Without responsible governance, the rush for minerals risks environmental harm, social disruption and lost economic opportunity
The world’s financial systems, governance and regulation of mineral exploration and mining must be reformed to direct more capital flows and a clean energy transition, a new UN report has found.
Released by the UN Environment Programme’s International Resource Panel, the report
comes as mineral extraction accounts for half of all global raw-material use, up from 31% in 1970.
The market for critical energy transition minerals — the building blocks for clean energy technologies such as solar panels, wind turbines and batteries — is expected to continue to soar.
In 2023 alone, demand for these materials rose between 8% and 15%, and by 2050, lithium demand could reach nine times its 2022 levels.
The panel’s report highlights key mining regions such as Africa, China and South America, stressing that financing and investment must prioritise environmental protection, human rights and sustainable development.
“The demand for minerals and metals needed for the energy transition requires a mining industry that contributes to sustainable development, while respecting human rights and the environment,” said Janez Potočnik, the co-chair of the panel. “Through sustainable finance, responsible mining can become the default, not the exception.”
Mining, a capital-intensive and high-risk industry, relies on both public and private investment throughout its lifecycle — from exploration to eventual mine closure.
A survey of major mining companies conducted for the report found that while maintaining environmental standards is seen as costly, most said it would add less than 25% to operational costs.
Most respondents also believed that strong environmental, social and governance (ESG) practices would attract new investors, giving the financial sector significant influence over corporate behaviour.
The report calls for fiscal incentives, sustainable finance frameworks and digital tracking tools to reward companies with strong ESG performance. Governments are urged to certify and incentivise responsible mining, improve transparency and support small-scale and artisanal miners through licensing, training, technical support and better access to finance.
Recycling, eco-design and green bonds for reuse facilities could also ease pressure on new mineral extraction. Even with stronger recycling systems, the scale of investment needed is enormous. The International Energy Agency estimates that up to $450 billion will be required by 2030, rising to $800 billion by 2040, to meet global net-zero targets.
The report, among other reforms, recommends tracking financial and ESG outcomes on a site-by-site, gendered and “shared value” basis that recognises indigenous rights, linking mining investments to climate and nature-positive outcomes and building partnerships between mining communities and importing and processing countries.
Africa’s substantial role
According to the report, the role of Africa in the provision of transition minerals is key to power the global energy transition to renewable energy. This is because 14 important transition minerals are produced on the continent and, in the case of chromium, cobalt, manganese and platinum, Africa accounts for half of world production. It produces more than a quarter of the world’s bauxite and palladium.
Production has been rising steadily but is concentrated in a few countries. In most cases, the two top producers account for over 80% of output, with Southern and Central Africa dominating, it said.
A survey for the report identified 170 projects by 129 companies across 25 countries, most in the exploration or development stages. “Africa is thus likely to become a key player beyond bauxite, cobalt, platinum group metals chromium and manganese, where Africa is already dominant.”
The survey shows activity in 13 minerals, led by companies from Canada, Australia, the UK and China — two-thirds of all firms. Most are junior miners, the report said.
China remains the main state financier, though Japan, Korea and the US are investing too. Companies face “a growing risk from tendencies” for some countries to claim sovereign rights over natural resources — including Burundi, Congo, Democratic Republic of the Congo (DRC), Zimbabwe — and governments are demanding a greater share of revenues and investment.
In Kenya, Malawi and Tanzania, companies face litigation actions against contracts. Issues relating to the environment (especially forest destruction) are being raised.
Mining plays a central role in many African economies. The DRC, for example, derives 12% of its GDP and 86% of its exports from minerals.
“The current demand for transition minerals, therefore, has the potential to benefit countries and can transform economies (and societies) if their institutions succeed in providing public goods and services that increase productivity across the non-extractive sectors,” the report said.
It noted that mining can deliver taxes, royalties, exports and investments at a national level, while creating jobs, roads, water systems and other benefits locally. Yet these gains often come with costs. Economic distortions, corruption, social disruption and environmental degradation frequently undermine the promise of mining.
Large-scale operations tend to create capital-intensive “enclave economies” with few links to other sectors, generating little employment — often only 1% to 3% of total jobs.
Despite mining’s promise, the report cautions: “As an individual mine only has a limited lifetime, defined by its reserves and the extraction rate of these reserves, these benefits may only be temporary,” unless managed with “clearly defined intergenerational sustainability objectives.”
Poor governance risks squandering sudden mineral wealth, as illustrated by the collapse of phosphate mining in Nauru, while poorly managed mining can leave toxic and financial legacies lasting decades, with remediation costs of up to $1 billion for a single industrial site.
And although mining has a long history in Africa, only one country — Botswana — has been able to achieve high living standards for its citizens.
While South Africa “has also done well” in establishing a strong local mining and services sector, this remains “very fragile given the worsening political, social and economic situation, evidence of these being provided, for instance, by the deep problems in Eskom with severe blackouts that threaten, the viability of its minerals and metals industry”.
The report noted that countries are seeking to leverage their abundance of critical minerals to drive local value addition and support the green transition. The DRC has launched a Battery Council with the aim of piloting the government policy to develop a regional value chain around the electric battery industry.
The South Africa Industrial Action plan seeks to make the country a manufacturer of fuel cells and an exporter of green hydrogen, based on its platinum-group metals. “This initiative, dubbed the Hydrogen Valley, is seen as a key to helping South Africa to achieve more economic benefits from its platinum group metal resources.”
The Africa Mining Vision offers a framework for local supplier development, sustainable livelihoods and stronger governance. But success will require political will and institutional capacity, the report said. History shows that, without these, mineral wealth can fuel “economic deterioration and the so-called resource curse”, where financial gains are offset by inequality, corruption and environmental harm.
Escalation in abuses
Newly-released data from the Business & Human Rights Resource Centre shows a sharp rise in abuses in Africa linked to mining minerals critical for the energy transition.
Between 2010 and 2024, it recorded 178 allegations in Africa — more than 20% of global cases. In 2024 alone, 45 allegations were reported, up from 26 the previous year, with cobalt and copper mines in the DRC accounting for nearly half.
Abuses include violations of workers’ rights, disregard for community consent, environmental degradation and attacks on human rights defenders.
“Africa holds rich reserves of transition minerals like cobalt, copper, lithium and manganese, yet it remains one of the most climate-vulnerable regions,” said the centre’s Joseph Kibugu, the Africa regional manager. “While some countries, such as Kenya, lead in renewable energy, mining-linked harms are undermining a just transition.
“Our data shows that the rush to extract these minerals is harming workers and local communities, with little evidence they benefit from the boom, despite mining occurring on their lands. Companies need to recognise the serious risks to their operations if abuses continue. Communities and workers are increasingly pushing back through lawsuits.”
Kibugu said that ignoring these abuses raises moral and operational concerns and casts a shadow over the energy transition.
“For it to be just, the rights and participation of indigenous peoples, frontline communities and workers must be central. They are essential partners for a fast, fair and sustainable transition.”
While the report calls for a significant increase in mining transition minerals, it warns that the world’s appetite, especially in the richest countries, must be tempered by social and environmental limits.
“The great majority of these minerals are geologically available. However, the appetite for these minerals … needs to be moderated by a clear recognition of the social and environmental limits to their extraction.”
This will require strong incentives in importing economies to limit demand and adopt radical circular economy approaches.
“Without such measures, and a commitment to obtain a sustainable development licence to operate in the countries and communities that host the mines, the mining industry will not succeed in building the trust that will be necessary for transition minerals to be produced at scale.”
That means designing products that use fewer minerals, recycling metals at scale and extending product lifetimes, the report said.