Green energy, dirty deals? Why UK trade policy must support justice in critical minerals

Critical minerals are a vital component in the global energy transition.

These resources, including nickel, copper and cobalt, are used in everything from wind turbines and solar panels to electric car batteries. 

Any country aiming to position itself at the forefront of the green industrial revolution is eager to secure a steady supply of critical minerals. And the UK is no different. The UK government is about to publish a new critical minerals strategy (to replace the 2022 version, itself updated in 2023), and the Business Secretary has been clear that securing critical minerals is a key plank of the UK’s trade strategy. 

Critical minerals: a new ‘resource curse’?

This race to build up critical mineral stocks has huge development implications. Apart from deposits of tungsten in Cornwall, the UK has few reserves of its own. Instead, the most resource-rich countries are low- and middle-income ones. Indonesia is the world’s largest producer of nickel, the DRC is rich in cobalt, Chile has huge quantities of lithium and Zambia has a vast copper belt. The mining required to extract these minerals is intensely environmentally destructive and can have disastrous consequences for ecosystems. The rights of communities and workers are too often cast aside in the rush for greater levels of extraction. 

The conversation around how to secure critical minerals has so far failed to engage with how this can be done in a just, rights-respecting way which supports the economic development of ‘producer countries’. If this is ignored, the world risks replicating the ‘resource curse’ of previous generations, where a country’s natural wealth exposes it to the worst ravages of neo-colonial corporate extractivism. 

A just approach to the UK’s critical minerals policy 

So, what could a truly just approach look like for the UK? This is a question that the Trade Justice Movement has been exploring with a range of civil society allies. 

In a recent briefing, endorsed by 17 organisations and covered in the Guardian, we have highlighted key considerations that should underpin UK policy on critical minerals. 

We call for steps to limit extraction to only that which is absolutely necessary. That means focusing on reusing and recycling minerals, embedding circular economy principles and taking steps to limit demand. 

We highlight how the urgency of the energy transition is being used to justify mining for minerals that are mainly used in the defence and aerospace industries. The argument for limited mineral extraction to tackle the climate crisis is strong; the case for digging up huge swathes of the world to build drones is not. 

We also support legislation – such as the widely supported proposal for a Business, Human Rights and Environment Act – which would hold UK companies accountable for failing to prevent human rights and environmental harms in their supply chains. 

The role of UK trade agreements in the supply of critical minerals 

The UK government regularly signs international compacts which refer to critical minerals. Various statements and agreements are already in place with countries, including Australia, Zambia and Saudi Arabia. As far as we can tell, these deals are vague and non-binding. But the government clearly intends to ramp up the use of trade agreements in this space.

The UK’s current critical minerals strategy makes it clear that trade policy is a major part of the government’s approach to critical minerals. The strategy states that the UK “will explore ways to lower barriers to trade of critical minerals, including as part of Free Trade Agreements”. 

Labour is on the same page. The Business and Trade Secretary has said that “a Labour trade strategy will use every lever, including … critical mineral agreements for our manufacturers”. 

Trade agreements typically seek to guarantee a low-cost, low-regulation environment for companies to buy and sell internationally. Yet there are plenty of reasons why countries producing critical minerals might want to obstruct trade. 

Indonesia – the world’s largest nickel producer – effectively banned the export of raw nickel in 2019 by requiring that it be processed within its borders. Chile is in the process of nationalising its lithium industry to ensure the booming trade in lithium fills the public coffers rather than being siphoned off by international investors. The DRC – the leading global producer of cobalt – has designated the element and other minerals as strategic resources to extract higher royalties.

Any UK trade agreements covering critical minerals must preserve and protect the right of ‘producer countries’ to pursue these kinds of policies, ensuring they are able to use their mineral wealth to support their economic development. 

If approached with imagination and ambition, trade agreements can also be a vehicle for higher standards. They could support more sustainable supply chains by offering tariff exemptions to products produced to high social or environmental standards. And they could include commitments for states to uphold core UN and International Labour Organization  human rights conventions. 

We will look to the forthcoming critical minerals strategy to understand how the UK government will support a globally just transition to clean energy. If trade agreements have a role in that story, they will have to be radically reimagined so they can be used as progressive instruments that support development rather than undermine it.