Dispatch from the World Economic Forum Council meeting in Dubai

Nov 13, 2012

Check out this post from the World Economic Forum Council meeting in Dubai. The original post and survey results are available here.

“The notion of responsible extraction (or sourcing) should be embedded in the concept of stability and growth in supply as a response to scarcity”

 

Can resource scarcity help drive responsible mining?

 

According to a World Economic Forum survey, resource scarcity ranked 4th in terms of “what to expect” in regards to upcoming trends. But, survey respondents were split on whether the issue deserves more public attention.

Heightened concern over resource scarcity is not a surprise. Even if scarcity is experienced on a short- to medium-term basis, and is therefore only temporary, the experience is real and often felt directly by businesses and consumers. For example, the impact with regard to rare earth minerals has been felt in electronics and other manufacturing. In the US, where the survey showed this as a trending issue, we have seen and felt the impact of a severe drought on corn supply and prices.

Where scarcity is real it can promote alternatives – such as the use of other natural resources – and efficiencies or product substitution. But questions of scarcity are also an opportunity to go directly to the source and better understand and support what it takes to respond to scarcity (real or perceived) and promote responsible, stable sources. I would argue that the notion of responsible extraction (or sourcing) should be embedded in the concept of stability and growth in supply as a response to scarcity.

Green technology, specifically green power, is one example. Consider the issue of the limited supply of some rare earth minerals, many of which are used in electronics and green power technology. Or consider the use of lithium for batteries.

Can environmental and social best practices in mining and sourcing (on the part of buyers and manufacturers) increase confidence in supply? At first glance this may seem counterintuitive. However, there is growing evidence that responsible, ethical supply chain management is partially driven by risk control on the part of manufacturers.

Efforts by Intel, HP, Motorola Solutions, GE and others to address conflict minerals in their supply chain are promoting new, more responsible sources in the Democratic Republic of Congo. And on the issue of rare earth minerals, the strategy of Molycorp is instructive. Molycorp has taken concrete steps at its reopened Mountain Pass mine in the US to differentiate itself on the grounds of environmental management practices.

And what about a new “green deal” that takes a look at the entire supply chain and promotes and rewards responsible development at every step, not just at the product phase? Can we extend the experience from other supply chains into minerals, energy and food? Recalibrating incentives and pricing on this basis might be good for society in a number of ways, including promoting new, responsibly developed supplies.

- Steve D’Esposito

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