IFC has a strong focus on supporting and investing in sustainable mining projects. What does this mean to you and your team?
Sustainable mineral value chains are more important than ever, given their role in supplying the critical raw materials for the green energy transition. At IFC, we invest across the metals and mining value chain to help deliver responsibly sourced minerals, which are essential for a low-carbon future. In addition to setting high environmental, social, and governance (ESG) standards, we work with our clients to enhance outcomes in areas like local economic development, community benefit sharing, and resilience to climate change. Our efforts include creating equal opportunities for women and youth, and improving digital skills to increase data transparency. These initiatives help create jobs, grow businesses, and enable transparent resource management.
In our investments, we promote sustainability-linked features to provide financial incentives for companies to achieve ambitious yet realistic and measurable sustainability targets. For example, we recently invested in Allkem’s (ASX: AKE) Sal de Vida lithium mine in Argentina, with a package which included robust climate and social key performance indicators (KPIs) on gender parity, greenhouse gas emissions reduction, and the increased use of renewable energy sources.
How do you see the energy transition and the associated increase in demand for critical minerals impacting the mining industry in Africa?
Given its mineral resources, Africa stands to benefit tremendously from a low-carbon future, if mining is done responsibly. In a decarbonized world, Africa has inherent competitive advantages, being home to high-grade deposits — requiring less overall mining activity and energy — and ample renewable energy potential. We also see opportunities for building climate-responsive local processing capacity where conditions are favourable, including stable investment climates and access to green power. Co-locating mining and processing facilities will require less energy and transport use, further reducing the industry’s overall carbon footprint. Globally, IFC has invested and mobilized nearly US$6B in mining over the last decade with about 40% in Africa.
However mining investments must go hand-in-hand with sustainable infrastructure investments in areas such as power and transport. IFC stands ready with solutions here as well. As one of the largest financiers of renewable energy in Africa, we enable access to green power for our clients. Our track record on transport includes financing and structuring some of Africa’s shared-use transport corridors, leveraging our convening power and ability to engage with private sector partners — along with host governments, the World Bank, and local communities. We believe that only in partnership with a wide range of stakeholders will we be successful in securing a responsible mining industry.
What are some ways to ensure that local communities benefit from investments in the energy transition, especially in resource-rich regions like Africa?
Much of our sustainable infrastructure advisory work is focused on building our clients’ capacity to develop robust community and local benefit-sharing strategies. This work is even more important in the context of the energy transition, which must be just and equitable. Our efforts are aimed at protecting the planet, as well as the most vulnerable populations, while enabling inclusive access to new economic opportunities that are arising.
One focus area for us is working with our clients to build community climate resilience. Because many of the projected climate impacts affect the communities, ecosystems, and infrastructure on which mining companies rely, climate-adaptive investments — in areas such as water, energy, biodiversity, and workforce training — are vital to ensure the long-term viability of mining sites and their surroundings.
Mining investments must go hand-in-hand with sustainable infrastructure investments in areas such as power and transport
Among the ways we help is by providing advice and world-class expertise, including on important areas of focus, such as gender equality. The mining sector generally lags in this area, although the mining companies that have made progress on improving the gender balance of their workforces have experienced bottom-line benefits, in the form of reduced risk, increased innovation, and enhanced financial performance and transparency.
Our recently released Gender & Infrastructure Toolkit provides clients with practical steps to improve gender diversity and boost business performance.
We’re at a pivotal point in the energy transition, in which massive amounts of new metals supply will be needed to help meet global climate goals. Is there sufficient funding available to finance scaled-up production?
Recycling and substitution notwithstanding, we agree that today’s supply and future investment plans fall short of providing the minerals needed for the energy transition and achieving global climate goals. Therefore, meeting future demand will require an unprecedented effort by the mining industry to act quickly and make the investments needed to bring new supplies online. This also includes all-important equity risk capital. IFC is well-positioned to meet demand. We can provide debt financing as well as equity capital, including ahead of mine development. In addition to assisting with political risk mitigation and setting high ESG standards, we can help broker infrastructure solutions and address bankability issues, as we have done in the past. Of course, governments in emerging resource-rich countries need to seize the opportunity to improve resource management governance and transparency standards so that they can attract foreign direct investment and benefit from the resultant opportunities.
How can we reconcile the need for more metals and mining with the drive to cut emissions? And how can this be done in ways that enhance public perceptions of the mining industry?
The mining sector has an important role in helping the world decarbonize, both by reducing its own emissions footprint and by providing the metals and minerals that are critical to low-carbon energy and transport systems. We believe one of the driving forces will be technology and large-scale innovation. While solutions exist today that reduce emissions, energy, and water consumption, they need to be deployed at scale and by a wider audience.
At IFC, we help tech-forward innovators realize their potential. For example, in 2023, IFC invested US$20M in deep-tech startup Boston Metal, supporting the company’s ability to scale up its breakthrough technology, which can help decarbonize the steel industry. We are also active in the green hydrogen space, which holds great potential for greening the steel sector, but also the broader mining sector, including transport solutions.
Importantly, the growth and expansion of mining activities must happen carefully and thoughtfully, with active communication, keeping in mind the dual goals of minimizing impacts on nature and maximizing benefits to local communities. It is only through this approach — by consistently applying industry best practices and high ESG standards, including on safety — that we will succeed in enhancing the public perception of the industry and securing the trust of the communities.
Can you give us some examples of the ways that IFC is driving this push for a more sustainable mining industry?
Sustainability is at the core of what we do, across sectors and regions. Future sustainable solutions in the metals and mining sector will come from primary mining, of course, but we also see the growing importance of expanding responsible recycling operations. We actively support circular economy initiatives in the metals space. For example, last year, IFC invested US$90M in Elemental Holding, a leading global urban mining and recycling conglomerate based in Poland. IFC’s investment will help Elemental ramp up its ability to take various waste streams — electronic waste, spent automotive catalysts, and lithium-ion batteries from electric vehicles — and extract valuable metals and materials from them for reuse.
We are expanding our climate advisory business by supporting clients and encouraging them to think holistically about their climate approach, from decarbonization to climate risk, and resilience and the just transition. For instance, in Africa, we are helping a mining client assess the climate risks faced by local communities and identifying ways to respond through investments in agriculture, forestry, and water management.
This work cannot be done by the private sector alone. That’s why we are partnering with our World Bank colleagues on the Climate Smart Mining initiative. This initiative is designed to encourage the sustainable mining of clean energy metals and minerals in resource-rich developing countries by leveraging finance and advice to help mining companies minimize their social, environmental, and climate footprints throughout the value chain.
We are also looking at entering strategic sourcing partnerships with our mining and manufacturing clients to sustainably source critical minerals, by applying our ESG standards — the IFC Performance Standards. These efforts will become increasingly important since the origins of critical raw materials are a growing concern for off-takers.
These are just a few of the initiatives underway at IFC, and we are excited about the potential of this evolving direction in the mining sector and the positive impact it can bring to emerging economies and communities globally, if pursued sustainably. By investing in innovative and sustainable mining practices, we hope to unlock the sector’s full potential, ensuring a greener and more resilient future for generations to come.
