Mike Henry

Mike Henry opening remarks at the IEA Critical Minerals and Clean Energy Summit

Thank you, Dr. Birol, and thank you Secretary Granholm, Minister Tasrif, Commissioner Breton, Secretary Rao and Minister Rakotomalala for your thoughtful remarks.

Dr Birol, the IEA must be commended for your work on deepening our understanding of the potential global decarbonisation pathways, including under a Paris-aligned 1.5 degree scenario, as well as for raising awareness of the critical role of minerals and metals in the energy transition and for energy security.

And thank you, Fatih, for the opportunity to be here for this discussion and to share an upstream perspective as a global metals and minerals supplier. 

We’re here today in recognition of the fact that the world needs to significantly scale up supply of certain minerals. This need is driven not only by the historical drivers of urbanisation, industrialisation and population growth, but also by the more recent drive to decarbonise the world’s energy system, which, in itself, is going to require significantly more of certain commodities, like copper, nickel, lithium and even steelmaking raw materials.  

But in the face of this need, the world is encountering some growing challenges. This is going to be hard.

The grade, or percentage of metal in a given volume of ore, is falling at existing operations. And this means more ore needs to be mined just to stand still. 

Newly discovered and developed deposits are, on average, incrementally lower grade as well. 

They’re increasingly hard to find, oftentimes deeper, and oftentimes smaller. 

Opportunities are being pursued in jurisdictions with less established mining industries, institutions and governance.

And, of course, societal expectations in respect of ESG and how value gets created for all stakeholders has grown – and rightly so.

These difficulties and growing expectations have some very important implications. 

Firstly, collaboration is going to be ever more important.  

We must work together to go about this in the right way – guided by common global standards, and with good governance, throughout the whole of the value chain.

Secondly, this effort is going to require a significant and growing quantum of capital. 

I’ll use the example of but one of the commodities needed, which is copper. BHP’s estimate is that under a plausible 1.5 degree scenario, the copper industry could require around 250 billion US dollars in growth capital over the next seven years to 2030, and that is over and above sustaining capital. 

But currently committed growth projects over this period only amount to around 40 or 50 billion US dollars today. 

More projects need to be identified, permitted and given the green light by those who are to invest in them. Governments and communities need to be supportive of these projects progressing and capital providers need to be flowing the capital to those companies that uphold the high ESG standards that must be met.

These challenges can be overcome, but it will require shared perspective, common aspiration and a high degree of collaboration.

Now let me be a bit more specific about what’s needed.

Governments must provide predictability and stability to attract capital at lowest possible cost and as quickly as possible. 

This means stable fiscal settings, streamlined planning and permitting processes and harmonised standards. Today, too often we still see short-termism in government policy, or policies which seek to meet near term political objectives, but which show limited understanding of what drives investment. And this slows up deployment of capital and will ultimately make the energy transition harder and more expensive. The flip side of course is that governments that do provide this certainty and stability will be the winners in this race to meet the world’s need for critical minerals. 

We should also be mindful of the fact that while subsidies can in some instances help to accelerate, they can also distort markets and, handled poorly, can inadvertently actually undermine our long-term goal of securing sufficient and low-cost supply.

Capital markets should work in a way that promotes the objective of low-cost and stable supply, and indeed uses their firepower, to enable – or to constrain – access to capital. 

My third point is responsibility. Get these settings right, and the more responsible the project, the more capital should flow. Miners should be granted access to resources based on the value they create, including for host communities and First Nations Peoples.

Opening a mine, done well, creates sustainable wealth and jobs. It brings tax revenues, which in turn fund public services, like health and education. It creates jobs, both directly and indirectly. And it generates a base of skills that can be leveraged into other industries.

But of course this must be done with least possible impact to the environment. We need a small set of common standards, upheld by all, and where performance against those standards is a greater determinant and increasing determinant of access to capital. I think the functioning of the market in this regard is still maturing. We also have too many standards for the same ESG dimensions, this leads to confusion and dissipated effort. Convergence on this front would be welcome – it would result in more focused effort, for higher positive impact.  

We must also not lose the opportunity to improve natural resources governance across the board, so that countries endowed with resources see economic value trickle down. Key to natural resources governance are policies such as transparency around taxes paid, strong anti-corruption frameworks and transparency around approvals processes. And I commend the EITI for its work on this front. 

It would be remiss of me, of course, if I didn’t mention recycling. While recognising that some metals are starting from an already high base, there is an opportunity and need for continued lifting of the rates of recycling to reduce the need for fresh metal units, and therefore the amount of mining required. It’s now for the private sector to turn that into reality. We also need to recognise that recycling alone won’t offset all of the challenges.

A combination of pragmatic international cooperation and competition can accelerate the energy transition. It’s much needed, and I think that’s reflected in this room today.

In closing, the magnitude of the challenge is significant and change is coming fast. But with that comes great opportunity. This opportunity will only be realised through concerted effort and collaboration across industry, investors and governments, putting predictability and responsibility at the core. 

Thank you again, Fatih, for the opportunity to be here today, and I look forward to the discussions ahead.