Stable political regimes and standardised environmental, social and governance (ESG) rules are key to attracting essential private investment in critical minerals, according to Australian resources firm BHP's chief executive, Mike Henry.
A pragmatic balance of international co-operation and competition can accelerate the energy transition, Henry said during the International Energy Agency Critical Minerals and Clean Energy Summit in Paris today. And this effort is going to require a significant and growing amount of capital for critical minerals.
Under a plausible scenario of limiting global warming to 1.5°C, BHP estimates that the copper industry could require about $250bn in growth capital over the next seven years. At present, there are about 450 committed projects that are identified, permitted and have been given the green light by those that will invest.
"[To accelerate investment], governments must provide predictability and stability to attract capital at as low as possible cost and as quickly as possible," Henry said. This means stable setting, streamlined processes and harmonised standards.
"Today, too often, we still see short-term development policies that seek to meet near-term political objectives but show limited understanding of what drives investment," he said. "And this blows up capital deployment, ultimately making the energy transition harder and more expensive."
He pointed out that societal expectations have grown with regard to ESG and how value gets created for shareholders, but said the area is still maturing. "We have too many standards for the same ESG dimensions, leading to confusion and dissipated effort," he said.
The transition is an opportunity to improve natural resource governance worldwide, including transparency in taxes, anti-corruption frameworks and governing processes, Henry said.
