Critical minerals – including cobalt, copper, lithium, nickel and rare earths – are vital for building the renewable technologies needed for the energy transition. But for countries that produce such resources, extracting these minerals comes with a number of governance risks, as outlined in our latest policy brief.
 
At stake: The development of critical minerals could expose countries to four broad categories of risks for public revenues and development. Volatile prices could harm public finances and drive political instability; investment booms could increase corruption risks in the licensing process; high prices could push mining into more environmentally and socially sensitive areas; and finally, demands for state participation could exacerbate governance challenges.
 
Making the grade: EITI implementation can help to address these risks through transparency and dialogue. EITI disclosures and processes provide a range of entry points for strengthening governance of the critical minerals sector – from tracking exploration activities to support better planning, to monitoring state participation to ensure alignment with public interests.
 
Cobalt: In its latest whitepaper, the commodity trading company Trafigura, an EITI supporting company, estimates that global demand will outstrip cobalt supply by 2025, and concludes that there is a need for responsibly-sourced cobalt production from the Democratic Republic of the Congo to avoid stalling the energy transition. Separately, the Natural Resource Governance Institute (NRGI) suggests how cobalt-producing countries can maximise value from cobalt mining and address governance risks in the industry.