New Report from Corporate Watchdog Group Alleges Environmental and Human Rights Violations by Chinese Energy Transition Mining Ventures

 

     A new report by the Business and Human Rights Resource Centre alleges widespread environmental and human rights violations involved in Chinese-financed green minerals mining in several countries around the world. The Centre is an NGO that tracks human rights related to corporate and business activity around the world. The countries with the worst violations are those with oppressive governments already known for human rights problems including Myanmar, Zimbabwe, Democratic Republic of the Congo (DR Congo), but also countries with more moderate human rights records like Indonesia and Peru.

     The transition minerals listed in the report are: copper, cobalt, lithium, nickel, manganese, zinc, chromium, aluminium, and rare earth elements (REEs). They note that global consumption of these minerals is projected to grow by six times by 2040, if that is possible.

 

From the executive summary of the report:

 

“China currently dominates the processing and refining of these key materials and the manufacturing of clean energy technologies, such as solar panels, wind turbines and electric vehicle (EV) batteries. Despite US and European plans to diversify transition mineral supply chains, China is set to maintain its dominance for years to come. Chinese companies have been acquiring overseas mines and investing in mineral-rich countries to secure the sourcing of transition minerals. This includes efforts in Indonesia, which has the world’s biggest nickel reserves and is seeking to develop an integrated EV supply chain and become an EV battery producer and exporter by virtue of foreign investment and technologies from China and other transnational corporations. Other resource-rich countries, such as Zimbabwe and Bolivia, are preparing to follow suit.”

 

Thus, China is set to continue dominating these mining, processing, and manufacturing markets while these industries grow by six times. Obviously, reliance on China for these commodities and services will grow along with demand. That is concerning, especially in light of Russia’s energy market manipulation with their hydrocarbons. While I don’t think China will go the way of Russia, this report shows that China does indeed need to improve their environmental and human rights records.

 

     The report defines three top categories of impacts: 1) impacts on local communities and attacks against civil society organizations (CSO’s) – this includes impacts on livelihoods, indigenous rights, and insufficient/inadequate consultation; 2) environmental impacts, mainly water pollution, impacts on wildlife/species habitat, and access to water; and 3) impacts on workers, including occupational health and safety. So-called ‘allegations’ refer to abuse by a company, civil society action against companies, or publicly reported attacks against human rights defenders (HRDs).  Sources of allegations include “local and international NGOs and media reports, which cited concerns raised by workers, trade union or communities, primarily in English, Chinese, Spanish and French.” 

     Over two-thirds of the allegations involve human rights abuses against local communities. They note that only 7 of the 39 companies even have written human rights policies. The group only received responses from 4 of 22 companies contacted, underscoring the need for transparency and accountability.

     Out of 102 allegations Indonesia had the most at 27 followed by Peru at 16. About 64% of allegations were in Indonesia, Peru, DR Congo, and Myanmar. “The Resource Centre has recorded 20 allegations in two years regarding nickel smelter industrial parks and facilities in Indonesia. These allegations include links to major Chinese investor-dominated projects.” Indonesia is a major global supplier of nickel and is aiming to become a hub for EV manufacturing and nickel-based battery manufacturing. Some of these facilities are powered by coal plants. Nickel is both mined and processed in Indonesia. In Myanmar they note that “illicit and unregulated heavy rare earth extraction in conflict-affected areas taints global supply chain.” This illegal REE extraction has occurred mainly since the 2021 military coup in Myanmar and mainly in northern Kachin state which borders China. The report notes that “urgent and heightened environmental and human due diligence is needed across the entire supply chain to protect vulnerable communities and the environment in Myanmar.”

 

57% of the total amount of allegations are tied to these eight companies. The Centre calls for corporate accountability and access to remedy these issues. They say corporate impunity is the basic problem.

 

Peru is a major global copper producer. China acquired (part?) ownership of the large La Bambas copper mine, which represents about 2% of the world’s copper. Social conflicts and complaints about environmental impacts are the main issues in Peru.

 

One conclusion of the report is simply that many Chinese companies have not adequately addressed these issues. Many do not have stated policies and are often not forthcoming or transparent. The report includes three principles for a just energy transition: shared prosperity based on effective business models, human rights and social protection, and fair negotiations. Fair negotiations include implementing Free, Prior, and Informed Consent for Indigenous Peoples as well as fairness for workers and community members who may be impacted by projects. The report includes a set of recommendations. These recommendations are divided into five sections addressing five stakeholders. These include recommendations for the Chinese government, governments of host countries, companies across mineral supply chains, industry associations, and investors and financial institutions.  

     Recommendations to the Chinese government include 1) Mandatory human rights and environmental due diligence (mHREDD) legislation within National Action Plan (NAP); 2) Access to remedy: (access to judicial and non-judicial mechanisms to provide effective remediation); 3) Oversight and communications: (should be in line with international standards, such as the UNGPs); 4) Embassies and consulates, specifically their Economic and Commercial Offices, should strengthen monitoring and guidance on Chinese companies operating in the host countries.

     Recommendations to host countries are similar to those for the Chinses government: 1) Mandatory human rights and environmental due diligence (mHREDD) legislation); 2) Access to remedy: (access to judicial and non-judicial mechanisms to provide effective remediation); and 3) Enforce and strengthen laws protecting local communities and Indigenous People’s rights.

     Recommendations tocompanies across mineral supply chains include: 1) Human rights and environmental due diligence (HREDD; 2) Undertake meaningful and inclusive consultations with potentially affected rightsholders and other relevant groups, commit to obtaining consent and to co-ownership through equal dialogue on shared asset models; 3) Assign clear Board responsibility for and oversight of respect for human and environmental rights; 4) Conflict-affected environment & security: Conduct heightened human rights due diligence when companies operate in or source from a conflict-affected and high-risk environments (such as Myanmar and DRC) to mitigate risks of being complicit in gross human rights abuses committed by other actors; 5) Remedy: Establish communication and grievance mechanisms for potential or actual social, environmental or human rights impacts; and 6) Incorporate clauses regarding remediation of human rights harms in contracts with suppliers.
     Recommendations to industry association include: 1) Guide and assist enterprises to comply with international standards such as the UNGPs and OECD Guidelines; 2) Establish long-term, collaborative relationships with civil society organizations, especially in host countries; 3) Make good use of industry-level grievance mechanisms to facilitate dialogues and conduct investigations when concerns are expressed.

     Recommendations to investors and financial institutions include: 1) Commit to rights-respecting investments: with board oversight, undertake analysis consistent with the UNGPs and OECD Guidelines for human rights and environmental risks related to all transition minerals mining and renewable energy investments; 2) Actively engage with investee companies: adopt stewardship policies, and develop and implement plans to proactively prevent and mitigate human rights and environmental risks, alongside reputational, legal and regulatory risks; and 3) Undertake inclusive human rights and environmental due diligence.

 

Signs of Chinese Companies Addressing Human Rights and Sustainability as Chinese Battery Company Joins United Nations Global Compact?

 

     It was also just reported that Chinese battery company Contemporary Amperex Technology (CATL), which makes about a third of EV batteries, including batteries for Tesla and BMW, has joined the United Nations Global Compact. CATL is the biggest lithium battery manufacturer in the world. The Compact includes CEO’s that make non-binding pledges to address sustainability, social responsibility, human rights, and labor rights. Right now it is a one year commitment to support and willingness “to implement the org’s 10 principles on human rights, labor, the environment, and anti-corruption as part of business strategy, culture and daily operations.”

     However, the article also notes that “a substantial portion of the raw materials used in the global auto supply chain are sourced from Xinjiang, a region in which China is credibly accused of abusing the human rights of the Muslim minority Uyghur population.” Forced labor is one of the issues in Xinjiang, which also produces much of the worlds polysilicates for solar panels. CATL’s move is perhaps in response to the Uyghur Forced Labor Prevention Act, which bans any goods made with forced labor in the Xinjiang Uyghur Autonomous Region from entering the United States, which was passed with strong bipartisan support in 2021. Semiconductor companies, a drone maker, and polysilicon suppliers have been banned in the U.S. through the act. Thus, the move may be in response to concerns about being banned in the U.S. rather than a noble pivot towards sustainability and social responsibility. Nonetheless, it is a good start.  

 

 

 

References:

China accused of scores of abuses linked to ‘green mineral’ mining. Nina Lakhani and Amy Hawkins. The Gurardian. July 5, 2023. China accused of scores of abuses linked to ‘green mineral’ mining | China | The Guardian

Unpacking clean energy: Human rights impacts of Chinese overseas investment in transition minerals. Business and Human Rights Resource Centre. July 2023. 2023_China_TM_briefing.pdf (business-humanrights.org)

Chinese battery maker for the stars of the EV world suddenly wants to be seen powering human rights. Laura Dobberstein. The Register. July 11, 2023. Chinese battery maker for the stars of the EV world suddenly wants to be seen powering human rights (msn.com)