We need lithium for clean energy, but Rio Tinto’s planned Serbian mine reminds us it shouldn’t come at any cost


Ana Estefanía Carballo, The University of Melbourne; Gillian Gregory, The University of Melbourne, and Tim Werner, The University of MelbourneThousands of demonstrators rallied across the Serbian capital Belgrade this month, protesting the US$2.4 billion (A$3.3 billion) Jadar lithium mine proposed by global mining giant Rio Tinto. The project, Rio Tinto’s flagship renewable energy initiative, is set to become the largest lithium project in the European Union.

Lithium is a crucial component of energy storage, both for renewable energy technologies and electric vehicles. Forecast demand has prompted efforts by companies and governments worldwide to tap into this market – a scramble dubbed the “white gold rush”.

As lithium projects have multiplied across Australia, Europe, Latin America and the US in recent years, so too have concerns over their environmental and social impacts. Communities near proposed and existing lithium mines are some of the loudest opponents. In a town near the proposed mine in Serbia, a banner reads: “No mine, yes life”.

Lithium extraction serves legitimate global environmental needs. But the industry must not ignore local social and environmental risks, and community voices must be included in decision making. The harsh lessons of mining to date need not be learned again in new places.

Weighing the risks

According to the latest estimates, the world’s resources of lithium sit at 86 million tonnes, a number that continues to grow as new deposits are found every year. Australia is the main producer of lithium, where it’s mined from hard rock called “spodumene”. The largest deposits are found in South America, where lithium is extracted from brines underneath salt flats.

Lithium mining operates beneath the salt flats in the Atacama, Chile.
Shutterstock

In many cases, lithium mines are relatively new operations, yet complex and adverse social and environmental impacts have already been observed. More research and better targeted policy are needed to help understand and manage the socio-environmental impacts.

In Chile, lithium has been mined since the 1980s. It has been shown to interfere with cultural practices of local Indigenous communities, alter traditional economic livelihoods and exacerbate the fragility of surrounding ecosystems.




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The Jadar lithium project is operated by Rio Sava, a subsidiary of Rio Tinto. It’s expected to become one of Serbia’s largest mines, occupying around 387 hectares, and contribute to at least 1% of Serbia’s GDP.

An environmental impact study commissioned by Rio Tinto, and obtained by Reuters, found the project would cause “irredeemable damage” to the environment, concluding the project should not go ahead. Environmental impacts are expected for any mine proposal. Yet some are manageable, so such a grave assessment in this case is not encouraging.

The extent to which a project shows best practice in mine management can depend on pressure from communities, investors and governments. Promises to adhere to all regulations are a common response from the industry.

But as we’re seeing in Chile, significant environmental damage and socio-environmental impacts can still occur within established regulations. Here, communities living on the salt flats are concerned about the effect of removing groundwater for lithium extraction on their livelihoods and surrounding ecosystems.

Communities near the Jadar Mine project hold similar concerns. They have gathered in formal organisation to reject the project and stage demonstrations. A petition against the project has gained over 130,000 signatures, and a report by the Serbian Academy of Arts and Sciences has protested the project’s approval.

The communities fear the potential risks of air and waterborne pollution from the lithium mine, destruction of biodiversity, and the loss of land to mine infrastructure. These risks could affect the livelihoods of local landholders, farmers and residents.

Of particular concern is that the proposed locations for mine waste (tailings) are in a valley prone to flash flooding and may lead to toxic waste spills. This previously occurred in the same region when the abandoned Stolice antimony mine flooded in 2014. Rio Tinto has said it will try to mitigate this risk by converting the liquid waste into so-called “dry cakes”.

In response to this article, a Rio Tinto spokesperson said it has been working through the project requirements for 20 years, with a team of over 100 domestic experts studying the possible cumulative impacts in accordance with Serbian law, adding:

The study will consider all potential environmental effects of proposed actions and define measures to eliminate or reduce them […] including water, noise, air quality, biodiversity and cultural heritage.

Can we decarbonise without sacrifice?

The Jadar Mine project is touted for its potential to bring significant profits to both Rio Tinto and the Serbian state, while helping usher in the era of decarbonisation.

Rio Tinto plans to begin construction by 2022, “subject to receiving all relevant approvals, permits and licences and ongoing engagement”, with first saleable production expected in 2026.

But relatively fast timelines like this can sometimes be a sign of regulatory governance instability, including weak regulatory frameworks or regulatory capture (when agencies are increasingly dominated by the interests they regulate). We have seen this in Guyana, Peru and Brazil.




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In Australia, Rio Tinto’s recent destruction of the culturally invaluable Juukan Gorge — which, notably, occurred legally — also demonstrates regulatory governance risks.

Jadar River Valley in western Serbia, home to a huge deposit of lithium.
Shutterstock

Rio Tinto’s spokesperson said its Environmental Impact Assessment process includes a public consultation period including, for example, meetings with non-government organisations, adding:

We have established information centres in Loznica and Brezjak and, since 2019, have hosted over 20 public open day events in these centres focusing on aspects of the project including environment studies, cultural heritage and land acquisition.

Although the Serbian government indicated that it’s prepared to hold a referendum to find out the will of citizens about the Jadar mine project, the community protests suggest the project hasn’t obtained any social license to operate.

A “social license to operate” is, despite its corporatised name, increasingly key to sustainable or responsible mining projects. It centres on ongoing acceptance by stakeholders, the public, and local communities of a company’s standard business practices. Building such trust takes time, and a social license is only a minimum requirement.




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In Argentina, for example, Indigenous communities living near the lithium mines have developed their own protocol for giving their informed consent.

Similarly, processes of community-based impact assessment or self-government structures led by First Nations in Canada offer insight into potential collaborative relationships.

These processes cannot be rushed to ensure voices are heard, rights are respected, and environmental protection is possible.

Lithium is essential for the transition away from fossil fuels, but it shouldn’t come at any cost.
Shutterstock

A new frontier

Like many other communities negotiating proposed mine projects, local communities and residents in Serbia should not become another zone of sacrifice, shouldering the socio-environmental costs of supporting a renewable energy transition.

Lithium deposits are often seen as “new frontiers” in the places they’re discovered. Yet we must learn from historical lessons of frontier expansion, and remember that places imagined as “undiscovered” aren’t actually empty.

The people who live there must not bear the brunt of a so-called “green” future.




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The Conversation


Ana Estefanía Carballo, Research Fellow in Mining and Society, School of Geography, Earth and Atmospheric Sciences, The University of Melbourne; Gillian Gregory, Research Fellow in Mining Governance, School of Geography, Earth and Atmospheric Sciences, The University of Melbourne, and Tim Werner, ARC DECRA Fellow, School of Geography, Earth and Atmospheric Sciences, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Rio Tinto’s climate change resolution marks a significant shift in investor culture


Anita Foerster, University of Melbourne and Jacqueline Peel, University of Melbourne

What does the advocacy group the Australian Centre for Corporate Responsibility (ACCR) have in common with the Local Government Super fund, the Church of England Pensions Board, and the Seventh Swedish National Pension Fund?

Quite a lot, it seems. These three institutional investors joined with the ACCR to co-file a shareholder resolution on climate change at mining giant Rio Tinto’s Australian annual general meeting in Melbourne yesterday. While Rio’s board advised shareholders to vote against the resolution, there was a very healthy showing of 18.3% shareholders voting in support (over 20% including abstentions).

The resolution called on Rio to review and comprehensively report on its membership of industry associations such as the Minerals Council of Australia (MCA). The MCA’s pro-coal political lobbying has been distinctly at odds with the position of companies such as Rio, which publicly support measures to reduce carbon emissions in line with the Paris climate agreement.




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This alliance between civil society and institutional investors is significant for several reasons.

Institutional investors (large investors such as superannuation funds which pool money to buy shares and other assets) are increasingly concerned about the long-term resilience of their investments to the business risks posed by climate change.

For an energy-hungry miner such as Rio, these risks include changing energy prices and markets, as well as operational disruptions caused by climate impacts such as storms, floods, and droughts.

Investors want companies to disclose these risks fully and to outline how they will manage them to maintain company value over the long term. As the Rio resolution suggests, they also want companies to be transparent and consistent in their approach to climate change. Paying multimillion-dollar memberships for industry associations that lobby against climate action is inconsistent with the long-term investment goals of such shareholders.

New phenomenon

Shareholder resolutions on climate change are a relatively new phenomenon in Australia. In the United States, however, there is a long history of using resolutions to pressure companies to address human rights abuses and change their approach to issues like climate change.

In Australia, advocacy groups such as ACCR (and its counterpart Market Forces) have taken up this tool more recently and lodged resolutions to Australian banks, utilities, oil and gas companies, insurers, and now the big miners, asking for improved disclosure and better management of climate risks.

What’s more, institutional investors are increasingly backing these requests. This latest resolution to Rio Tinto is also reportedly supported by key voting advisors ACSI and Regnan, as well as other major Australian super funds.

As a result, it marks a significant shift in investor culture in Australia, signalling an increased willingness to engage proactively and publicly on environmental, social and governance issues.

Compared with the US and UK, shareholders in Australia have more limited rights to bring resolutions to an AGM expressing their views or requesting that certain actions be undertaken by company management. Australian court decisions have upheld a strict division of powers between company management and shareholders. Nonbinding advisory resolutions on matters that interfere with company management are not permitted. This means shareholders must lodge a special resolution to change the company constitution to allow them to put forward an advisory resolution on a substantive matter such as climate change.

This is not only clunky and inefficient, but also acts as a significant deterrent for investors to support a substantive resolution with which they would otherwise concur. There are renewed calls for law reform, widely supported by institutional investors and also, increasingly, by some of the companies facing these resolutions, to change the law to allow for a more consistent and orderly approach in Australia.

Do these resolutions actually change behaviour?

From their brief history in Australia so far, it appears that shareholder resolutions on climate change, together with a range of other influences, do have the potential to drive change. Many Australian companies that have faced these resolutions so far have responded with significant improvements in climate risk disclosure and management.

Santos recently released its first Climate Change Report; AGL has developed a long term energy transition strategy; and BHP Billiton (which faced a similar resolution to Rio Tinto on its membership of industry associations in 2017) has announced its withdrawal from the World Coal Association and reviewed its other industry association memberships, including the MCA.

While these developments are undoubtedly the result of many factors – including technology and market developments, behind-the-scenes engagement with investors on climate risks, and increased pressure from financial institutions and regulators – it seems that shareholder resolutions can help to focus a company’s attention on ensuring its climate stance is defensible to shareholders. The impact of these resolutions in Australia may also be a function of their relative novelty compared with other jurisdictions such as the United States.




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This week’s resolution at Rio Tinto signals a coming of age for investor engagement on climate change in Australia. Shareholder resolutions have clearly become an important part of the toolbox for civil society in Australia seeking to influence corporate decision making on climate change.

As mainstream investors come on board with these resolutions, their potential impact is heightened considerably. For their part, Australian institutional investors seem to be increasingly willing to stand behind calls for better disclosure and management of climate risks by the companies in which they invest, including by forming new alliances and supporting the use of these more activist tools.

The ConversationIn a country with a relatively conservative approach to investor engagement, these are important cultural shifts. They offer promising signs that Australian businesses and investors are taking a more considered and proactive approach on climate risks.

Anita Foerster, Senior Research Fellow, University of Melbourne and Jacqueline Peel, Professor of Environmental and Climate Law, University of Melbourne

This article was originally published on The Conversation. Read the original article.