Opinion

A Typology of Avoidance: The Race to Renewable Energy

Ainsley Elbra reports on the increasing use of legal and financial loopholes by mining firms and the dark side of resourcing renewable energy systems.

Image by Yulian Alexeyev, via Unsplash

We are currently witnessing a global race to locate and extract valuable minerals and metals used in the production of renewable energy. This contest, of course, is being driven by the urgent need to move away from carbon-intensive energy sources, to a decarbonised world. The International Energy Agency (IEA) estimates that on our current trajectory, global energy demand will grow by 1.3 percent annually until 2030, at which point the planet would experience an exhausted carbon budget and 3 degrees of warming. The necessary response to this scenario is to rapidly increase our reliance on renewable energy sources, in preference to traditional, carbon intensive energy sources.

However, the fast-paced shift to renewable energy is not without challenges of its own. The production of renewable energy depends more on the extraction and use of minerals and metals for its production than traditional energy sources. The growth in demand for these key minerals and metals is predicted to increase between 200 and 300 percent between 2017 and 2050.1 In the race to secure these vital metals and minerals we need to consider the negative impacts of mining on communities and societies most affected.

Our latest research project Governing the Dark Side of the Global Shift to Renewable Energy, run by Susan ParkTeresa Kramarz, Craig Johnson and myself, seeks to understand the displacement effects of mining for key inputs into renewable energy, with a focus on developing states.

The project examines how the urgency of addressing the climate crisis has overlooked the negative impacts of the global shift to renewable energy. We focus on three types of displacement:2

  1. Processes of dispossession that displace local populations from land and livelihood through expropriation and resource exploitation
  2. The pollution and contamination of local and global ecosystems at the extraction, production, transportation, and disposal/recycling points of the renewable technology supply chain
  3. Systemic patterns of unequal environmental exchange that lock national economies into destructive path dependencies of primary extraction, land expropriation, elite capture and unsafe disposal of toxic and hazardous waste

In attempting to understand the displacement effects of mining we need to start with our existing negative externalities generated by mining. Hard rock mining is an inherently unsustainable practice, which displaces communities from traditional land, increases the risks of violence and environmental damage and leads to long-run negative impacts on political economies. As early as the 1980s scholars had mapped the negative effects of mineral wealth on developing states, arguing that states with significant mineral wealth could be expected to see a reduction in economic and social progress, compared to their non-resource rich peers.3 We know that the presence of mine sites increases the risk of violence, lengthens civil conflicts and funds insurgencies.4 Mine site security if often outsourced to private contractors, can have problematic relations with local communities. Furthermore, the environmental impacts of mining are highly detrimental, during the life of the mine, after the mine ceases production and in the many instances of environmental disaster.

“Hard rock mining is an inherently unsustainable practice, which displaces communities from traditional land, increases the risks of violence and environmental damage and leads to long-run negative impacts on political economies.”

Mining multinational corporations (MNCs) from developed states are at the forefront of mineral extraction in the Global South. This has added to the complexity of governing issues surrounding mine sites, as many of these issues cannot be addressed at the domestic level. Multinational mining firms are adept at avoiding corporate tax, an especially harmful practice in developing states desperate for government revenues to deliver vital social services. In states where governance gaps exist, mining firms have been shown to formulate their own rules and regulations.5 For example, gold mining MNCs developed the voluntary, Conflict-Free Gold Standard, aimed at reducing conflict around mine sites. The standard is sufficiently weak to allow gold mining firms to continue operating in conflict zones despite our knowledge of the links between mining and violence.6

In light of the research outlined above, it is imperative that we work to understand the ways by which mining firms are able to avoid their legal and financial obligations to host states. As we race to extract vital resources for the production of renewable energy, we must consider the impact on developing states. One of the first steps of this research is to establish a typology of avoidance. That is, plotting how mining firms evade their legal and financial obligations owed to mining communities. Initial research suggests that the tactics used by mining MNCs include tax avoidance, unscrupulous end of life practices at mines and unfair dispute resolution practices after traumatic events such as sexual violence around mine sites.

Some of the examples uncovered as part of this research include women who were victims of sexual assault by workers at an foreign-owned mine in Papua New Guinea receiving a cash payment of USD$20,000 but forced to sign legal waivers stating that they would not pursue the company for further damages.7 In the Solomon Islands, Australian mining firm Santa Barbara sold its Gold Ridge mine to a local community organisation, Gold Ridge Community Investment Limited (GCIL) for $100. The mine required significant rehabilitation to prevent the full tailings dam from overflowing into fresh water supplies. The community organisation was unable to undertake this work, and an environmental catastrophe ensued.8 Lastly, mining MNCs are encouraging their home state governments to incorporate foreign investor protection into free trade agreements. This is under the guise of preventing rash nationalisation of assets such as mines by unstable host state governments. However, it is also motivated by a desire for mining MNCs to be exempt from any increases in royalties, taxes or government ownership of natural resources. Indeed, attempts by developing state governments to renegotiate agreements with foreign mining firms has led MNCs to commence arbitration procedures in order to stall contract renegotiation.9

These are just some of the examples of avoidance seen in the mining sector. By developing a typology of avoidance practices, we can more clearly understand the behaviour of mining firms, particularly where they contribute to the displacement effects that are the focus of this project. This research will also shed light on the effectiveness of the international and national governance institutions currently overseeing mineral extraction, and their ability to hold actors to account.

References
1. World Bank. (2017). The Growing Role of Minerals and Metals for a Low Carbon Future. Retrieved from Washington DC.
2. Kramarz, T., Park, S., & Johnson, C. (2019). Governing the Global Displacement Effects of Renewable Energy. Paper presented at the Earth Systems Governance Conference, Oaxaca City, Mexico; Gelb, A. H. (1988). Oil windfalls: Blessing or curse? New York: Oxford University Press for the World Bank.
3. Auty, R. M. (1993). Sustaining development in mineral economies: The resource curse thesis. London: Routledge
4. Collier, P., & Hoeffler, A. (2004). Greed and Grievance in Civil War. Oxford Economic Papers, 56(4), 563-595. doi:10.1093/oep/gpf064
5. Elbra, A. (2017). Governing African Gold Mining: Private governance and the resource curse. Basingstoke: Palgrave Macmillan.
6. Elbra, A. (2020). Fool’s Gold: Business Power and the Evolution of the Conflict‐free Gold Standard. Global Policy.
7. Jungk, M., Chichester, O., & Flectcher, C. (2018). In Search of Justice: Pathways to Remedy at the Porgera Gold Mine. Retrieved from San Francisco:
8. Armbuster, S. (2016, 21/07/2016). Major tailings dam spill at Solomon Islands ‘disaster’ gold mine
9. Norton Rose Fullbright. (2019). Mining arbitration in Africa


Ainsley Elbra is a researcher in the field of international political economy. Her work focuses on private governance, business-state relations and the politics of natural resources. Ainsley’s book, Governing African Gold Mining: Private Governance and the Resource Curse (Palgrave Macmillan) was published in 2016.