We don’t support the mining of fossil fuels like coal. But you may be surprised to know we invest in companies that mine the rare-earth mineral lithium. Here’s why we’ve chosen to invest in lithium mining – and how we make sure these investments meet our strict ethical principles.
Investing ethically isn’t just about avoiding harmful products and industries. It’s also about investing in positive industries like renewable energy. But one of the key challenges of renewable energy is ensuring a constant supply when the sun isn’t shining or the wind isn’t blowing – and that’s where lithium comes in.
Lithium is a rare-earth mineral used in batteries that store surplus energy from renewable sources. That means lithium is a critical part of the transition to a zero-emissions future.
Lithium ion batteries can turn on and off in fractions of a second, making them a fast and stable way to store and deliver surplus energy. They can be used in a home or office setting, or for micro-grids – small networks of electricity users. They’re also getting considerably cheaper, which is great news for the future of renewables.
Weighing the benefits
Lithium will play an important role in enabling the transition from fossil fuel power to renewables. It’s expected that by 2025 about two-thirds of all mined lithium will be used in battery production. So, in 2018, we decided to explore the potential of lithium as an investment. Since then, we have invested in two Australian-based lithium miners: Pilbara Minerals and Orocobre.
Pilbara Minerals owns the Pilgangoora Lithium-Tantalum Project which is located in the Pilbara region of Western Australia. It expects to earn up to 90% of its revenue from lithium. Its other key product, tantalum, is used to create lightweight metals that can help increase fuel economy in vehicles.
Orocobre is a Brisbane-based company with mining operations in Argentina where it explores and develops lithium, potash and boron deposits. Its chief operation is the Salar de Olaroz lithium project in the Jujuy province of Argentina. While most of the company’s revenue comes from lithium, it also mines boron and potash, both of which have positive uses in agriculture. Potash, which is made of potassium, is an essential macronutrient for plant growth and boron is an important micronutrient.
When it comes to their core business of mining lithium, Pilbara and Orocobre use different methods to extract the mineral from the earth – both of which come with risks and negative impacts. Pilbara Minerals crushes and processes mined spodumene, which is a mineral that contains lithium. Orocobre’s process is to extract and evaporate lithium-containing brine.
Assessing the impacts
As part of our investment process, our ethics team carefully assessed Pilbara Minerals and Orocobre against the Australian Ethical Charter. They looked at the impacts of each company’s mining practices on people, animals and the environment.
As part of this assessment, our ethics team looked at factors including:
- The protection of the rights of local indigenous and other communities;
- The risk of corruption in obtaining mining approvals;
- Health and safety management in both mining and processing;
- Energy efficiency;
- The use of chemicals to process minerals;
- Waste management;
- How the land is restored once the mining process is over; and
- Any controversies affecting either company.
Our ethics team found both companies were responsibly managing their social and environmental impacts. They also found that, despite the different extraction methods, the relative risks and negative impacts of the mining operations were much the same.
Lithium and recycling
Our decision to invest doesn’t mean that there are no negative impacts from lithium mining. One issue with the mineral is the tendency for spent batteries to end up in landfill. At present, few companies are able to recycle lithium from batteries but new technology may provide the solutions.
For example, a Perth-based company, Lithium Australia, has created a process for recovering lithium, nickel and cobalt from used batteries. They aim to produce refined lithium phosphate and use it as cathode material for new batteries. Sims Metal Management, a company we invest in that specialises in e-waste, recycles lithium batteries through its subsidiary Sims Recycling Solutions.
Find out more about the way we invest
At Australian Ethical we’re investing today to protect the world for future generations. We constantly review the companies we invest in against our Ethical Charter and that will include our two investments in the lithium mining sector.