By 2040, the global demand for transition minerals, such as copper, cobalt, chromium, Graphite, lithium, nickel, manganese, Molybdenum zinc, and rare earth elements (REEs) and the others is expected to increase by six times. These minerals are widely used in clean energy technologies such as solar panels, wind turbines and batteries, including for electric vehicles, and are therefore essential to the global shift to a green economy.
The Business and Human Rights Resource Center (the Resource Center)’s Transition Mineral Tracker (TMT), which covers six minerals namely cobalt, copper, lithium, manganese, nickel and zinc, has observed mounting human rights and environmental accusations with the greater demand for these minerals in the past decade. The Tracker has recorded a total of 510 allegations of human rights abuses in the extraction phase of minerals from 2010 to 2022. Over two-thirds of recorded allegations involve only 14 companies, which are among the largest and most established in the extractive sector. These companies include China Minmetals (China), Glencore (Switzerland), Grupo México (Mexico), Codelco (Chile), Freeport McMoran (USA), and Solway (Switzerland).
While human rights abuses in the critical minerals sector are far from confined to Chinese companies, China’s dominant position in the value chain and expanding investment in extraction overseas has given rise to much attention on Chinese mining companies. At present, China has a dominating influence on the processing and refining of the majority of the critical materials as well as the production of clean energy technologies. It does not have the same level of control over the extraction of these minerals, but is actively seeking to broaden its global footprint through targeted investments and acquisitions in upstream mineral supply chains, focusing on cobalt, lithium, and nickel in countries across Asia, Africa, and South America. GlobalData predicts that the number of mines holding transition minerals under development or exploration outside China, predominantly owned by Chinese firms, is poised to increase twofold.
A new report from the Resource Center documents 102 allegations of adverse environmental, social and human rights impacts of Chinese companies’ overseas investments in nine transition minerals over a two-year period from January 2021 to December 2022. These minerals include: copper, cobalt, lithium, nickel, manganese and zinc, as well as chromium, aluminum and rare earth elements (REEs). The overall findings of the briefing indicate that environmental and human rights risks in transition mineral supply chains associated with Chinese companies, including exploration, extraction and processing, are as significant as those of their western and other counterparts. Below is a breakdown of the findings in three key sets of facts.
Over two thirds involve impacts on local communities
According to new research, 54% of clean energy mining projects overlap with indigenous lands. As new mining projects are fast-tracked, there is a risk that corners will be cut. Without proper consultation and legal protections, the future supply of transition minerals could put Indigenous Peoples and their lands at greater risk.
This echoes the findings of the Resource Center’s report, which shows that Chinese overseas investment in transition minerals is widely associated with concerns about negative impacts on the environment and local communities, particularly indigenous peoples and workers. More than two-thirds of the allegations (69) relate to human rights abuses against local communities. The most prominent risks relate to impacts on livelihoods (33), indigenous peoples’ rights (28) and inadequate meaningful consultation (21).
Projects that have allegedly affected indigenous peoples’ rights include the Las Bambas copper mine in Peru, the Weda Bay Industrial Park (IWIP), the Obi Island nickel smelter project and the proposed Dairi Prima zinc and lead mine in Indonesia, and several other lithium, copper and nickel projects in Argentina, Ecuador, Papua New Guinea, etc. These involve some of China’s largest mining companies, such as MMG (part of China Minmetals), Zijing Mining, Tsingshan Group, Huayou Cobalt, China Nonferrous Metal Mining (CNMM), Ningbo Lygend Resources, Jiangxi Ganfeng Lithium, and so on.
The Las Bambas copper mine has recorded the highest number of human rights allegations (five in 2021 and eight in 2022), both among controversial Chinese mining projects and in Resource Center’s global TMT. Equally telling, however, has been the response of local communities and the state to these violations, with legal challenges launched and numerous protests leading to production stoppages and project delays, as we saw at the Dairi zinc mine, where local women farmers recently celebrated the court’s decision to revoke the mine’s environmental permit.
Indonesia could serve as a successful example for other countries with rich resources looking to move up the mineral value chain. Their approach of prohibiting nickel ore exportation while luring foreign investors to establish smelting and refining facilities in the country is worthy of emulation. However, the goal of becoming an electric vehicle manufacturing hub entails huge transformations that may involve egregious environmental and human rights abuses because of unscrupulous business practices and regulatory failures.
Based on the data collected, Indonesia has recorded the highest number of abuse allegations (27), of which 20 are linked to nickel smelter industrial parks and facilities. These allegations relate to major Chinese investor-dominated projects: the Delong Nickel Industrial Area, Indonesia Morowali Industrial Park, Indonesia Weda Bay Industrial Park and Obi Island Battery-grade Nickel Smelter Project, supported by companies including Tsingshan Group, Zhejiang Huayou Cobalt, Jiangsu Delong Nickel Industry, and Lygend Resources.
These projects reportedly caused air and water pollution, soil contamination, flooding, deforestation, and biodiversity loss. Moreover, some of the facilities are powered by coal plants, which contradict China and Indonesia’s green energy transition commitments and allegedly pose severe health risks to residents, especially children. Local groups have claimed that the extraction and processing of nickel has resulted in the loss of means of subsistence, access to food and water for local communities, and social conflicts spurred by land appropriation and severe security measures against those who resist the displacement. Media coverage and NGO reports have unveiled escalated labor strife stemming from inadequate working conditions, frequent work-related fatalities and injuries, inequitable and discriminatory treatment of migrant laborers from China and domestic workers, and the dismissal of trade union leaders.
Given the rapid expansion and development of Indonesia’s nickel industries, and the difficulty for civil society actors to access sites and monitor environmental and social issues due to the remoteness of many project sites, the documented violations are likely to be just the tip of the iceberg. Without stronger labor and environmental protections enforced by the Indonesian government, and serious human rights due diligence throughout the mineral supply chain, Indonesia’s path to green energy will be marred by social and environmental costs.
In addition to Indonesia, Peru (16), DR Congo (12), Myanmar (11) and Zimbabwe (7) are among the five countries that account for more than 70% of all reported allegations. While the majority of allegations relate to the largest industrial mining operations in copper, cobalt and lithium, environmental and social harms associated with small-scale and unregulated Chinese mining operations in REEs in Myanmar and chrome in Zimbabwe are also documented.
Mining companies operating in conflict-affected areas, such as post-coup Myanmar, are of particular concern because accountability is almost impossible as civic space is under constant attack. Global Witness and other civil society groups have documented the environmental damage and human rights abuses associated with companies backed by Chinese owners or investors colluding with local arms groups in the mining of REEs, and traced how these materials move through the mineral supply chain to the world’s best-known manufacturers of EVs, wind turbines and electronics. Despite this, we have yet to see proactive measures taken by major producers, investors and governments to address illegal and conflict-related REEs.
Only seven companies linked to allegations have human rights policies
A total of 39 Chinese companies were implicated in the dataset of allegations of abuses in their overseas operations related to transition minerals, and only seven of them have published a human rights policy. Notably, half of the top eight companies linked to the highest number of allegations have human rights policies. These include MMG, China Molybdenum, Zijin Mining and Zhejiang Huayou Cobalt. MMG, the operator of Las Bambas, is the only Chinese-owned mining company to have signed up to several recognized voluntary responsible business initiatives, including the International Council on Mining and Metals (ICMM), the Voluntary Principles Initiative (VPI) and the Extractive Industries Transparency Initiative (EITI), in addition to its corporate human rights policy. However, the Las Bambas project has the highest number of allegations, demonstrating significant gaps between the company’s policy commitments and performance.
The response rate from Chinese companies on allegations is much lower than that of their Western and Asian counterparts. Between 2021 and 2022, the Resource Center made 22 approaches to 17 Chinese companies in the transition mineral sector, asking them to respond to allegations of abuse. It received only four responses, a response rate of 18%. That is even lower than the 24% response rate recorded in the Resource Center’s 2021 report. By comparison, between 2021 and 2022, the Resource Center recorded a global response rate of 56% in the metals and mining sector, and a response rate of 43% from Asia-based metals and mining companies (excluding China).
The low response rate from Chinese companies shows a lack of willingness to engage with a wider range of civil society actors, including an international NGO like the Resource Center. Nonetheless, there has been sporadic progress. For example, Zhejiang Huayou Cobalt is one of the first Chinese companies to publish a fairly comprehensive human rights policy and to establish a corporate-level grievance mechanism in line with international standards such as the UNGPs and OECD Guidelines. The development follows international pressure on the company after Amnesty International published a damning report exposing child labor in Huayou’s supply chain in the Democratic Republic of Congo (DRC). The company also responded twice to the Resource Center’s inquiries about its labor practices and environmental challenges in Indonesia.
In addition, there are occasions when companies such as China Molybdenum, La Société Minière de Boké (SMB, part of China Hongqiao), Sino-congolaise des mines (Sicomines, joint venture of Sinohydro, China Railway Group, etc.) and Zijin Mining have provided feedback on other NGOs’ reports on various human rights issues in Guinea and the DRC.
This may indicate a growing awareness and capacity of companies to communicate externally with different stakeholders. However, the company response mechanism is generally a limited and partial tool for measuring transparency and traceability of companies and their supply chains. It is also worth emphasizing that companies should not get full credit for simply responding to the Resource Center, or for making an announcement about a vague human rights policy. Ultimately, meaningful consultation, robust monitoring and reporting, effective remediation and shared benefits are essential to the sustainability of mining, which requires strong government intervention and coordinated efforts and support from buyers, investors and key stakeholders along the mineral supply chain.
Tiger Blake (alias) is a researcher with the Business and Human Rights Resource Center. The author has adopted an alias due to the sensitivity of the issue discussed.