Under the proposal, the UN scheme would collect “independently verified due diligence on the mineral sector’s environmental, social and governance performance”.
“This could include geographic location data, human rights practices, environmental practices (including greenhouse gas emissions, environmental harms, respect for no-go areas, tailings management approaches), social practices (including on gender, labor rights, Indigenous Peoples, and the obtainment of their Free, Prior and Informed Consent), and governance practices (including on corruption risks, fraud, illicit mining, illicit financial flows, money laundering, transparency gaps, fair deals and equitable benefit-sharing),” the panel said.
“It’s good to hammer these principles, but we need to think about enforceability,” Myriam El Kara, founder and chief executive officer of Singapore-based critical raw materials advisory services firm Sterling Acumen told Fastmarkets. “What’s the sanction for non-compliance, and who’s deciding on that sanction? Which body? Without monetary incentive, the market won’t take care of it.”
In a UN panel report released September 11, 2024, titled “Resourcing the Energy Transition,” the United Nations proposed a new global tracking framework for critical energy transition minerals.
The panel was created in 2023 to address the challenges and opportunities associated with the increasing demand for minerals essential for renewable energy technologies.
The report’s principles and recommendations will be discussed at the upcoming COP29 from November 11-22, in Baku, Azerbaijan.
COP29, or the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), is the world’s biggest and most important climate summit aimed at advancing international climate action. Last year, it had over 85,000 participants and 150 heads of state.
This year’s conference emphasizes the need for creative solutions to mobilize climate finance; the agenda includes discussions on carbon markets and adaptation strategies.
China’s dominance raises stakes for mineral oversight
The UN’s proposal came after governments at COP28 agreed to triple renewable energy capacity and double energy efficiency by 2030. This transition is expected to drive critical mineral demand – set to quadruple by 2040, according to International Energy Agency forecasts.
“The proposal represents an ambitious yet challenging task,” Jawad Sardar, director at Richmond Global, a consultancy working to create sustainable supply chains for critical minerals, told Fastmarkets.
“Production of many critical energy transition minerals is concentrated on a few major actors,” Sardar said. “China controls 35% of nickel, 40% of copper, and 50-70% of lithium and cobalt processing.”
The CETM market remains in its early stages of development, with many key battery raw materials still lacking mature price discovery mechanisms.
“Until nickel and other battery metals compounds reach sufficient maturity and liquidity in new markets, they’re going to be very much tied to the Chinese market,” said El Kara. “No energy transition can happen without Chinese and Indian demand.”
As a result, the panel has recommended the establishment of a framework outlining seven Guiding Principles and five Actionable Recommendations aimed at embedding equity and justice in the race to net-zero emissions.
The framework would require comprehensive environmental and human rights due diligence, transparency in revenue and payments, and independent third-party verification of performance standards for market access.
The proposals cover minerals essential for renewable energy technologies, including copper, cobalt, nickel, lithium, graphite, rare earth elements and aluminum needed for electric vehicles and batteries – as well as silicon, cadmium, tellurium and selenium for solar panels.
El Kara warned that the framework’s voluntary nature could limit its effectiveness. “It’s soft law. There is no consequence for not complying,” she told Fastmarkets.
“[Its] success, like other globally adopted principles and standards, will largely depend on the buy-in from key market players,” Sardar said.
Additionally, the proposal throws up issues around data security, which would need to be addressed.
“Traceability and transparency are crucial questions, but we need to think about the security and ownership of the data,” El Kara said. “How are we [resolving the issue of] cyber security? Where are we saving the data, which servers? Who owns the data? These were raised when [I was] working on traceability solutions in supply chains.”
El Kara previously worked in procurement roles at companies like Verkor, a lithium-ion EV battery startup manufacturer.
“A one-size-fits-all approach to traceability won’t be straightforward given the vast differences in operational capabilities, technological readiness, and regulatory frameworks across these markets,” Sardar said.
But he conceded that “the proposal’s emphasis on transparency and accountability is much needed” notwithstanding “the practical mechanics of implementing such a system across diverse operating environments.”
New market oversight mechanisms
The UN Panel has also recommended a global mining legacy fund to address derelict or abandoned mines and strengthen financial assurance for mine closure and rehabilitation, as well as a high-level expert advisory group to accelerate greater benefit-sharing, value addition and economic diversification in mineral-producing countries.
The panel emphasized that mining has too often operated as an “enclave” with little value accruing to host countries.
Developing countries have faced significant hurdles implementing industrial policies to transform their economies – a position that could worsen if existing trade rules hindering structural transformation remain static.
New mining rules require upfront financial guarantees and indigenous consent before development can begin. The framework demands environmental protection measures, local processing requirements and transparent revenue sharing with affected communities. It also includes provisions for artisanal mining operations (ASM).
“Artisanal and small-scale mining… contribute significantly to global mineral supply,” said Sardar. “About 20% of global cobalt comes from ASM operations in the Democratic Republic of Congo alone.”
“Organizing artisanal mining and bringing the basics of health and safety and organizing work for people to get a better livelihood out of it is very important,” El Kara said. “These issues – the traceability, the artisanal mining, and the dangers of that – are not new topics. We should ask miners how they’ve tackled these issues on the ground because they have been dealing with them for a long time.”
El Kara emphasized that addressing these challenges requires an inclusive, multi-stakeholder approach. “We need to bring together civil society, international organizations, local governments, and industry players to develop fit-for-purpose solutions,” she said. “The most successful initiatives have always been those that draw on existing experience while fostering accountability across all stakeholders.”
Forming the UN Critical Minerals Panel
The UN Secretary-General established the Panel on Critical Energy Transition Minerals in April 2024, bringing together governments, international organizations, industry and civil society representatives. It completed intensive consultations including stakeholder dialogues with civil society, finance sector, industry and artisanal mining representatives before submitting recommendations.
After its launch, the panel – working to transform resource governance – conducted 13 virtual meetings and two in-person meetings in Copenhagen and Nairobi during July and August. The group of members, selected for geographic and gender balance, received over 100 stakeholder submissions during consultations before completing their work on September 3.
The recommendations build on existing UN declarations, conventions and agreements, with technical expert advice from 17 UN agencies. The panel followed a two-phase approach, first identifying priorities through workstreams before drafting the principles and recommendations.
Specific initiatives include establishing an International Council on Artisanal and Small-scale Mining to help these miners become “agents of transformation” in sustainable development. The panel also recommended new approaches to material efficiency and circularity, along with strengthened requirements for environmental bonds and financial assurance.
The panel’s proposals align with existing UN frameworks including the UN Framework Classification for Resources (UNFC) and UN Resource Management System (UNRMS).
The EU’s Critical Raw Materials Act (CRMA) already mandates UNFC standards to promote global cooperation and resource efficiency.
Fastmarkets provides comprehensive price assessments for critical minerals such as silicon, cadmium, tellurium and selenium. For more information on Fastmarkets’ minor metals prices and market coverage, visit fastmarkets.com/metals-and-mining/minor-metals.
