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Current issues and challenges

This article discusses current environmental, social and economic issues and challenges related to the extractive sector

In the extractives sector, both the policy and industry efforts have gone a long way to improve environmental performance, increase trust towards local community and society overall, and satisfy raw material needs of downstream sectors. Still, challenges remain on various fronts.

Environmental Challenge

Mineral extraction is still a very land, energy and waste intensive activity, with a plethora of potential negative consequences for the environment if not adequately managed. For example, new extractive projects and the sector as a whole need to increase efforts along several lines:

  • To counteract the destruction of biodiversity and ecosystems, accountable land management and rehabilitation plans need to be implemented.
  • To avoid pollution of the local environment and water bodies, all waste streams, including tailings need to be properly managed.
  • To further reduce related GHG emissions, energy efficiency and the electrification of extractive activities with renewable energies need to be pursued further.

Local Benefit & Societal Contract Challenge

The extractive sector in Europe enjoys a greater degree of acceptance compared to other world regions, due to the levels of trust in public administration and their role in prioritizing the interests of citizens. However, new methods of extraction or increased competition with other land uses compromise acceptance of extractive operations on the local level while strategic priorities for mineral raw materials remain on the national level. For example, new extractive projects and the sector as a whole need to increase efforts along several lines:

  • communities expect companies to go beyond the legislative requirements for engagement;
  • as priorities shift within society, companies must develop strong lines of continuous communication to address these expectations; and
  • in many cases, this requires new ways of collaboration on sharing benefits and mitigating costs.

Demand Challenge

The EU’s ambitious transition towards an inclusive, greener and more digital economy, aiming at achieving carbon neutrality and a global digital leadership role by 2050, will drastically increase the demand for minerals. The technologies needed for these efforts range from wind turbines and PV panels to electric vehicle batteries and motors, as well as ICT semiconductors. All these rely on a secure supply of minerals and increase pressure on primary extraction in Europe and elsewhere.

  • Supply chain resilience for EU industry: One strategy to increase the security of these supply chains, and adequately manage supply risks, especially for Critical Raw Materials, is the ambition to source (where possible) increasing amounts of these materials inside Europe. This shift calls for the need of a stronger European sustainability framework for the extractive industry in order to ensure that additional extractive operations in Europe do not have negative effects on societies and the environment, take all necessary steps to receive a Social License to Operate (SLO), and generally provide a high level of transparency and accountability for their operations. In addition, an increased push towards a Circular Economy will reduce the demand for materials imported from outside the EU. However, in order for secondary material sourcing to be a viable alternative to primary sourcing, there needs to be a certain amount of materials already in the economy. Until this level is reached, the focus on sustainable and resilient primary sourcing practices is of undeniable importance.
  • Site-specificity: Mineral extraction faces challenges that are very specific to its location – European-centric and site-specific: The challenges related to extractive activities in Europe are dependent on the geographic location of the mine site. On average, EU regulation has higher standards compared to other world regions, largely mitigating structural issues (e.g. child labour, illegal disposal of waste streams). Issues, such as water scarcity will be more prevalent in arid regions, whereas potential land disputes with indigenous populations might only occur in a few select places. We are currently witnessing a decentralised approach to European mining regulations, where most of these regulations are created on a national or regional level. Hence, it makes the navigation of the legal framework around sustainability in the extractive sector complicated. A streamlining of this approach, via a coherent European framework and exchange of practices among EU MS, will facilitate sustainable extractive practices within Europe and create a level playing field for companies within the sector.

The policy coherence and level playing field challenges

  • Challenges in achieving a level playing field for the extractive sector within Europe: There are many instances where national or regional policies affecting extractive activities is incoherent with the intent or goals of relevant EU policy. This leads to additional barriers to entry for actors and further renders some regions less attractive for prospective extractive projects. From an EU perspective, these local policies hinder the creation of a level playing field for the extractive sector within Europe. An example of such a divergence is the criteria catalogue, which devises which projects need to carry out an Environmental Impact Assessment, where many Member States have criteria that are not aligned with the EU directive or other Member States. Furthermore, when it comes to biodiversity conservation requirements in the permitting process, some countries have expanded the EU list of protected species to include larger numbers of local fauna.
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Sustainable Management in the Extractive Industry

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