural environment — and the people, plants and animals that depend on it.

That could not have been clearer during a recent reporting trip to this mineral-rich nation, one of a handful of commodity giants at the leading edge of the global energy transition’s voracious appetite for critical minerals.

Others include Australia, Mongolia, Canada, Argentina and many of the nations in Africa. And, of course, China, which controls nearly all global trade in critical minerals and dominates the production of clean-energy technologies from solar panels to electric cars. For resource-rich, export-oriented countries like Chile, the international race to secure these minerals is accelerating.

People, plants, birds, fish, microbial life and the Earth itself endure the brunt of the extraction process. For that reason, nearby communities — in Chile often Indigenous groups with connections to extraction sites stretching back many generations — demand a share in profits and compensation for the inconvenience and erosion of their way of life. Affected plants, animals and the Earth itself can’t make such demands — and yet constitute part of the fabric of life on the planet, which is diminished if they disappear.

The global mining industry has a checkered history of abuse, violation and violence — and, in recent years, a record of fitfully reforming past practices. Part of the history of Chile, the world’s largest producer of copper and second-largest of lithium, is a struggle common to all commodity heavy economies, from the United States to Russia: how to sustainably balance private profits with public good.

This has been the case through economic booms and busts, caused by global appetite for materials critical to human development, and now the energy transition.

“Mining is not just about money and economic development. It is also about a moral cost of solving maybe the most important challenge humanity is facing,” said Juan Carlos Jobet, dean of the School of Business and Economics at Universidad Adolfo Ibá?ez in Santiago and minister of energy and mining for Chile between 2019 and 2022.

Here, we break down the challenges that make mining sustainably for critical minerals such a tall order. Stay tuned for on-the-ground coverage from South America on this topic.

Growing demand

Demand for metals and minerals is already soaring and will only grow, driven by expanding energy consumption and the need to assure more of that energy comes from cleaner sources such as solar, wind and nuclear. A new unit of clean energy, from, say, a solar panel or wind turbine, on average requires 50% more critical mineral resources than an additional unit of conventional energy, according to the International Energy Agency.

The combined market value of minerals key to the energy transition — copper, lithium, nickel, cobalt, graphite and rare earth elements — could more than double to $770 billion by 2040 if the world got on a trajectory to achieve net-zero emissions by 2050, the agency said.

Though these minerals and elements are being increasingly recycled from the products they’re used in, much of the demand over the coming decades will have to be met by minerals pulled from the Earth and then industrially processed in steps often involving toxic chemicals and harmful byproducts.

Read Cipher’s other explainers diving into why we need critical minerals for the energy transition and how society is looking to get them.

Geopolitical tug-of-war

Because of the strategic importance of these materials, controlling them and their processing is coveted by nations for economic and military security.

China, which controls the source or processing of over 90% of critical minerals, is already leveraging minerals in geopolitics. The country briefly stopped exports of rare earth elements to Japan in 2010 after Japan arrested the captain of a Chinese fishing trawler that collided with Japanese ships near disputed islands. That move sent global prices for rare earth minerals soaring.

Late last year, China did the same to the United States after the Biden administration moved to cut China’s access to high-performance computer chips used in artificial intelligence. The standoff continues, with China denying many rare earths to the U.S. as the Trump administration gets underway.

The growing demand for minerals paired with increasing geopolitical friction has flung resource-rich countries like Chile, whose two largest trade partners are China and the U.S., into the tense wrangling between global superpowers racing to secure these minerals and control their processing supply chains.

“Chinese companies dominate both cleantech and the mineral supply chain, and that’s no coincidence,” said Milo McBride, a research fellow specializing in critical minerals at The Carnegie Endowment for International Peace. “Dual uses spill over for many of these minerals. Rare earths and lithium are needed in defense technologies, copper for high-grade steel alloys. That’s triggered national security concerns.”

Chile’s approach

Chile’s government has taken different approaches to mining over the years, from granting large, government-owned mining companies’ total control to allotting extraction concessions to private companies. The current government has shifted the emphasis toward government miners controlling large projects with international partners that bring investment funds and technology, with some smaller private projects also encouraged.

The aim is to find the right combination of extraction and environmental protection that supports a productive industry for the long run, said Arlene Ebensperger, an advisor to the mining industry there.

“We have to strike a balance. We can’t do nothing, but we can’t destroy everything, either,” she said.

My visit to Chile revealed how tough that balance can be to achieve — whether 14,000 feet up in the Atacama Desert at a lithium-rich salt lake or at a municipal dump overlooking the Pacific Ocean in the city of Concepción, where a rare earth mining project is struggling to get underway.

The shift in administrations in Washington has come with a step back from social and environmental concerns in the U.S. What’s more, tensions between China and the U.S. and between the U.S. and its European and Asian allies are growing. Mining projects, critical to boosting supplies beyond China’s control, can’t easily be sustained without effective engagement with local communities and the environment surrounding them, industry officials say.

“I have seen companies that say, ‘this is desert, there’s nothing here.’ But you have to acknowledge that for these communities, this is their ecosystem, their foundation,” said Marcela Sepúlveda, a long-time community relations manager for miners working in Chile’s Atacama Desert. Sepúlveda, who is currently working on a lithium project owned by London-listed mining company CleanTech Lithium, added: “There’s no perfect technology. You have to just assess the impacts and find ways to mitigate them.”

Santiago-based journalist Patricia Garip contributed to this story.