In the context of what the UN has described as the “triple planetary crisis” – of climate change, biodiversity loss, and pollution – commitments by countries to accelerate their transitions away from fossil fuels have increased. This has heightened demand for critical minerals such as lithium, copper, cobalt and nickel, which are essential for clean energy technologies like electric vehicle batteries, wind turbines and solar panels.
With these international commitments, such as the Paris Agreement, or tripling renewable energy capacity by 2030, the extraction of critical minerals becomes increasingly relevant. But is it possible to prevent the negative patterns that have often been associated with these industries, such as environmental degradation, displacement of communities or human rights harms? As investors increasingly look to the Global South as a fundamental source of these critical minerals, what measures would avoid replicating these problems?
For regions such as Latin America – a strategically important territory as the home to some of the world’s largest reserves of lithium, copper, cobalt and nickel – can a new era of “green extractivism” be avoided?
The phrase green extractivism has been used by activists and academics to describe and denounce what is seen as a new mode of capitalist exploitation. Natural resources, renewable energy and labour, particularly in countries of the Global South, are “extracted” for the benefit of companies, consumption and markets in richer areas, primarily in the Global North.
The concept builds on the term extractivismo, which emerged from Latin America in the late 20th century and has been popularised in the decades since. It describes centuries of resource extraction in the region, often at the expense of its environments, people and development, and with exported materials often adding little value to local economies. It is these trends that critics hope to see avoided in a new, purportedly greener era.
Given the significance of Latin America’s mineral resources, this sector has duly been the main recipient of foreign direct investment over the past two years. Minerals attracted 23% of the value of projects, according to the UN Trade and Development Conference, the UN body promoting the interests of developing countries in world trade.
According to the International Energy Agency’s Global Critical Minerals Outlook 2024, in the coming years Latin America is expected to account for the majority of the critical minerals market’s value, in terms of mining output. That value is projected to reach USD 120 billion by 2030. It seems assured that investments in critical mining in the region will continue to increase. The processing of these minerals is likely to remain beyond the region, however, with 50% of refining projected to happen in China.
For Latin American countries, the extraction of these minerals holds a promise of economic growth, but with risks. For example, the weak implementation of regulations and the reproduction of extractive patterns that limit technological development, quality jobs and opportunities to reduce inequalities.
A history of problematic extraction
In Latin America and beyond, extractive industries have had a long historical association with human rights violations and serious environmental impacts. Community displacement, inadequate consultation, and socio-environmental conflict are common in the region. At the time of writing, the Observatory of Mining Conflicts in Latin America (OCMAL) documented 284 such conflicts; Mexico, Peru and Chile were the most affected.
Environmental impacts linked to mining activities include various types of pollution: chemical contamination, air, noise and light pollution, soil instability and often irremediable change to landscapes. The industry’s high demand for water has also often put a strain on both local environments and relations with adjacent communities. Disasters such as the Sonora River spill in Mexico in 2014, and tailings dam failures in Brazil at Mariana in 2015 and Brumadinho in 2019, are just some of the more high-profile incidents.
A lack of transparency and cases of corruption have also been highlighted as major challenges for extractive projects, including concerns around Chinese investments in the region. Civil society has been documenting negative impacts for the environment, Indigenous rights, labour rights, and freedom of association.
Panels, principles and due diligence
Given this context, what actions could be implemented to ensure the same historical patterns in mineral extraction are not repeated?
In April 2024, the secretary general of the UN, António Guterres, established the Panel on Critical Energy Transition Minerals. It is aimed at ensuring a fair and sustainable transition that benefits all countries and communities that possess these minerals.
As a first step, this panel of governments, international organisations, companies and civil society representatives proposed seven voluntary principles.
- Principle 1: Human rights must be at the core of all mineral value chains.
- Principle 2: The integrity of the planet, its environment and biodiversity must be safeguarded.
- Principle 3: Justice and equity must underpin mineral value chains.
- Principle 4: Development must be fostered through benefit sharing, value addition and economic diversification.
- Principle 5: Investments, finance and trade must be responsible and fair.
- Principle 6: Transparency, accountability and anti-corruption measures are necessary to ensure good governance.
- Principle 7: Multilateral and international cooperation must underpin global action to promote peace and security.
In addition, the panel has recommended some concrete actions to be implemented by different stakeholders. These include creating the Global Mining Legacy Fund to address legacy issues related to the closure or abandonment of mines, and designing circularity strategies, material efficiency and consumption reduction to mitigate impacts.
The report presenting the seven principles constitutes an important step in drawing attention to some key issues: human rights, the environment, transparency, development and responsible investments. These should be placed at the centre of any extraction of transition-critical minerals.
Elsewhere, the UN Guiding Principles on Business and Human Rights (UNGPs), adopted in 2011, establish a framework to prevent the negative impacts of business activities on human rights. They define the obligations of states to protect these rights, the responsibilities of companies to respect them in their operations and value chains, and the mechanisms for access to remedies in case of violations. These principles have been applied in debates on the energy transition and climate change, especially in relation to extractive industries. Companies are urged to implement due diligence processes that identify, prevent and mitigate adverse impacts; states are urged to regulate, and to make these processes mandatory.
Several European countries, including France, the Netherlands and Germany, have developed mandatory human rights due diligence laws. These require companies to conduct risk assessments and deploy preventive measures.
Significantly, the European Union adopted a Corporate Sustainability and Due Diligence Directive (CSDDD) in 2024. This regulates companies’ human rights and environmental risks prevention processes, and applies to all 27 member states. Though not without its shortcomings, this was a very important step in guiding European companies towards making their value chains and suppliers – including in Latin America – compliant with human rights and environmental standards. Unfortunately, in February the EU proposed simplifying CSDDD and merging it with two other directives. This would water down the requirements and eliminate companies’ legal liability. This is a major step back and misaligned with the UNGPs.
In some Latin American countries, discussions of legislative proposals for mandatory human rights due diligence are beginning, including in Brazil, Chile and Colombia.
With its companies being significant investors in and buyers of Latin American minerals, and as the dominant player in the processing of critical minerals, how China responds to these questions is also of importance. The government has no concrete proposals on human rights due diligence so far, although it dedicates a section to business and human rights in its 2021-2025 Human Rights Action Plan. In this plan, it states China will promote responsible business conduct in global supply chains. It also says China will “encourage Chinese companies to adhere to the UNGPs in their foreign trade and investment, to conduct themselves with due diligence in human rights and to fulfill their social responsibility to respect and promote human rights.” Chinese mining bodies, meanwhile, have announced their own initiatives to improve accountability in overseas investments.
The implementation of concrete actions guided by the UNGPs and the principles of the critical minerals panel will be key. Not only governments, but also companies, financial institutions and civil society organisations play a fundamental role in this. Although these are just two examples of many that seek to address the negative impacts of extractive industries, they demonstrate the centrality this issue is acquiring internationally: energy transition stakeholders are increasingly demanding processes that detect risks to human rights or the environment.
This provides an interesting opportunity for Latin American governments to regulate the requirements they will impose on extractive companies seeking to exploit critical minerals. Clear expectations will provide a level playing field. They will allow countries to not only be more competitive, but also to have better tools for attracting quality investments that meet the highest standards. Whether the region’s governments will seize this opportunity remains uncertain. We have seen the opposite approach to regulation and expectation-setting for lithium extraction companies in Chile and Argentina, for example.
In this regard, overseas investments may be a double-edged sword. On the one hand, they could contribute to improving infrastructure and technology transfers, to the benefit of both parties. This is something countries may seek to gain from ventures via China’s Belt and Road Initiative or, to a lesser extent, the European Union’s Global Gateway. But questions remain over guarantees and commitments to such benefits, as well as the avoidance of risks and negative impacts.
People at the centre
It is crucial that people are at the centre of solutions. In a context where Latin America’s resource wealth is opening up new economic opportunities, we must ask ourselves whether governments will seize the opportunity to protect people and their territories. They could guarantee human rights, ensure fair outcomes and decent jobs, and reduce inequalities. Or, they could allow investments without the proper safeguards.
The same question applies to companies. Will they be able to incorporate human rights protections into their business models, or will they continue to see them as externalities? Will they be able to generate profits while respecting principles of responsible business?
Only by putting the most vulnerable people at the centre can we avoid the historical harms of extractive activities
A combination of strategies, including pressure from civil society, implementation of international obligations, support from stakeholders committed to sustainability, and concerted action among governments, will be key moving forwards. Only by putting the most vulnerable people at the centre, and collaborating with the public and private sectors, can we avoid the historical harms of extractive activities.
In the current political context, the emergence of new extraction models that are rights-respecting and do not perpetuate the same problematic patterns seem scarce. The push for deregulation and the pressure put on Latin American countries, particularly by the United States’ new administration, will probably erode the capacity of governments in the region to stand strong on human rights protections among businesses.
Despite the daunting times, there is hope in resistance – particularly when we look at social movements and local community actions. New generations are demanding urgent action on the climate crisis from their governments. They are demanding the rights of our most vulnerable be respected.
There is an opportunity for leaders in Latin America and the Caribbean’s public and private sectors to confront these challenges and rise above harmful narratives. They could establish clear industry rules for the energy transition, forging a truly just transition.
Latin America has a golden opportunity in its hands to attract more investments. But it needs quality investments, to capitalise on its strategic position and set standards that will bring the best results to its people.
In the words of UN secretary-general Antonio Guterres: “As we redesign how we power our societies and economies, we cannot replace one dirty, exploitative, extractive industry with another dirty, exploitative, extractive industry. The path to zero emissions cannot bypass the poorest people.”
