IFC has a key focus on investing in sustainable infrastructure and mining projects in emerging markets. Can you spell out what responsible mining means to you?
IFC, a development finance institution, has remained consistently committed to the metals and mining space throughout its history, financing projects across all stages, from exploration to expansion, with a focus on sustainable economic growth. We believe in the contribution of metals and mining to development, and we invest across the value chain to help produce responsibly sourced minerals, which are essential for the energy transition.
Sustainability is at the heart of everything we do in the mining space. That’s why the World Bank and IFC have established the Climate-Smart Mining Initiative, which helps developing countries maximize the opportunities associated with the energy transition, while ensuring sustainable and responsible mining sector development and production.
How has the definition of sustainability evolved and how do you use that when looking at investment opportunities?
This is actually a good time for mining as new technologies can improve the performance and footprint of the mining industry. It’s also a time when you cannot propose a new mine without taking into account water, power, and community considerations. At IFC, our first point of call is ensuring compliance with the IFC Performance Standards, which are basically our environmental, social, and governance (ESG) standards. However, we’re always happy when clients express a willingness to go beyond that, beyond strict compliance, and we’re eager to support them in their sustainability initiatives. We have established the climate advisory business, for instance, to provide support to our clients when dealing with climate aspects of the operations. And that could go from decarbonization to climate adaptation and the just transition. In Africa, for example, we worked with a mining client to help assess the climate risks faced by the local population and identify mitigation measures.
Looking a bit more broadly, how do the resource-rich countries across regions like Africa stand to gain from the energy transition? As we increase the demand for these critical minerals, where are the opportunities there?
We see a growing acknowledgment by many countries that there is need for at least partial self-sustainability in critical minerals. This has created a new window of opportunity for mining companies and investors. Africa, which is home to high-grade deposits and has ample renewable energy potential, is obviously very well positioned to capitalize on this momentum, provided mining is done responsibly. Over the last decade, IFC has invested and mobilized over US$7B in mining, out of which almost 40% was in Africa.
I believe that by promoting sustainable mining investment, we contribute to unlocking the sector’s potential globally.
Looking at the metals needed for the energy transition, what is IFC’s role in terms of helping local communities and making sure that they’re gaining from the investments into their countries?
In addition to setting high ESG standards for the projects that we invest in, IFC also works with clients to enhance outcomes in areas such as community benefits, local economic development, and climate adaptation. We also promote equal opportunities for women, who are still severely underrepresented in mining. And these initiatives help create jobs, develop local economies, and promote greater transparency of the resource sector. This work is even more important in the context of the energy transition, which must be just and equitable.
We’ve spoken about the growing demand for critical minerals in order to meet our global climate goals and ensure the energy transition can happen, but is there capital going into the projects needed to help grow this supply?
There is a consensus among global stakeholders and experts that the current supply of critical minerals will not be enough to provide the critical minerals that the world needs for the energy transition, even when combined with projects entering the development stage in the near term. While recycling and technological substitutions are key to reducing the impact, we are still very far from achieving that goal. So, new investments in mining projects are essential. And IFC, as a part of the World Bank Group, is well placed to support the mining industry, whether through infrastructure solutions such as power to mines, equity investment, or debt. I believe that by promoting sustainable mining investment, we are unlocking the sector’s potential globally.
Can you talk about some of the strategies or new technologies that are being used to drive sustainability in the sector? Is the investment going into these sectors as well?
The growth in the supply of critical minerals must not happen at the expense of the environment or local communities. So, the development of sustainable mining activities requires thoughtful planning, active communication, application of industry best practices, and high ESG standards. It also means scaling up recourse to solutions that reduce emissions, energy, and water consumption. IFC is working in this space, financing power to mines and water to mines projects that support sustainable mining development. We also support our clients through our sustainable infrastructure advisory work, which focuses on developing local benefit-sharing practices and social inclusion capabilities. Our aim is to protect the planet, and also its most vulnerable populations, including women and youth.
There is this great need for an immense amount of new metals supply. How do we balance that with sustainability efforts and the energy transition?
We need to look beyond the traditional financing for mining and metals processing to support transformative technologies. For example, green hydrogen could provide valuable solutions for the mining sector as a whole, including in areas like transport and downstream processing. Achieving this requires collaboration from all stakeholders to ensure that industry best practices and high standards are applied across the board.
