Internal DND study calls green technology minerals 21st-century 'oil weapon'

Minerals needed to power the green transition from fossil fuels could become"the 21st-century version of the 'oil weapon,'" warnsan internal study commissioned by Canada's Department of National Defence.

There is widespread agreement among scientists that drastic cuts in fossil fuel consumption are needed to stave off catastrophicclimate change and a transition to electric cars, wind and solar power form key pillars of this shift.

But as countries race to adopt more electric technologies, investors and governmentsare battling to control access to commodities like copper, lithium and rare earthsfrom remote regions. This hasled many observersto fearthat thegreen transition could have echoes of the tension and violence characterizingthe global pursuit of oil.

"The explosive growth of electronic devices in the past decade, coupled with fast-moving advances in green technologies such as wind power and electric vehicles, are driving the increase in demand for REEs [rare earth elements]," said the study produced for DND in 2020, and accessed under freedom of information legislation.

"REEs are also crucial for national security as they are key ingredients in the production of a variety of defence-related components and applications," said thestudy. "Any disruption to the availability of rare earths could have serious economic and national security impacts around the world."

Rare earth elements are agroup of 17 commodities with names like neodymium, cerium and yttrium. They'rekey components for advanced technologies, including hybrid vehicles, laser-guidance systems and flat-screen monitors.

Analysts said the general trend of competition for control also applies to other minerals needed for the energy transition, such as copper and lithium.

The paper said that China "has already shown that it is willing to use its rare earths as a political weapon," citing Beijing's 2010 move to halt REE shipments to Japan followingthe latter's detention of a Chinese fishing crew during a maritime border dispute.

China controls about 90 per cent of the world's supply of rare earth elements, said the study, which warned that clean technology minerals could be a "21st century version of the 'oil weapon' that Arab countries used during the 1973 OPEC embargo," when petroleum exports were halted to the U.S. in retaliation for Washington's support for Israel.

Nearly 100 pages of DND's internal fileswere withheld, underscoring the sensitivity of information surrounding access to these resources.

The Department of National Defence declined an interview request. In emailed comments,aspokespersonsaid the study, conducted for DNDby Canada's National Research Council,has not led to any direct actions from the military. It has, however,"informed broader departmental discussions that are ongoing."

DND is in talkswith the U.S. over the countries' "shared defence industrial base,"the spokesperson said.

'Tension multiplier'

To fuel the green transition, environmentalists fear demand for new mines, often in remote and ecologically sensitive areas, will lead to contamination as well as violence between communities and investors.

These local conflicts could risein tandem with geopolitical strife between countries and corporations as power brokers jockey to control increasinglyvaluable resourceseverywherefrom South American rainforeststo Canada's Far North and theDemocratic Republic of Congo.

"We are already seeing more conflicts atthe local level," said Donald Kingsbury, an assistant professor of political science at the University of Toronto who studies mining in Latin America, of the renewableenergy boom.

"It'sa tension multiplier," Kingsbury said of new mineral demand linked to the energy transition. "We see it setting the stage for future conflicts down the road."

Demand for copper is expected to double by 2050, the CEO of the commodities trading giant Glencore predicted last year, meaning the world will need to extract60 million tonnes annually.

Producing one electric carrequires more than twice as much copper as a gas-powered vehicle, according to the Paris-based International Energy Agency (IEA). A clean-energy vehicle also needs minerals not used in traditional cars, includingcobalt, lithium and graphite.

Lithium demand is projected to spikemore than 40-fold by 2040, according to the IEA, withdemand for graphite, cobalt and nickel increasing more than 20-fold.

Getting to net zeroemissions"requires a truly monumental global shift, a copper-intensive global system for renewable power," said Daniel Earle, CEO of SolarisResources, a Canadian-listed mining company. "You are basically talking about an effort to electrify everything you can."

A scramble for Ecuador's untapped resources

Earle is hoping to capitalize on this new demand in an impoverished corner of southeastern Ecuador.

Solaris wants to build an open-pit copper mine on a286-square-kilometre concession, extracting more than one billion tonnes of material near the border with Peru. If the Warintza project receives its environmental permits and meets other requirements, copper mining at the site could start as early as2026, Earle said.

It's in places like this, a biodiverse region andhotbed of illegal mining accessiblealmost exclusively by helicopter, where thescramble for resources linked to the energy transition is heating up.

Earle said thebiggestcopper projectsalready operating, including Chile's giant Escondida mine, the world's largest,do nothave the capacityto meet the new demand. He expects smaller operationsin more remote regions, like the Solaris plan, to proliferate globally.

Long dependent on oil revenues and reticent about approving new mines, Ecuador's government is in the process of allowing more mineral extraction, saidNathan Monash, president of the country'sChamber of Mines.

He acknowledged that the increase in mining activity could replicate some of the "geopolitical issues"that have plagued the oil sector.But he insistedcompanies in Ecuador have a "commitment to local communities" after "learning a lot from extraction policies in the past."

"All neighbours can have disagreements, but fundamentally it comes down to trust," Monashsaid."Is there trust built up between local stakeholders and mining companies?"

Federico Velsquez, Solaris's vice president of operations, stressed thatIndigenous Shuar communities living around its proposed mine support the project, due topromises of jobs and infrastructure in one of Ecuador's poorest regions.

Other Indigenous groupsin Ecuador, including the Governing Council of the Shuar Arutam People, which representsdozens ofcommunities in the region, have called on the government to suspendthe project.

"These activities [by Solaris] violate our legitimate decision to say 'No to Mining'in our territory, a decision protected by our right to self-determination and other collective rights," said Josefina Tunki, the group's president,in a statement last year.

Local environmentalists are also concerned about the new mines, fearing water contamination, forest destruction and long-term damage to remote ecosystems, saidNathalia Bonilla, president ofthe Quito-based conservation groupAccion Ecologica.

Embargo fears

The mining industry argues these projects are necessary for combating climate change, creating jobs and moving Ecuador beyond its dependence on oil extraction. If a firm like Solaris doesn't build the copper project, they say, someone else might.

"China is the dominant player in natural resources in Ecuador," said Solaris CEO Earle. Chinese companies are taking "100 per cent" of the copper concentrates from the Miradormine located near the Warintzaproject, he said, and virtually all of Ecuador's oil production.

"Chinese mining companies have gotten the jump on Western mining companies."

China's embassy in Ecuador did not respond to interview requests.

Inaddition to its growing presence in South America, China continues to control the market for rare earths"and is the leader in rare earths research and development," said the study for DND, leading some analysts to believe Beijing could potentially block sales of the commodities during periods of strife.

There was a comparable situation in the oil market of the 1970s.During the 1973 Arab-Israeli War, Middle Eastern nations fromtheOrganization of Petroleum Exporting Countries (OPEC) cartel imposed an embargo on oil sales to the U.S. as retaliation for Washington's support for Israelduring the conflict.

The embargo led to a spike in oil prices and high inflation, launchingan era of economic malaise in the West.From 1973 to2013, between one-quarter and one half of interstate wars were connected to oil, according to research published in the journal International Security.

The situation iscomparable to today's oil market, with prices at record levels due to Russia's war in Ukraine, persistent inflation and other factors.

A spokesperson for Natural Resources Canada said the government is working to "developa comprehensive understanding of Canada's mineral needs over the medium to long term," with nearly $4 billion proposed in the latest budget for a critical minerals strategy to boost supplies.

To avoid replicating the mistakes of the oil era, the University of Toronto'sKingsburysaid the shift to electrification should not mean a "Tesla in every garage." Improving emissions-free public transitand making cities walkablewould do more to fight climate change than continuing to perpetuate the 1950s model of suburban sprawl, he said.

After an inevitable surge in extraction ofnew minerals for the transition, there should be a push for a more circular economy, Kingsbury said. This would allow, for example,lithium to be recycled from old batteries rather than constantly mined.

Nathalia Bonilla from Ecuador's Accion Ecologicaagrees. She said the fight against climate changeshouldn't involve countries and communities battling over resource deposits or wrecking rainforestswith a plethora of new mines.

The green transition, she said, "should be about consuming less materials, not more."

Read thestudy commissioned by Canada's Department of National Defence:

The travel and reporting for this story were funded by a grant from the Global Reporting Centre and Social Sciences Humanities and Research Council.