MSP’s emphasis on ESG principles reflects a global commitment to transforming and “greening” economic activity and fighting climate change, despite political anti-ESG backlash in the U.S.
To support and advance President Biden’s policies on critical minerals and secure supply chains the U.S. Department of State has created the Minerals Security Partnership (MSP). The program, under the aegis of Under Secretary of State for Economic Growth, Energy and the Environment Jose Fernandez, the MSP “aims to accelerate the development of diverse and sustainable critical energy minerals supply chains through working with host governments and industry to facilitate targeted financial and diplomatic support for strategic projects along the supply chain.”
MSP partner States include Australia, Canada, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the United Kingdom, the United States, the European Union (represented by the European Commission) and Estonia (the most recent country to join the MSP, officially welcomed into the fold at the March 2024 PDAC meetings). The member States will coordinate their work through the MSP Forum, established March 3 at PDAC in Toronto. The Forum will promote diverse and resilient supply chains, local value-addition, and beneficiation.
The MSP is focused on addressing four major critical minerals challenges:
- Diversifying and stabilizing global supply chains;
- Investment in those supply chains;
- Promoting high environmental, social, and governance (ESG) standards in the mining, processing, and recycling sectors; and
- Increasing recycling of critical materials
The MSP operates on the basis of several Principles under which member States strive to elevate environmental, social, and governance (ESG) standards across the global minerals sector. The MSP only will support projects that meet high, internationally recognized ESG standards throughout the life of the project.
Companies interested in participating in the MSP program and funding opportunities must:
- Demonstrate responsible stewardship of the natural environment;
- Engage in consultative and participatory processes regarding land access and acquisition;
- Commit to meaningful, ongoing consultation with communities;
- Ensure safe, fair, inclusive, and ethical conditions in the community and the workplace;
- Provide economic benefits for workers and local communities; and
- Ensure transparent, ethical business operations
These principles strongly suggest that adherence to programs such as Prior Informed Consent (PIC) (governing consultations between companies, governments, and indigenous populations), the Extractive Industries Transparency Initiative (EITI), and human rights laws prohibiting child labor and protecting the rights of artisanal miners will be required for companies taking part in the MSP. (Note that not every country is fully implementing PIC or EITI and therefore presumably there could be exceptions on a case-by-case basis while maintaining a focus on fulfilling the intention of those programs.)
A large potential complication for the MSP could be the current absence of an internationally agreed standard on ESG implementation and reporting. The EU is considered to have the most rigorous framework, while currently the US does not have an overarching legal standard (the SEC recently postponed announcing its framework, although it is still expected to do so by the end of 2024 after almost 3 years delay). In the absence of a cohesive standard, it is possible that national law will prevail, meaning that companies will have to be fully compliant with whatever ESG laws are in place where their project will be located. Companies applying for MSP funding/participation may find it useful to follow the standards of organizations such as the Global Reporting Initiative (GRI), the IFRS Sustainability Reporting Standards developed by the International Sustainability Standards Board (ISSB) or to become members of ESG-related organizations such as the Institute for Responsible Mining Assurance (IRMA). Likewise, depending on the mineral in question, there are agreed industry standards such as Copper Mark or the International Council on Mining and Metals Principal on ESG. As the MSP grapples with the question of a universal ESG standard they no doubt will be considering the existing principles already developed by institutions and organizations such as those mentioned above.
There currently are 23 projects in the MSP, 16 of which involve mining and mineral extraction, 7 in processing, and 7 in recycling and secondary recovery. These projects involve cobalt, copper, gallium, germanium, graphite, lithium, manganese, nickel and rare earth elements. Six projects are sited in the Americas, 5 in Europe, 13 in Africa and 3 in the Asia-Pacific region.
The State Department and officials in other participating government agencies are actively looking for additional projects meeting the above standards for production of the identified critical minerals. US Embassies overseas can be a useful resource for companies interested in learning if their projects might qualify for the MSP.
The MSP’s emphasis on ESG principles is an important reminder that despite some political anti-ESG backlash in the U.S., the world – and the USG – remains committed to transforming and “greening” global economic activity and fighting to slow climate change, and is increasingly working together to mobilize resources and capabilities to achieve these vitally important goals.
Leave a Reply