World Bank to leverage mines for green energy, human development – mining lead

➤ In a world increasingly split into trading blocs, metal shortfalls may prove more painful in regions that haven't locked up supply.

➤ The World Bank wants to leverage the infrastructure that comes with new mines for green energy and human economic development.

➤ Commodities markets will differentiate because of carbon pricing and pollution policies.

Michael Stanley, the World Bank's mining lead. Source: Michael Stanley.

The World Bank is increasingly focused on leveraging mining's potential to drive human economic development on the back of green energy, according to Michael Stanley, the international financial institution's mining lead.

The greater attention on mining comes at a fraught moment for the industry. Countries are racing to secure metals supply in a more multipolar world riven by national security concerns, trade spats and war. Meanwhile, metal supply deficits loom, but it remains tough to build new mines quickly given long development timelines.

Still, Stanley remains optimistic the sector will meet the challenge of filling growing demand — at least for now.

S&P Global Commodity Insights spoke with Stanley at the Prospectors and Developers Association Conference in Toronto, Canada. The following interview has been edited for clarity and space.

S&P Global Commodity Insights: How optimistic are you that miners can meet fast-growing metals demand from the energy transition and broader economic development?

Michael Stanley: Today, I remain optimistic because I think that you never waste a good crisis — and we haven't quite got to that yet. As prices really start to climb, I think you'll see that there's probably a lot of capacity that isn't being fully utilized right now. Some mines will be able to ramp up. They can kick up 5%, 7%, 10%.

The issue is also a bit geopolitical in that, at the aggregate global level, it may be that there's more copper in the market than the supply gap today indicates. That's because you've gone to this multipolar world. And so some big trading blocs — China — may have a greater lock on more of that copper. So this shortfall may fall within different geographic parts of the global economy.

I think that we're probably going to see a lot more [research and development] and innovation pouring in as prices climb. If there's one thing we learned from the response to the COVID-19 crisis, it's that when you put enough money into R&D, you can come up with solutions quickly. There'll probably be some good metallurgical leapfrogs. That's one.

And then the other is this 15.7-year timeline from discovery to production. Frankly, governments may say this is important, but the processes within the governments are totally indifferent to that. It's plodding. And in many countries, there are steps where they see themselves as the gatekeeper. That will probably be addressed.

The third area is certainly AI and the ability to go deeper in the crust. And that is huge. I think we're going to see a lot of opportunity come from that through geophysical data, and just data mining, and being able to penetrate deeper. My final point is that the current set of global mining districts is not inclusive of Africa's potential. That is a big one going forward.

I'm optimistic. But ask me three years from now and I might change my tune.

Is the World Bank's mission changing or expanding given that more governments are pursuing mining-focused industrial policies?

On the demand side, governments are certainly much more active players. It's just emerging on the supply side. And on the supply side, where we're likely to see it manifest most is state enterprise taking much larger percentages — equity positions — inside these new mines. In Africa, institutional governance has always been a barrier, right? So we are retooling a little bit to try and de-risk some of the institutional governance.

In the last 10 years, we focused a lot on the physical space. But now these governments — it's maybe a bit aspirational — but they are looking for value addition. It could be building a bigger ecosystem of the small to medium enterprises and just getting more jobs in that indirect space, outside the fence, but associated with mining operations.

What are some of the higher-priority regions where the World Bank would like to work on infrastructure corridors as it relates to the mining sector?

So in 2014, we put out [a report called] "The Power of the Mine." The Power of the Mine looked at development in Africa, and it was like a spider that doesn't build a good uniform web. We came to recognize that mines were organically building these corridors of development.

And so from that, we want to flip this around and say, 'O.K. If these mines are big energy consumers, and become anchors, and they can electrify — which is the start of economic development — can we work with mining companies on renewable, clean, low-carbon sources of energy and transmission?'

So this is where we're going to focus a lot more. And it's in Africa. It's in East Asia, in Papua New Guinea and other places where we've got these rural areas that are quite removed from the grid, but there are proposed mines. And if a road goes in, and [information and communications technology] goes in, and they have to have energy, is there something about that we can then, in a public-private partnership, leverage to electrify or share benefits of that infrastructure in the region around it.

Has it become easier to work on projects that target lower-carbon energy in the past five or so years, simply because net-zero goals have gathered momentum in some countries?

Yes, it is getting easier. First off, renewable energy is getting much cheaper, right? You can do a lot more with renewable energy at a cost that is pretty cost competitive now. So that's been a huge step forward.

Is that because, in doing so, you embed the external pollution cost to the price?

Absolutely. And frankly, if a government does not wish to do this, then there are mechanisms coming in like carbon border adjustment mechanisms. That's very real. One way or another, I think we're going to see that we price carbon. We're going to see more of this going forward; that the commodities will certainly be differentiated in the global market. I look to nickel as one [metal] that doesn't get discussed as much. But there's quite a variance on carbon [intensity] of nickel in the global market today.