How Manufacturers Can Sustainably Source Minerals

Minerals are essential to the manufacturing of everything from smartphones to electric vehicles and from renewable energy to even home appliances. These sectors depend on materials like cobalt, lithium, and rare earth elements, whose extraction can cause environmental damage and human rights violations. Sourcing these minerals is no longer a simple matter of buying from any supplier at the lowest price. As environmental concerns and ethical considerations grow, manufacturers are increasingly under pressure to source minerals sustainably. Sustainable sourcing of minerals in the supply chain not only helps protect the planet but also ensures that businesses are prepared for future regulatory and market shifts.

Here's how manufacturers can adopt sustainable sourcing practices, including strategies and actionable insights.

Understanding the Mineral Supply Chain Process

The mineral sourcing process involves several key stages, each crucial for ensuring the minerals are sourced efficiently and responsibly.

Mineral Extraction

The process begins with the mining of raw minerals from the earth. This can be done through surface mining, underground mining, or placer mining, depending on the location and type of mineral. Mining involves removing rock, soil, and other materials to extract valuable minerals.

Transportation to Processing Plants

Once extracted, the minerals are transported to processing plants, which could be located close to the mining site or further away, depending on infrastructure and logistics. The transportation can involve trucks, trains, or ships.

Refining

At the processing plant, the raw minerals are refined to remove impurities and prepare them for further use. Refining can include processes like crushing, grinding, smelting, and chemical treatments to extract the desired minerals in their purest form.

Transportation to Manufacturing Sites

After refining, the purified minerals are transported to manufacturing sites, where they will be integrated into various products. This stage involves moving the refined materials to locations where they will be used in the production of goods like electronics, automotive parts, or batteries.

Integration into Products

The refined minerals are used in manufacturing to create components or finished products. For example, lithium might be used in battery production, cobalt in electronics, and rare earth elements in renewable energy technologies.

Delivery to Consumers

Finally, the finished products are packaged and delivered to consumers, retailers, or distributors. This step involves logistics and supply chain management to ensure the timely delivery of products to their end destination.

Why Sustainable Sourcing of Minerals Is Important

Sustainably sourcing minerals means obtaining them in ways that do not harm the environment, violate human rights, or contribute to social injustice. The mining of minerals, especially in certain parts of the world, such as the Democratic Republic of Congo (DRC), China, Indonesia, Brazil, and Russia, has been linked to environmental degradation, such as deforestation, water pollution, and carbon emissions. In some regions, unethical labor practices like child labor and unsafe working conditions are still common in the mining industry.

For manufacturers, the risks of not adopting sustainable practices are becoming clearer. Failure to do so can lead to supply chain disruptions, reputational damage, and even legal liabilities. Therefore, manufacturers must understand how to source minerals ethically and sustainably while maintaining profitability.

The Role of Supply Chain in Sustainable Mineral Sourcing

The supply chain plays a critical role in sustainable sourcing. It connects raw materials to finished products, and the decisions made within the supply chain can either promote sustainability or contribute to environmental and social harm. Manufacturers take responsibility for the entire lifecycle of their materials, ensuring that every step, from extraction to processing to final product manufacturing, aligns with sustainability goals.

Key Strategies for Sustainable Sourcing

1. Traceability and Transparency

One of the first steps in ensuring sustainability in mineral sourcing is improving traceability throughout the supply chain. Manufacturers can utilize technologies such as blockchain, RFID tags, and geographic information systems (GIS) to trace the origin of minerals from the point of extraction to their final use. This transparency allows manufacturers to verify whether their suppliers comply with ethical and environmental standards.

Example: In 2020, Apple announced that it was able to trace its cobalt supply chain, ensuring that cobalt used in their products came from mines with ethical labor practices.

2. Supplier Audits and Certifications

Manufacturers should only work with suppliers who have verified sustainability practices. Many organizations, such as the Responsible Business Alliance (RBA) or the International Council on Mining and Metals (ICMM), offer certification programs that ensure suppliers adhere to environmental, social, and governance (ESG) standards. Regular supplier audits are essential for ensuring these standards are consistently met.

Example: Tesla conducts supplier audits and works with third-party organizations like the Responsible Minerals Initiative (RMI) to ensure its cobalt suppliers adhere to environmental and social standards. These audits help verify ethical sourcing and compliance with ESG standards.

3. Environmental Sustainability in Mining

To mitigate the environmental impact of mining, manufacturers can demand that their suppliers adhere to sustainable mining practices. This includes minimizing deforestation, reducing greenhouse gas emissions, and implementing efficient water usage strategies. Manufacturers can also invest in research to support more sustainable mining methods, such as automated and environmentally friendly extraction processes.

Example: In 2021, the world's largest copper producer, Codelco, announced an initiative to reduce its carbon emissions by 30% by 2030.

4. Recycling and Circular Economy

An effective way to reduce the demand for newly mined minerals is by increasing recycling rates. Manufacturers can promote the reuse of minerals from old products, such as smartphones, electric vehicle batteries, and home appliances. Establishing a circular economy model—where materials are continuously reused—can reduce the pressure on virgin mineral extraction.

Example: BMW has committed to using 50% recycled aluminum in their car manufacturing process by 2030.

5. Local Sourcing, Reshoring & Use of Alternative Materials

Sourcing minerals closer to the manufacturing site reduces transportation emissions and supports local economies. By bringing some of the mining and mineral processing closer to the point of production, manufacturers can lower their supply chain's carbon footprint. This also allows companies to have more control over the sustainability practices of their suppliers. Researching and developing alternative materials that can replace rare or conflicting minerals is another way to ensure sustainability. For example, finding substitutes for cobalt in batteries or using more abundant materials can reduce the environmental impact of mining and the dependence on scarce resources.

Example: BMW is reducing cobalt use by up to 60% in its electric vehicle batteries through a new technology. By 2025, the company plans to incorporate this cobalt-free battery technology into 30% of its EV models, helping lower the environmental impact and ethical concerns of cobalt mining while advancing sustainability goals.

Rising Demand for Critical Minerals

The global mineral market is vast, with millions of tons of minerals traded each year. Below are the numbers to consider when evaluating the sustainability of mineral sourcing.

Global demand for cobalt: The market demand for cobalt is expected to grow by more than 4% annually, driven by electric vehicle (EV) production. As of 2024, global production reached over 140,000 metric tons, but much of it came from the Democratic Republic of Congo (DRC), where mining is often linked to child labor and poor environmental practices.

Copper: Around 22 million metric tons from mines and 26.5 million metric tons from smelters copper are produced each year, with over 60% of it coming from large-scale mines in countries like Chile, Peru, and China. The environmental impact of copper mining is significant, with high levels of water consumption and waste.

Lithium: The global market for lithium is set to grow by 15% per year through 2030, largely driven by the rise of electric vehicles. Lithium mining, especially in the "lithium triangle" (Argentina, Chile, Bolivia), uses large amounts of water, which has raised concerns in water-scarce regions.

Rare Earth Elements: Over 60% of global rare earth element production comes from China, but mining and processing methods are heavily criticized for their environmental impact. Sustainable sourcing practices are becoming increasingly important for manufacturers in the electronics and renewable energy sectors.

The recycling rates of critical minerals like cobalt and lithium are still low, at 5-10% globally. However, manufacturers are investing more in recycling programs, aiming to close the loop and reduce dependency on virgin minerals.

Supply Chain Implications: Cost vs. Sustainability

To better understand how sustainable sourcing practices can be applied, it's useful to compare traditional sourcing vs sustainable sourcing across different minerals.

Sustainable sourcing practices can initially be more expensive due to costs related to certification, audits, and technology implementation. However, the long-term benefits often outweigh these upfront costs. Responsible sourcing reduces the risk of supply chain disruptions, as companies are less likely to face issues related to unethical practices, such as labor violations or environmental harm, which could halt production or damage reputations. Additionally, sustainable practices can lead to cost savings by improving resource efficiency, reducing waste, and lowering energy consumption.

Over time, these benefits can translate into both financial and reputational gains, making sustainability a worthwhile investment for companies.

Future of Sustainable Mineral Sourcing

With increasing global demand for minerals due to the rapidly advancing electric vehicles, renewable energy, and consumer electronics industries will need to use innovative and sustainable means of sourcing. The future of mineral sourcing will depend on environmental preservation, ethical labor, and resource management.

Sustainable sourcing practices such as traceability, audits of suppliers, environmentally friendly mining technologies, recycling, and circular economy models would become necessary for manufacturers. 

Sustainable mineral supply chains support not just the planet but also the economy by promoting local industries, generating jobs, and driving innovation. Companies embracing these practices will be more capable of responding to the shifts of the future market, fulfilling the increasing expectations of consumers, and building resilient and inclusive supply chains that help businesses, people, and the planet.