Fastmarkets International Critical Minerals and Metals Summit: Indonesia

[As prepared for delivery]

Discussion with lead question: Could you share your views on the current landscape of critical energy transition minerals value chains, particularly from a geopolitical perspective?

Your Excellency, Mr. Septian Hario Seto, Deputy Minister of the Coordinating ministry for Maritime and Investment Affairs of Indonesia;

Dear fellow panelists;

• Marit Kitaw, Director of the African Minerals Development Center of the African Union;
• Veronique Steukers, President-Elect, The Nickel Institute;
• Bryce Lee, Global Lead of ESG & Sustainability, Huayou Cobalt;
• Janeman Mauritana Latul, Director, Macquarie Capital;

Dear Raju Daswani (moderator);

Dear participants,

Thank you for inviting me to this important event, which contributes to advancing the energy transition we so urgently need.

With the escalating threat of climate change to our planet and societies, global attention has increasingly focused on critical minerals essential for powering this transition. The rising demand for and competition over these resources have elevated the importance of critical energy transition minerals  - or CETMs - on national and international policy agendas.

Many of the countries rich in these minerals are located in Africa, Latin America, and parts of Asia. For these nations, the energy transition offers a transformative opportunity to achieve greater economic equity.

Historically, however, these regions have reaped limited economic benefits from their resource wealth, primarily due to their role as exporters of raw materials.

Now, there is a chance for these countries to move up the value chain through local value addition and economic diversification. This would also reduce their dependency on volatile commodity prices.

Research conducted by UN Trade and Development shows that resource wealth can lead to development when countries successfully strengthen their national productive capacities. This involves building mid- and downstream industries while maintaining competitiveness in the upstream sector. Such success stories have been the result of coherent policy frameworks that align industrial, education, innovation, and investment policies while fostering a conducive business environment. I am confident that the speakers following me will provide valuable insights into successful experiences and lessons learned.

Allow me to share some reflections on the current landscape of CETM value chains, particularly from a geopolitical perspective:

First, the distribution of these minerals is set to reshape global alliances. Countries and regions with significant reserves could gain increased geopolitical influence. Many developed nations have begun recalibrating their foreign policies to secure access to these resources.

This shift could lead to new alliances between resource-rich developing nations and major global powers, as well as within regional blocs in Latin America, Africa, and Asia.

To manage potential tensions, international frameworks that respect resource sovereignty while encouraging cooperative agreements between CETM-rich and CETM-dependent countries would be valuable.

Second, CETM-related production is currently concentrated in developed countries and China. As with any industry with a high degree of concentration, this leads to vulnerabilities in supply chains. The COVID-19 pandemic clearly demonstrated these risks. More diversified supply chains are inherently more resilient.

The objective of mineral-rich developing countries to become suppliers and integral players in global manufacturing and processing networks is not only a sound national policy but also a strategy that contributes to greater global supply chain resilience. Alliances between developed and developing countries would therefore be beneficial in reshaping these supply chains, with positive implications for global trade dynamics and economic stability.

Third, China is a key player in the global energy transition, particularly due to its central role in processing and manufacturing CETMs. While China's leadership in this area has raised concerns about supply chain dependencies, its investments in renewable energy infrastructure could significantly support many developing nations in advancing their energy transitions and improving their infrastructure.

Fourth, access to technology is crucial. China and some developed countries, such as the United States and Germany, are leading in the research and development of energy transition technologies. There is an urgent need to make these advancements accessible to developing nations to tackle climate change and avoid deepening global inequalities. Also the multilateral trading system should live up to its longstanding promise to support technology transfer.

At the same time, countries need to invest in building their local technological capabilities. Regions like Southeast Asia and Latin America, in particular, would benefit from such technological investments.

Fifth, ensuring environmental and social responsibility in the race for critical minerals is imperative. With heightened competition, there is a significant risk that environmental and social considerations could be sidelined. Despite efforts toward responsible mining, many developing countries continue to suffer from severe environmental degradation and social disruption due to mining activities.

We must ensure that the pursuit of these resources does not come at the expense of local communities and ecosystems.

A coordinated international effort is required to establish and enforce responsible mining practices. More technologically advanced countries should take the lead in adhering to these standards while also supporting developing countries in their implementation.

These factors underscore the need for a balanced approach and enhanced international cooperation to make the energy transition feasible and ensure its benefits are shared equitably across the globe. Only through fostering cooperation and creating opportunities can we build the trust necessary to ensure the energy transition is secure, fair, and inclusive for all.

For example:

Partnerships between the European Union and African nations should focus on creating mutually beneficial economic relationships. These would support Africa in developing local industries and ensure sustainable and responsible extraction practices while providing access to critical minerals for the EU.

Similarly, South-South cooperation - within frameworks like BRICS and the African Continental Free Trade Area (AfCFTA) - offers platforms for developing countries to collaborate on technology sharing, infrastructure development, and market access. This would strengthen their collective bargaining position in the global arena.

I would like to conclude by highlighting a timely global initiative: the Critical Energy Transition Minerals (CETM) Panel, established by the UN Secretary-General in April. This panel is tasked with developing common, voluntary principles to guide the use of critical energy transition minerals toward equity and justice in resourcing the energy transition. These principles are unique because they apply to the full value chain, not just the extractive industries, and they cover economic, social, and environmental aspects.

The CETM panel is inclusive, bringing together experts from government, industry, civil society, and international organizations. This inclusivity enables a dialogue that reflects the diverse and complex interests at stake.

A key recommendation discussed by the panel is the establishment of an initiative to facilitate multi-stakeholder dialogue on accelerating value addition of critical energy transition minerals with a focus on equity. The initiative will support governments and stakeholders in CETM-producing developing countries in areas including financing, capacity building, research and analysis, knowledge transfer, technical assistance, and peer learning.

UN Trade and Development has been an integral part of the CETM Panel Secretariat and remains fully committed to supporting developing countries in transforming critical minerals into genuine development opportunities.

With that, I thank you.

Discussion with lead question: Could you elaborate on the opportunities for regional and global cooperation?

Regional and global cooperation are vital for helping developing countries maximize the economic benefits of their critical mineral resources while ensuring sustainable and equitable development.

Let me share some of my points at yesterday’s CETM event at the high-level forum that are also pertinent for the discussion here.

Regional cooperation offers a means to share costs, learn collectively, and create regional economic opportunities. Regional cooperation can enhance human capacity for value addition and diversification by establishing capacity-building centers.

There are several goods examples.

For instance, the Africa Higher Education Centers of Excellence and the Copperbelt University Africa Centre of Excellence in Sustainable Mining. These centers could serve as regional hubs for training, research, and knowledge dissemination. Their effectiveness could be further enhanced through multi-stakeholder engagement. 

Another excellent example is the African Minerals Development Center headed by Dr. Marit Kitaw, which oversees and coordinates the African Mining Vision and its Action Plan.

A promising regional partnership in building industrial capacity for critical minerals is the DRC-Zambia agreement to manufacture battery precursors. This partnership has just started.

Moreover, regional trade agreements (RTAs) can be instrumental in supporting value-addition initiatives. RTAs can include more flexibility for provisions like rules of origin and local content criteria and help lower trade costs by simplifying customs procedures.

Frameworks like the African Continental Free Trade Agreement (AfCFTA) or the Regional Comprehensive Economic Partnership (RCEP) offer valuable opportunities.

But also the multilateral trading system has a responsibility as I said earlier with respect to technology transfer.

On international frameworks and cooperation:

There are several areas where international cooperation can make a difference, let me mention two concrete areas:

Compliance with standards: Many developing countries face challenges in participating in critical minerals value chains due to the high costs with complying to standards – often multiple standards. Standardized international guidelines could reduce these barriers, facilitate market access, and increase participation by developing countries. However, guidelines need to be designed with sufficient flexibility to accommodate the varying capacities of developing countries, and be supported by international assistance mechanisms.

In the context of our climate challenges and the need for social responsibility in these industries, adopting international standards and certifications for sustainable and responsible production practices is essential.

Traceability: This is an important factor to improve transparency, provide better consumer information, combat illicit trade, and promote conflict-free sourcing. But the significant costs and challenges of implementing these systems in developing countries must be recognized and backed by international support in the form of funding, technical assistance, and phased implementation strategies.