One of the success factors for the
significant commercial opportunity provided
by this increase in mining capacity will relate
to risk management and legal compliance.
Another success factor for such projects
is arranging appropriate financing.
Projects supporting “new energy” such
as EV batteries face challenges such as
funder concerns on price volatility, and
the infancy of this sector meaning that
funders are working out what sort of
offtake commitments they need and want
from particular projects. There will also be
structuring risks – for example, in relation
to “project on project risk” where mining
projects link to manufacturing projects.
There is also currently a lack of contract
standardisation for the supply of these
raw materials. It is anticipated that this
will come in due course; however, at the
moment, negotiations on key terms can be
time consuming.
Any increase in mining capacity will need to
be accompanied by a comprehensive risk
management programme that considers
issues such as conflict minerals, child
labour, human rights and supply chain due
diligence and management.
To date there is very little specific
legislation governing the sourcing of
raw materials, but we expect this to
change as the market grows. Indeed,
the EU has already started to develop a
common set of principles for a socially
and environmentally sustainable mining
sector in Europe. The OECD Guidelines for
Multinational Enterprises and the OECD
Due Diligence Guidance for Responsible
Mineral Supply Chains are currently
the main sources of reference for EU
companies or those selling into the EU.
The UK, Germany, Belgium and the Netherlands encourage companies to implement the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas and the French devoir de vigilance requires companies to source raw materials in a socially and environmentally sustainable way.
The US and Australia have their own specific rules, but the broad principle is that these too relate to conflict minerals and modern slavery.