Written evidence submitted by Anglo American (MIN0038)
Dear Ms Kearns
Anglo American response to the Foreign Affairs Committee’s inquiry into Critical Minerals
Anglo American welcomes the opportunity to respond to the House of Commons Foreign Affairs Committee’s inquiry on Critical Minerals. Mining plays a critical enabling role in providing the metals and minerals needed for a low carbon world – something that is increasingly recognised. We welcome recent initiatives both by the UK Government and others to develop policies focused on critical minerals and are pleased to be supporting the UK Government through our membership of the Critical Minerals Expert Group. Mining, and the role of companies such as Anglo American, is particularly important in this debate.
In this context, we believe that the UK has a currently untapped differentiator – some of the world's largest responsible miners are either headquartered in London or have a significant presence. This, in our view, provides significant opportunities:
- sourcing of materials – utilising the support of large mining companies in the UK to secure the metals and minerals required.
- to drive high standards of extraction around the world – many effective mining standards or best practice guidelines are created in the UK, alongside key transparency and monitoring initiatives.
Anglo American is one such UK headquartered FTSE 100 listed responsible global mining company, with a portfolio that spans copper, nickel, platinum group metals, iron ore, diamonds fertilisers, and several other minerals. Our portfolio of world-class assets produces the metals and minerals needed to power a cleaner, more sustainable future. Our metals are the essential ingredients in smartphones, electric cars and wind turbines, while our basic materials build homes, offices, railways, and airports that help form the backbone of the British economy.
Additionally, we are investing heavily in the UK through the development of the Woodsmith mine in North Yorkshire. Once operational, Woodsmith will make the UK the leading producer of a critical and sustainable mineral for food production through the production of a low carbon and organically certified fertiliser, polyhalite. As such, we believe that potassium should be included as a critical mineral, given its vital role in food production and threats to the security of supply (Russia and Belarus account for 35% of global potash production). Once developed, Woodsmith will be one of Europe’s largest indigenous sources of potassium (polyhalite is 14% potassium), and the world’s largest mineral fertiliser mine by tonnage produced, adding a further differentiator for the UK.
We are pleased to provide our contribution to this inquiry through our enclosed response. We hope you find this contribution to be useful and we would welcome the opportunity to present oral evidence to the committee, should this be of interest.
Yours sincerely,
Jonathan Dunn
Head of International Policy and UK Government Relations
Jonathan.dunn@angloamerican.com
ANGLO AMERICAN RESPONSE
Question 1: Which critical minerals are the most important to the UK’s national priorities (including national security and the green transition)? Where are the vulnerabilities in these supply chains? What are the consequences of disruption to these supply chains?
The challenge in answering this question is that industrial value chains today, and the value chains on which industries of the future will depend, are inter-locking and interdependent. A simple example might be that a lithium battery will require lithium and nickel, but the transmission of power will require copper and the foundation of every significant decarbonising technology is steel. It is important to acknowledge and understand this interconnectedness as a first step to understanding where the UK may need to focus its efforts to ensure resilience in value chains.
We believe that the Government’s existing list of critical minerals, and the watchlist concept, is a good way of setting out the key metals and minerals needed for the transition.
We would suggest one addition to that list and a second more conceptual inclusion.
Firstly, we believe that copper should be listed as a critical mineral. The transition will require electrification of large parts of the economy, increased grid infrastructure and more dispersed connectivity. These are just some of the issues which will see demand for copper increase significantly. Projections by leading analysts see a shortfall in copper availability in the coming decades as the combination of recycled metal and primary mined metal fails to meet the growing global demand. In short, copper is critical to the UK’s ability to transition, and it is projected to be in deficit in the years to come.
Our second, more conceptual suggestion is to consider how the issue of food security should be seen through the lens of critical minerals. The current crisis, caused by the war in Ukraine, has shone a light on the critical role of minerals in food production, and potassium specifically. A large proportion of the world’s mineral-based fertilisers originate in Russia and Belarus and, as a consequence, the question of where key crop nutrients will come from in the coming years, is key. The sectors the Government’s current strategy focuses on are strategically important over the mid-term; disturbances in the food chain can trigger immediate crises, and these can develop very quickly, as we have learned over the past year.
In this context, we believe there is a strong case for including potassium on the list of critical minerals. Potassium (K) (often referred to as potash, K2O) is an essential nutrient for all living organisms. It is the third most important plant nutrient (by the amount required) and has a vital role in plant metabolism, growth, and adaptation to stress. Including potassium in fertiliser blends increases crop yield, health and uptake of nitrogen and potassium, which is important in achieving nutrient neutrality. It is notable that the Canadian critical mineral strategy lists Potash as one of its critical minerals.
Our low carbon, polyhalite mine, Woodsmith in North Yorkshire, will become one of the world’s largest single sources of crop nutrients when it reaches full production in the coming years. This source of potassium (and other crop nutrients) potentially presents a strategic opportunity for the UK, with significant potential not only to help secure the UK’s food supply but drive export value and provide greater resilience in the fertiliser value chain.
The polyhalite extracted from this mine is a natural mineral containing potassium, sulphur, magnesium and calcium plus numerous micronutrients, and is more environmentally friendly than most other potassium fertiliser sources. Because it is not chemically processed, polyhalite has an ultra-low carbon footprint, is naturally low in chloride, and is suitable for organic farming.
Europe produces 19.4 million tonnes of K2O per year, when Russia and Belarus are included. However, the UK and EU produces just 3.4 million tonnes of this, underlining the extent of the role that Russia and Belarus currently play in this international market. Since polyhalite is 14% potassium, at full capacity (13 million tonnes per annum), Woodsmith will increase indigenous UK and EU K2O production by 53.5%.
Question 2: What opportunities are there for diversification of the UK’s critical minerals supply chains? How is the FCDO supporting the Government’s efforts to diversify supply of critical minerals?
As a UK-headquartered diversified mining company, with a global footprint, Anglo American has significant experience of operating in parts of the value chains for critical minerals referred to. Specifically, the majority of Anglo American’s operations are located in Southern Africa and South America, regions which are rich in the mineral deposits from which much of the primary material required in those supply chains will come.
In this context, we believe that the concept of the UK securing bilateral and plurilateral agreements related to critical minerals supply is a good one. We would suggest that those agreements draw together the threads of economic and trade policy, foreign policy and development policy, helping to ensure that the development of critical mineral resources across the world needs to be done in such a way as to produce real and enduring value for the host communities. Inclusion in such agreements of commitments to responsible mining practices would be an important step.
Such an approach requires clarity of purpose, long-term commitment and resources dedicated to it to ensure that it can deliver the outcomes desired by all parties.
Anglo American has long-term experience of working with the FCDO (and previously the FCO and DFID, as well as DIT) especially in the countries where we operate around the world. The support of and promotion for responsible mining undertaken by responsible mining companies is one way to deliver the critical minerals the UK will need. Having FCDO officials and UK Government Ministers supporting companies such as Anglo American in this way can help unlock opportunities.
Question 3: What can the UK learn from steps taken by other countries to reduce the vulnerability of their critical mineral supply chains?
Since 2016, India, Japan, Australia, South Africa, the USA, South Korea, the EU, and Canada have all published strategies to secure the supply of critical minerals. While each has identified a different range of minerals for their critical minerals lists, however, they have taken a similar approach to that set out by the UK towards both enhancing domestic capabilities, including circularity, and collaborating with international partners. This lends credence to the fact that the UK Critical Minerals Strategy is in the right place to reduce the vulnerability of UK critical mineral supply chains.
Rather than a concrete list of policy actions, however, the UK’s Strategy acts more as a guiding framework for how the Government will approach issues relating to critical minerals. We are aware that a more concrete Critical Minerals Delivery Plan is scheduled for publication. It is vital that this includes tangible policy actions, backed by appropriate funding, to give clarity, to both the mining sector and the industries that will need raw materials, as to how the UK will aim to secure its critical minerals supply chains.
The current lack of budget behind the Critical Minerals Strategy is the most significant policy risk that could undermine the Government’s approach. The Canadian Government, for instance, proposed C$1.5 billion of funding at its 2022 Budget for infrastructure development for critical mineral supply chains, with a focus on priority deposits. While the UK doesn’t have equivalent mineral deposits, the scale of funding proposed nonetheless underlines the degree to which other countries are taking serious action to reduce the vulnerability of their supply chains.
Question 4: How can the FCDO support the responsible sourcing of the UK’s critical minerals? How can the UK work with global partners to improve environmental, social and governance performance (ESG) across the sector? What are the potential complications/implications of insisting on traceability in supply chains?
The UK’s status as home to the headquarters of some of the world’s largest mining companies presents a significant untapped opportunity for the country to drive high standards of extraction around the world. The International Council on Mining and Metals (ICMM), also headquartered in the UK, plays a key role in encouraging the application of high standards across the industry, and many effective mining standards or best practice guidelines are created in the UK, alongside key transparency and monitoring initiatives.
As the global economy shifts to a more sustainable future, the question is where will these materials come from? Circular approaches, efficient use of materials, and expanding the pipeline of responsible mining projects will be key to feeding the need for critical minerals to enable the transition. Each of these aspects will be needed to meet demand.
Primary mined material will be a large part of the solution. The issue, therefore, is how to promote responsible mining? Anglo American engages in a wide range of initiatives and activities that help ensure the sourcing of necessary materials is done ethically and sustainably. Responsible sourcing is a critical focus of Anglo American’s commitment to ethical value chains, and we are committed to working with suppliers who comply with applicable laws while striving for zero harm to people, society, and the environment.
One example of our work in this area is through IRMA (the Initiative for Responsible Mining Assurance), a global multi-stakeholder initiative to assess, certify, and drive-up responsible mining activity of which we are a Steering Board member. IRMA’s best practice global standard, established through years of consultation with over 100 companies and organisations, covers all mined materials (except for energy fuels), for all sizes of industrial mines, in all parts of the world at the mine site level.
IRMA’s Standard for Responsible Mining is the world’s first and only global definition of what constitutes leading practices in social and environmental responsibility for large-scale mining operations, assessed through independent third-party verification and assurance against a comprehensive standard for all mined materials, providing ‘one-stop coverage’ across the range of issues related to the impacts of industrial-scale mines. The Standard provides the list of expectations that independent auditors will use as the benchmark for responsible mines and its publicly available audit results provide credible information to purchasers interested in the responsible sourcing of mined materials.
The Standard covers a wide range of issues under four broad categories, including business integrity, planning for positive legacies, social responsibility, and environmental responsibility. IRMA also works to incorporate wider industry and sustainability best practice, such as recognised chain-of-custody or traceability solutions for different products. Anglo American’s Unki platinum mine in Zimbabwe was the first mine to be assessed against the comprehensive standard, reflecting our commitment to transparency, and striving for the highest standards for responsible mining. We are committed to having all of our mines certified by a third party by 2025.
The FCDO, and the UK Government at large, can help support the responsible sourcing of UK critical minerals by encouraging the take up of independent third-party assurance process, particularly IRMA certification, for suppliers of primary materials to the UK market. In addition, advocating for the adherence to ICMM performance standards and the application of IRMA certification around the world, will help give greater confidence in the performance of mining operations across the sector.
There are rapid innovations with regards traceability in the metals and minerals space. However, the nature of the value chains and the way in which metals are processed, sometimes combined, and then reused and recycled means that full traceability is complex. Value chains for precious metals and diamonds are further ahead in proving provenance than for other metals and minerals, and lessons can be learned from those experiences. We believe that over time, using technology platforms including those based on blockchain, it will become possible to trace metals back to the shovel in the mine from which they were produced. Such definition is not yet possible, and traceability will often need to be based on aggregated data.
Question 5: What are the opportunities and challenges of deep seabed mining for critical minerals? What should the UK’s role be in regulatory development around this?
We recognise the sensitivity surrounding deep seabed mining. Anglo American does not have any deep sea mining interests, but is engaged in the technical debate around deep seabed mining as well as engaging in discussions with interested NGO stakeholders on whether deep seabed mining can contribute to the responsible provision of critical minerals.
The major challenge in this debate is that the very fact that the operations are in the deep sea makes scientifically proving that such mining can be undertaken responsibly is extremely difficult. Given the potential value of the deposits and the international nature of the location of the deposits, it is important that a robust, scientific/technical analysis is combined with a consideration of the international and intergovernmental issues at play.
Understanding and engaging with the authorities with relevant regulatory oversight of possible deep seabed mining in international waters is also an important consideration for the UK Government.
Question 6: Where should the UK’s focus be in developing bilateral relationships for improving our supply chain accessibility and traceability? How can the UK Government help mitigate any adverse impact of “debt-trap diplomacy” and increasing divides between the global South and global North?
Anglo American’s global footprint includes our global headquarters in London and mining operations across several continents, with the majority in the “global South” – Southern Africa and South America. In this context the question related to increasing divides is pertinent.
Our approach to mining is based on the premise that with responsible mining, value is generated for all concerned: the local communities, governments (local and national), our suppliers, our customers, our employees and our shareholders. This approach affects all that we do, from our corporate approach to taxation, to local procurement and local employment, to strategic socio-economic development around our operations and engaging with governments on, for example, local beneficiation.
As a consequence, we believe that encouraging responsible mining, certified independently by processes such as IRMA, should not increase the risk of “debt-trap diplomacy”. On the contrary, responsible mining can and should help a country gain real benefit from its mineral wealth, generating sustainable value.
UK Government policy can support such an approach directly or working with multilateral development partners, for example through capability development in local and national governments.
Other initiatives, such as the Extractive Industries Transparency Initiative (EITI) also have a role to play. The UK Government could encourage other governments and companies to commit to the EITI principles.
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28th February 2023