00:00:00: Welcome to a new episode of shaping sustainable Supply chains and the last podcast we looked at food supply chains in a.

00:00:09: Today we will have a look at another vital issue for our planet and talk about draw materials or raw minerals like platinum and.

00:00:17: And we will ask is sustainability a chance for the mining industry to get rid of its dirty image I'm Nicholas Martin thank you for listening.

00:00:28: Music.

00:00:40: It's a paradox on the way to a more sustainable Society we need a lot of raw materials

00:00:47: wind generators electric motors and digitalization have increased the demand for certain materials

00:00:54: but almost no other industry has a worse image when it comes to sustainability

00:00:59: mining often happens under a poor working conditions the transport of raw materials is energy intensive and the recycling of used minerals is yet often.

00:01:10: Not profitable and sometimes eludes today's state-of-the-art

00:01:15: in this podcast we want to ask how is it possible that mineral Supply chains can become more sustainable voluntary goals of the industry enough

00:01:25: or do they need stronger legislative guidelines

00:01:28: I'm happy to join the conversation with Christina Zhao leash and Spanish oh nice to Global value chain experts at the German Institute for international and security Affairs swp and.

00:01:40: Jean-Pierre in progeny.

00:01:43: Doctoral researcher at the department of economics and management at the University of Helsinki great to talk to you in Finland and Germany.

00:01:53: Hello hi hi

00:01:54: Jean-Pierre your research focuses on how sustainability performance happens in Mineral Supply chains.

00:02:05: I already mentioned that the image of the industry along the mineral supply chain is rather bad from your point of view.

00:02:12: Why is it that people still tend to associate the industry always with something - thanks for that

00:02:19: Nicholas I think it's actually not just the mineral industry that has this negative image it's extractives in general so we need to of course like include oil industry into this picture right

00:02:30: and I'm in their variety of reasons why they have these a bad image meant we had environmental large-scale catastrophes we have corruption scandals there is child labor in some mineral Supply chains and we even had like

00:02:46: I mean situations where extractive projects turned into Civil War and things like that so it is quite obvious why there is a bad image

00:02:53: Christina's winner you are both part of a project on transnational governance of sustainability commodity Supply chains Christina at the German Institute for international and security Affairs you

00:03:06: analyze the sustainability in the Platinum Supply chains in South and Africa and svenja you look at the Copper Supply chains from the Andean region to the EU

00:03:18: first you Christina why Platinum why did you decide to analyze this supply chain

00:03:23: yeah thanks Nico might seem a bit odd to dedicate so much time to platinum but actually platinum or.

00:03:30: The Platinum Group Metals which actually a group of six different metals are considered critical raw materials by the European Union and this means that they are

00:03:38: crucial for Europe's economy because they're used for producing a broad range of goods and applications that are used in everyday life in the EU.

00:03:46: And on top of that Platinum is also one of the metals that will be needed for the green energy transition because it is used for fuel cell electric vehicles and these fuel cell Vehicles also have customers that use customer

00:03:59: so the demand for platinum in the EU is rather high and it will remain high but you itself it doesn't produce any.

00:04:07: Pressing them except for the Platinum videos recycles

00:04:10: so it has to Source it from somewhere else and in the case of platinum the eu's major sources are South Africa which is the world's largest producer of platinum and Zimbabwe which is the third largest producer of platinum

00:04:22: so a question-and-answer platinum on the one hand it's full of high importance of you economy but there is also a high risk associated with it Supply and

00:04:31: with their sustainability in the supply chain and I think this makes it a very interesting in the very important case to look at

00:04:37: thank you Christina so you mentioned a platinum is very important for the new technologies when you're you look at the Copper Supply chains why is copper needed these days

00:04:48: actually several of the aspects that Christina already mentioned for platinum also apply for copper copper is

00:04:56: on the present within our daily lives every electronic device we use has copper in it and therefore it is also very important also for the energy transition for example it is used in batteries such as an electric cars and wind turbines Etc

00:05:12: copper also can be recycled actually without losing its valuable properties.

00:05:18: The quantity of copper around is not enough to satisfy the demand in order to build the more

00:05:25: electric cars for excited demand in order to build the more electric cars for example win.

00:05:31: I need for the energy transition in the case of copper the largest

00:05:36: part of the global Supply is located in Chile and Peru and the Andean region and there are the most productive mines in the world copper is sometimes already refined within the country itself and Sheila for example but sometimes it also leaves the harbor as or and is then refined elsewhere and then processed for example in Germany we have one of the biggest copper refineries in Europe

00:05:59: but most of the copper directly goes to Asia understand process there and then later

00:06:05: Comes to Europe in form of the mentioned electric devices and in the project what we try to do is we try to

00:06:13: track the metal along the whole chain and see which countries companies and other actors play a part in it and then compare the two Supply chains and look at

00:06:22: possible gaps of sustainability let's look at sustainability we already mentioned that more and more countries are trying to pass due diligence laws that might impact companies

00:06:36: in the mineral Supply chains but svenja and Kristina you both have written a very intense paper at swp on Germany's law.

00:06:46: But in our previous talk you also mentioned that you see great potential for more sustainability in the so-called DSG criteria.

00:06:55: Indy DSG is a very popular abbreviation these days and stands for environmental social governance.

00:07:03: But Christina what is ESG exactly in why do you think it could be a driver for more sustainability and the mineral Supply chains.

00:07:11: Well yes D or environmental social and governance as you just mentioned Nico are three criteria that are used by

00:07:19: socially conscious investors to measure or to screen the social and environmental impact of potential investments in a company or in a fan for instance

00:07:28: the environmental criteria refer to for instance energy consumption greenhouse gas emissions or Waste Management social standards for how a company managers relationships with its employees and suppliers its customers and also the impact on communities and where it operates.

00:07:45: And finally governance refers to the procedures the company uses to govern itself so these ESD criteria help investors avoid

00:07:54: companies that fail to meet certain sustainability standards

00:07:57: and as you just mentioned in recent years we've seen a rise in ESG and this means that more and more private and institutional investors and also vendors such as banks are including EST criteria in their investment and lending decisions.

00:08:11: And at the same time.

00:08:13: The influence of Esq rating agencies that Frank companies according to about USD performance has also increased so how does this affect Minerva value chains mining is a very capital-intensive industry.

00:08:25: So it depends heavily on access to finance and to access capital and future Miners and also a refiners of metals for instance need to demonstrate commitment.

00:08:35: To USD concerns and

00:08:37: to do so they need to become more transparent so they need to provide the information on ESD that investors and lenders need so

00:08:45: to sum up I say the rise of USD has the potential to push companies in whenever value chains to become more sustainable and more transparent in order to stay competitive.

00:08:55: Jean-Pierre what do you think are ESG criterias solution for more sustainability are do you think that the industry might find loopholes or finds loopholes to get around the regulatory requirements.

00:09:09: So I think I mean regarding regulatory requirements we really need to understand that regulation is key also for companies it's like the very basis for them to actually be able to exist and to operate.

00:09:24: It becomes problematic if there's corruption because then you can sort of negotiate what it means to be compliant with regulations on right and what I think what

00:09:33: happened in the past decades with voluntary standards and what Christina just said about these G criteria and investor interests the rating agencies and so on

00:09:43: is that we are actually in the huge debate about what does that actually mean for business to be sustainable along such lines right so we also need to understand these initiatives.

00:09:56: Is G criteria promoting initiatives

00:09:59: as sort of discursive platforms about what do we think is currently the right thing to do for businesses and whatnot and

00:10:08: we need to encourage these initiatives in terms of because

00:10:12: times they compensate regulation right so we have situations where there might be a lack of binding roots

00:10:19: there might be no clear targets or the might be a lack of enforcement may be from government agencies at least it's 42 here but some parts of the world

00:10:27: and they're like it's very useful to have these compensating initiatives definitely and some of them

00:10:35: not many so far unfortunately to actually set clear targets where Regulators don't do it.

00:10:41: So let's maybe change the perspective a little and look from the perspective of the companies at these new criteria or at these criteria sueno

00:10:51: the copper supply chain in the Andean region for instance from the point of view of the companies what are the challenges being faced by trying to be more serious about ESG

00:11:03: of course from the perspective of the companies they also faced several challenges first of all.

00:11:10: The mentioned problem of transparency or if you wanted to frame like a problem let's say

00:11:16: the lack of transparency may be one of the main issues as long as you don't know about the conditions of your supplier and then his supplier and then the next supplier it is very difficult to guarantee that your product has been produced under sustainable and fair circumstances of course in the Andean region there are several productive mines

00:11:38: and the or from those different Minds come together in one Refinery and.

00:11:44: Bored then in a product form already and so the firm who purchases this.

00:11:52: Product is not always able to actually track the or to every mind it has been from

00:11:58: and of course we have this one problem which always remains mining is never actually sustainable and environmentally friendly.

00:12:06: You set mining is never sustainable.

00:12:12: But at the beginning we talked and you also talked about the new technologies that could improve sustainability or enhance Christina can you give us some examples of technological innovations.

00:12:24: So I think we're seeing quite a lot of innovation in the number of our teachings at the moment and this is partly due to the need to reduce operating costs and to

00:12:32: improve productivity but the technological change is also driven by the rise of you see which we've just you know we've discussed earlier.

00:12:41: For instance mining companies at the moment planning to invest in Renewable Power stations at mine sites to reduce dependence on fossil fuels and actually there's already one minor to me that relies 100% on renewable energy.

00:12:56: Mining companies are also using water-saving Technologies to reduce water consumption.

00:13:00: They use artificial intelligence when planning Minds to reduce mine Footprints and another example is transport so

00:13:08: Commodities are usually transported by ships and some cut mining companies and out plan to.

00:13:14: Tart sour too high a low carbon emission ships that use liquefied natural gas instead of heavy fuel oil so these are just a couple of examples but actually.

00:13:24: I think the pandemic has somehow you know it's somewhat slow down the mining industry to some extent because some of them weren't set to close temporarily

00:13:33: but it's also in a way accelerated technological change and innovation in the mining industry because the industry had to adapt to that.

00:13:42: So there's been you know quite a push for Innovations and the use of new technologies

00:13:47: maybe it's a what do you think do you think that the new technology leads to more sustainability wow that's a very broad question Nicholas and I think we really need to focus on

00:13:59: absolute reductions of environmental impacts and I find this has too often not taken into consideration

00:14:07: and it's also for me a little bit with this green energy and the e-mobility discussion in terms of like

00:14:14: are we really reducing our environmental impacts like on a global scale if you think for example about the automotive industry

00:14:23: or are we just relocating environmental impact

00:14:26: two other parts of the world and their by diversifying our impact these are like very open questions that I don't see sufficiently addressed yet and particularly not in those discussions we're usually

00:14:40: people say we need to have new Green Technology and so on what I usually Miss.

00:14:48: In the sustainability discussions is much more and understanding how we as societies have produced sustainability challenges meaning that there is something about our culture about how we believe to live in this world and interact with this world

00:15:05: that has produced major challenges in particularly those that earth scientists are predicting to like climate change biodiversity loss and so on

00:15:15: and there is something about this culture we need to change and just by pointing to the possibility of new technologies I think we are actually

00:15:23: pitch waiting the same thing that we've done before.

00:15:26: Okay thank you Jean Pierre for that perspective but let's go back to the technology being a solution Christina.

00:15:34: Looking at Platinum at the Platinum Supply chains do you see technology changed a lot or is it also creating new problems.

00:15:43: I would say it's a very typical answer for research it depends or both I really I agreed to watch a just said it's

00:15:53: you know it always adds two sites to its and yes on the one hand the use of music and Technologies testing in mining has.

00:16:00: Produce positive effects but it also has its side effects that companies and governments definitely need to tackle let me give you two concrete examples from the Platinum value chain.

00:16:09: For instance Platinum mines use huge trucks to transport four and these trucks use four to five thousand liters of diesel today.

00:16:18: So you can imagine the pollution and the dust that these trucks that use and today mines are replacing these user trucks by hydrogen-powered Fuel Cell tracks and this of course makes a contribution to reducing emissions at mind sir but I'll also give you another example.

00:16:32: It gives you an idea of the social impacts that the use of Technologies in the mining sector can have.

00:16:39: What we are witnessing at the moment is that mining companies want to increase automation so you know that trying to use more machines and these machines take over certain tasks in the mines that previously previously humans did.

00:16:53: And this has specific positive impacts.

00:16:57: Usually on the efficiency and also in productivity and probably also on the health and safety of workers because machines often take over you know the most dirty and cumbersome tasks.

00:17:07: At the same time machine also like heat.

00:17:10: Replace lower-paid and Louis killed and less educated workers so with increasing automation these jobs are at risk and of course the use.

00:17:19: Of new technologies also creates jobs but these jobs are usually higher skilled jobs.

00:17:23: So let's sum up a little bit we have talked about the ESG criteria we've talked about the effects of Technology

00:17:35: ends in the industry there are also new sustainability standards and initiatives that really focus on the mineral industry Jean-Pierre.

00:17:44: You have analyzed different standards and initiative during your research Who develops them actually and what are their goals in a few words.

00:17:53: I know that's hard it's very hard they could as it I mean they are very diverse.

00:17:59: We talked in the mining industry I think in the meantime maybe about 40 maybe even 50 like different standards that exist and with diverse scopes

00:18:08: who is developing them I mean they can be company or like Association driven the could be

00:18:15: types of donor organizations behind them ngos government sometimes so it really depends

00:18:22: and I think I mean we can generally say that they do try to make a difference somewhere in the industry for industry to be more responsible or if you want to call it sustainable

00:18:34: in their production and operations and I think that's a common denominator and they do it of course two very different extents.

00:18:41: So we can say there is a jungle of these different initiatives and standards but for instance copper has a long mining tradition that's when you do see that some of these standards are really widely accepted or is

00:18:55: everybody actually applying his own standard.

00:18:58: Yeah Nicholas I think you touched on a very sensible issue when calling the jungle we have several different standards from different levels for copper especially since 2019

00:19:13: for example there is a new certification system also voluntary this was especially developed for copper and difference called The Copper mark

00:19:22: and besides the Mayans the copper Mark also ordered copper processors such as refineries

00:19:29: but it still remains difficult to actually incorporate all Stations of the whole chain would you say that this standard really makes a difference that many companies adapt to it.

00:19:40: I would definitely say it does make a difference that

00:19:42: many companies now look at the standards and try to improve their is G Performance through such certification systems are certainly in

00:19:54: which way is then actually incorporates the whole chain I think this is rather the problem

00:20:02: for the sectors like the mining sectors as mentioned there are different standards and certification systems which are in place which have

00:20:12: been proven

00:20:13: to improve the conditions in the mining sector but for example for the refineries this is a rather new or jumpy I mentioned the transportation sector which is not really Incorporated in such auditing programs.

00:20:29: And so it is still really hard to say okay this is one scheme which is widely accepted for the whole chain for example.

00:20:39: I would like to add another Point here if I may just about the jungle thing right about these many standards and trying to understand what do they incorporate and what not

00:20:48: and I think from a company perspective trying to understand these standards in particular the nitty-gritty about what

00:20:54: today want what approaches today recommend and things like that if you try to understand them and compare them it's really messy

00:21:02: like very messy and that's just because a point the race will you because we need to understand these standards as

00:21:09: discussion platforms we're basically we try to make sense of what we want to see in those businesses and they all go a little bit into different directions and it makes it difficult for industry to apply them actually if you haven't been part of

00:21:23: setting them up in the first place.

00:21:27: So putting together the pieces that we brought up we talked about technology and that the many many different standards that we have looking at the mineral Supply chains what do you think can be

00:21:40: or is the biggest driver for most sustainability in the near future sueno maybe you want to start.

00:21:47: I think this can only work if we have different drivers coming together and pushing this whole idea forward

00:21:57: I mean maybe this is a rather simple and of course it is not that simple but I would think that the consumer also plays a role not the only one of course but

00:22:07: maybe it is not enough anymore to ask for an organic banana or fat chocolate though that is very important of course but it also should

00:22:16: become more important to consider what our cars or houses consist of for example and this is far more complex and difficult to answer but nevertheless is important to start

00:22:27: change Maybe

00:22:29: but still the consumer is not everything and demand alone won't change everything but to be considerate about it and to ask about it and to ask us so for a rise of the asg's from.

00:22:45: The the perspective of the buyer of the and consumer or over shareholder this may be a good start.

00:22:54: It's a what do you think so I would generally agree to that I would just want to add maybe to a different perspective

00:23:00: actives and the first one is from my work that we really need to understand much better what's going on inside the businesses and how they perform and sustainability objectives

00:23:10: because I think sustainability initiatives standards or even like the new German law and so they would not make like the differentiation of trying to understand that diversity.

00:23:22: Businesses they are trying to address and there's a lot of scope driving sustainability from such a.

00:23:28: And the other thing that I mentioned before is really like this cultural part about what's actually going on in our society with regards to sustainability challenges.

00:23:37: What are the causes of it and coming back.

00:23:41: That's regard to the topic about mining industry having a bad reputation I think if a company or an industry has a bad reputation it's also part because they mirror what's going on in our societies you know there are

00:23:55: part of our societies they

00:23:58: don't exist separate of it we make the existence of these companies possible in their operations and really need to understand this entangle modes also from a cultural point of view if you want to get

00:24:10: to grips with our sustainability challenges thank you Jean Pierre Christina what do you think what can be a driver for more sustainability in the future.

00:24:19: I think I definitely agree visenya that consumers can play an important role I mean if we as individuals who want more sustainable mineral Supply chains.

00:24:28: Then we have to change our personal buying in our investment behavior and I think.

00:24:34: As a response company in capital-intensive Industries such as the mining sector then have to adapt to follow the money but of course the problem with this approach is that consumer behaviors that something that changes overnight but it's a very very long.

00:24:48: Process also because people often don't know what type of types of metals are used for which devices and how they expected.

00:24:55: So I think a lot of awareness-raising is still needed and

00:24:59: this also matches with what Jean Pierre said you know we have to also has a cultural aspect to it we have to kind of change our way of thinking about minerals and where they come from and what type of sourcing we want.

00:25:14: Let me ask you pointing to the consumers I mean looking at the cell phone you know in a cell phone you have I don't know how many dozens of different Metals inside

00:25:23: how can the consumer really know what's inside a phone how do you imagine this phone that a consumer can

00:25:31: choose from you know what I mean this would include new labels what do you think

00:25:35: yeah it's it would definitely have to include more labels and you're definitely requires more information by companies on how the

00:25:45: Nationals that you know that we used to produce the phone has been sourced and what the problems and the risk along the supply chain are so I think a lot of it has to do with transparency making making these Supply chains more transparent

00:25:56: sharing more information with consumers and maybe also developing certain seals that help consumers take decision which product to buy

00:26:05: you know like it is the case in the agricultural sector on textile sector yeah I would very much agree with that and also add the goal should not be to label products which are

00:26:18: produced under sustainable circumstances but rather to make sustainability the norm like to actually enact

00:26:27: legislations and criteria which ask for.

00:26:33: Sustainably produced product as a norm and not for the exception which need an extra seal maybe so this would mean to raise the transparency along the chain but also to enforce a certain

00:26:48: legislations which were also already mentioned.

00:26:51: And if I could just add one small Point here one problem I think that we also that were also facing a mineral value chains is that there is no price premium for

00:27:00: sustainably produced metals and I think this is also a problem of the sector hasn't been to might have to change

00:27:07: and again this has to do with bio with the buyers in with consumers that have to be willing maybe to also pay more.

00:27:13: In order to make sure that the phone that they using is not built with dirty metal mmm yeah obviously sorry if I'm add something here.

00:27:21: I know it is there are cases within mineral Supply chains we're buying firms so not like and consumers are willing to pay a premium price for the right Productions of these things.

00:27:34: Exist but it's definitely not mainstream yet coming to the end.

00:27:42: Going back to our question at the beginning the bad reputation of the mining industry.

00:27:47: What do you think other factors that we mentioned relevant and other likely to change the mining industry sped image Jean-Pierre what do you think.

00:27:57: In a few words or in a few words

00:28:01: I honestly don't think or mining companies have a bad image so we really need to differentiate about what we talk about when we say the mining industry there are very diverse bunch of companies and we should

00:28:14: take a little bit more care about that they're quite some good Advanced mining operations

00:28:20: but still like it's a question of what we call sustainable not and whether it's like an industrial operations as mining is can ever.

00:28:29: Comply with such ideas thank you Christina.

00:28:32: Well I'm not sure of the sectors that we mentioned will actually change the mining Industries in which but one thing I am currently observing is that the - industry is working very very hard to change its image itself.

00:28:43: So big mining companies see.

00:28:46: The energy transition as a window of opportunity for presenting themselves as the green industry and as an industry that drives the energy transition because as you mentioned at the beginning of this podcast Niko.

00:28:58: - essential for a zero carbon future so I would say the energy transition is creating a momentum for the industry to change its image and

00:29:07: to be fair the industry is also making efforts you know to clean up its practices and its reputation

00:29:12: but of course mining Industries contribution to a Greener future should also not be used as an excuse for continuing with unsustainable practices in the value chain so.

00:29:22: Healthy countries to decarbonize is not enough the mining industry itself has to work on decarbonizing itself to and I think if it does its image will also

00:29:31: improve thank you Christina what do you think sueno yeah I would definitely s what Christina just said mining is.

00:29:41: In itself not a very sustainable activity because it extracts resources from the ground which do not regrow but

00:29:51: to really move forward the mentioned energy transition we need those metals and to really have a Greener future we need to make it let's say as less harmful as possible and there are

00:30:06: very forward-looking initiatives that we already mentioned in the mining industry also we

00:30:13: we should not forget that the mining sector also is a large employer and that it is

00:30:20: part of the development of many regions and also benefits many people

00:30:27: in that sense and we need to take care that in these regions that there are not abandoned and left behind after the metals are extracted

00:30:35: thank you so much for this fruitful discussion Jean-Pierre in bracciano from the Department of economics and management at the University of Helsinki

00:30:45: dialing in from Finland

00:30:47: Christina's knowledge working on sustainability in the Platinum supply chain and svenja show nice looking at the Copper supply chain at the German Institute for international and security Affairs swp thank you so much for joining us today.

00:31:03: Thank you for having us thank you

00:31:05: thanks everybody great discussion this podcast is brought to you by the research Network sustainable Global Supply chains which brings together leading researchers from around the globe

00:31:20: in the next episode we will have a look at intended and unintended consequences of standards and regulations on

00:31:27: Agro based value chains I'm Nicholas Martin thank you for joining us stay tuned and stay safe.

00:31:34: Music.