Mining the Planet to Death

The Dirty Truth About Clean Technologies

The poor South is being exploited so that the rich North can transition to environmental sustainability. Entire swaths of land are being destroyed to secure the resources needed to produce wind turbines and solar cells. Are there alternatives?

By Jens Glüsing, Simon Hage, Alexander Jung, Nils Klawitter und Stefan Schultz

             Foto: [M]: Hedi Xandt; SABarton / Getty Images / DER SPIEGEL

There’s a dirty secret hidden in every wind turbine. 

They may convert moving air cleanly and efficiently into electricity, but few know much about what they are made of. 

Much of the material inside wind turbines are the product of brutal encroachments on our natural world.

Each unit requires cement, sand, steel, zinc and aluminum. 

And tons of copper: for the generator, for the gearbox, for the transformer station and for the endless strands of cable. 

Around 67 tons of copper can be found in a medium-sized offshore turbine. 

To extract this amount of copper, miners have to move almost 50,000 tons of earth and rock, around five times the weight of the Eiffel Tower. 

The ore is shredded, ground, watered and leached. 

The bottom line: a lot of nature destroyed for a little bit of green power.

A visit to the Los Pelambres mine in northern Chile provides a clear grasp of the dimensions involved. 

It is home to one of the world’s largest copper deposits, a giant gray crater at an altitude of 3,600 meters (11,800 feet). 

The earth here is full of metalliferous ore. 

Just under 2 percent of the world’s copper production comes from this single pit.

Dump trucks, 3,500-horsepower strong, transport multi-ton loads down the terrace roads that line the mine. 

The boulders are transported by conveyor belt almost 13 kilometers (8 miles) into the valley, where the copper is extracted from the rock. 

This processing requires huge amounts of electricity and water, a particularly precious commodity in this arid region.

The project is operated by Antofagasta, a London-based Chilean mining corporation that owns 60 percent of the mine. 

The company built a hydroelectric plant in 2013, almost exclusively to supply electricity to Los Pelambres. 

Farmers protested against it, and have blamed the project for water shortages in the region.

Now, though, the mine is slated to grow even larger. 

The company is pumping additional volumes of desalinated seawater from the Pacific coast across the country. 

Company executives hope this will enable them to continue operating the mine for a few more years. 

Global demand for copper, after all, is expected to grow immensely, for power cables and electric motors. 

And for wind turbines.

There are great hopes that the green technology can be used to help save the climate, but that rescue also entails stripping the planet of precious resources. 

And this is the paradox behind what is currently the most important project of the industrialized world: the global energy transition. 

The dilemma, which is becoming increasingly apparent, is also on the minds of the 25,000 or so delegates at the World Climate Conference currently taking place in Glasgow. 

Deposits in the poor South are being exploited so that the rich North can transition to environmental sustainability. 

At least to a lifestyle that appears sustainable. 

Mathis Wackernagel, a resource researcher who lives in California, describes it as a disastrous development. 

"We haven’t quite thought the future through,” he says.

Wackernagel, who was born in Basel, Switzerland, in 1962, is one of the most influential figures in the environmental movement. 

He coined two metaphors that have influenced thinking about sustainability around the world.

One is the idea of the environmental footprint, which indicates how much land and sea area is needed to renew the resources that we have consumed. 

According to Wackernagel’s calculations, 1.75 Earths would be needed for the planet to regenerate itself. 

If all the people on the planet were to behave as wastefully as the inhabitants of Germany, it would require almost three Earths.

The other is Earth Overshoot Day, which marks the day each year on which humanity has used as many resources as the planet can replenish in a year. 

This year, that day fell on July 29. 

The two metaphors serve to underscore Wackernagel’s main point: "We are using resources of the future to pay for the present.”

He’s referring to the daily consumption of around 90 million barrels of crude oil, the use of land for buildings, roads or arable land – and also the exploitation of mineral resources. 

Wackernagel says the biological budget is limited and that humans must decide what they want to use it for. 

If we use it to mine copper, then it won’t, for example, be available for the cultivation of beets. 

He says it’s too short-sighted to think that all we have to do to protect the environment is to recreate the fossil-fueled world with electricity and swap the six-cylinder Jaguar for the battery-powered Tesla.

Few are aware of this fact as they drive their electric vehicle, use electricity from wind or solar power, or have a lithium-ion storage facility set up in the basement – making them feel like pioneers in sustainability. 

Many don't realize how extremely polluting the production of raw materials from which climate technologies are manufactured really is. 

Who knew, for example, that 77 tons of carbon dioxide are emitted during the manufacture of one ton of neodymium, a rare earth metal that is used in wind turbines? 

By comparison: Even the production of a ton of steel only emits around 1.9 tons of CO2.

Almost 50 years after American scientist Donella Meadows and her fellow campaigners warned of "the limits to growth” in their report to the Club of Rome, the overexploitation of nature is taking on a surprising new dimension. 

The massive demand for materials has continually been the underappreciated factor in all the technologies that are intended to help make the world more sustainable. 

Wind turbines, photovoltaic systems, electric cars, lithium-ion batteries, high-voltage power lines and fuel cells all have one thing in common: Inconceivable amounts of raw materials are consumed in their production.

In a solar park measuring 1,000 by 1,000 meters, there are fully 11 tons of silver. 

A single Tesla Model S contains as much lithium as around 10,000 mobile phones. 

An electric car requires six times as many critical raw materials as a combustion engine – mainly copper, graphite, cobalt and nickel for the battery system. 

An onshore wind turbine contains around nine times as many of these substances as a gas-fired power plant of comparable capacity.

It is the specific properties they contain that makes these metals so desirable. 

Cobalt and nickel increase the energy density in a battery. 

Neodymium amplifies the magnetic forces in wind generators. 

Platinum accelerates processes in fuel cells, and iridium does the same for electrolyzers. 

Copper’s conductivity makes it relevant in every electrical installation. 

Around 150 million tons of copper are installed in power lines around the globe. 

And humankind is only at the beginning of its energy transition.

According to calculations by the International Energy Agency (IEA), global demand for critical raw materials will quadruple by 2040 – in the case of lithium, demand is expected to be as high as 42 times greater. 

According to IEA head Fatih Birol, these materials are becoming "essential components of a future clean global energy system.”

Over the course of his professional career, Birol, who has a doctorate in energy economics, has never really had to deal with these materials until recently. 

His area of focus had always been oil and gas, first as an analyst for OPEC and later, at the IEA, founded in Paris in 1974 by the consuming countries in response to the first oil price crisis. 

The crisis painfully demonstrated to governments just how dependent they had become on the drip of a few producing states.

Almost a half a century later, Birol is now observing how the industrialized nations are falling into a new dependency – not on oil, but on metals. 

And it could prove to be even more serious.

Many of these critical commodities come from a small group of countries. 

Indonesia and the Philippines command around 45 percent of the global nickel supply. 

China supplies 60 percent of rare earth metals. 

The Congo is responsible for about two-thirds of cobalt production. 

South Africa dominates around 70 percent of the platinum market.

The geographical concentration is even more pronounced than in the oil business. 

OPEC covers just 35 percent of global supply. 

In mining, on the other hand, only 10 countries produce around 70 percent of the raw materials by value.

The good news is that, from a geological view, there is no shortage of metals. 

Even the rare earths are neither rare nor earths. 

Nor are they in any way exclusive to China.

On the other hand, mining is becoming more and more expensive, and ore quality and raw material content are declining. 

As the tight supply meets surging demand, prices are skyrocketing. 

Within 12 months, important metals have become massively more expensive: The price of nickel has risen by 26 percent, copper by 43 percent and aluminum by 56 percent. 

The price of lithium carbonate has roughly tripled in a year to more than $20,000 per ton. 

At the same time, stocks of metal in warehouses around the world are plummeting.

It’s obvious that something is out of balance. 

IAE head Birol is familiar with the situation from the oil business, and the metals markets could also fall into a similar situation. 

Birol speaks of the looming discrepancy between ambition and supply: between the aspiration to protect the climate and the difficulty of obtaining enough affordable copper, nickel and lithium.

Given that the depletion of resources is concentrated in a few countries, particularly those that are politically unstable, their supply is becoming a global security issue. 

"This could lead to disruptions,” warns Birol.

And it begs the question: How clean are green technologies really?

Mining: Rich Soils, Poor People

Foto: Hartmut Schwarzbach / argus

Hamdallaye was a village in northwestern Guinea in West Africa, a settlement of thatched mud huts and shady fruit trees. 

Sociologist Mamadou Malick Bah, 25, used to live in the village. 

But Bah had to leave last year. 

The village and its 700 inhabitants stood in the way of bauxite extraction.

The reddish ore that lies hidden beneath the earth is considered Guinea’s gold, since it is the raw material for aluminum, an important light metal in wind turbines and power lines. 

The inhabitants of Hamdallaye were resettled in a new village located five kilometers away from the old one.

In photos, the new community, built on a spoil heap, resembles a desert landscape.

"It’s like being on Mars,” says Bah. 

Not much can grow there. 

Indeed, the soil is so poor that CBG, the partly state-owned Guinean mining company, now has to support the small farmers, who previously made a living off their own plots. 

Each farmer is provided with the equivalent of 94 euros a month. 

"More and more young people are leaving the village," says Bah, and the locals weren't given jobs at CBG anyway.

Companies began mining the Boké region more than 50 years ago, and today the excavators run almost nonstop. 

Guinea, one of the world’s poorest countries, has the largest bauxite deposits on Earth. 

Mining concessions have been awarded for a large part of the country’s territory, and Chinese companies are also involved.

The environmental consequences have been devastating. 

Bah says it has resulted in the destruction of natural diversity and sources of drinking water. 

The machines’ vibration caused his hut in the old village to collapse four years ago. 

But he still hasn’t received any compensation.

One controversial aspect of the mining project is the fact that the German government is involved. 

In 2016, Berlin provided loan guarantees to the tune of 246 million euros for the expansion of the mine, despite criticism from the German Environment Agency. 

In a report, the German Economics Ministry praised that globalization in Guinea could be managed equitably. 

Rather than focus on the expropriations of West African farmers, the report instead noted that the investment helped guarantee jobs back in Germany.

The report noted that the expansion of the mine would enable the Germany-based company Aluminium Oxid Stade (AOS) to secure its production for more than 10 years. 

AOS is the last remaining German bauxite processor and an important supplier of products for the automotive industry. 

An Audi E-Tron vehicle includes 804 kilograms of aluminum.

The controversial bauxite mining in West Africa is but one example of the disconnect between popular environmentally friendly products "Made in Germany” and the origins of their ingredients. 

Indeed, it is the paradox of abundance that plagues countries like Guinea. 

They have enormous mineral resources and yet they fail to attain widespread prosperity.

But this isn’t necessarily a given. 

Norway is also blessed with resources, but it also manages to put that advantage to good use: The country is reliable politically, its institutions are strong, and it has a low crime rate. 

Good governance is the key to ensuring that countries like Guinea can also profit from the global commodities boom.

The major deposits can be found in the three "A’s” – Africa, Australia and the Andes, all of which are suffering extremely from climate change. 

In all these places, water is extremely scarce, and enormous amounts of energy are needed to process the ore.

The crushing and grinding of rock accounts for up to 3 percent of global electricity demand. 

That’s more than the entire amount consumed by Germany.

The mining industry even describes itself as being a "dirty, dusty, dangerous” business. 

No other industry is as destructive to the environment. 

The operations often leave behind a lunar landscape, in addition to basins full of contaminated sludge, so-called tailings, in which the residues of the processing are collected. 

Around 32,000 of these toxic lakes are located around the world. 

In January 2019, a dam located near an iron ore mine in Brazil burst and created a mudslide that poured into the valley and killed more than 270 people.

In the past, ignoring the environment was something that mining companies could afford to do. 

But they face resistance today. 

The weekend before last, a protest by indigenous Mayans in Guatemala against a Swiss mining company extracting nickel in the northeast led the country to declare a state of emergency. 

Many customers of mining companies, especially investors, are no longer giving an easy pass to misconduct – at least not within the biggest companies. 

They avoid industries that are considered environmentally dubious, even if they are financially promising.

This is forcing the mining companies to act, too. 

"We meet all the requirements to be interesting for investors,” Iván Arriagada, the CEO of Chilean copper giant Antofagasta has said, courting investors. 

Arriagada, 58, is a modern executive with a master’s degree from the London School of Economics – and not one of the old-school mining tycoons who would never show up without wearing a tie. 

Arriagada is seeking to position Antofagasta as a pioneer in environmental protection – at least to the extent possible in the industry.

He says that close to half the water the company uses in mines like Los Pelambres now comes from the sea instead of the mountains; and by 2025, that figure is expected to rise to 90 percent. 

"We use every drop of water seven or eight times before it evaporates,” Arriagada says. 

He also says that the electricity needed is to be generated entirely from renewable sources in the coming year.

Around a dozen companies are involved in the global commodities business.

Switzerland’s Glencore dominates the cobalt market, the U.S. company Albermarle is No. 1 in lithium, Brazil’s Vale is the global leader in nickel, and Chile’s Codelco and Britain’s Antofagasta are leaders in copper. 

All these companies are feeling growing pressure to protect the environment. 

"We really need to change our mindset,” Rio Tinto CEO Jakob Stausholm confessed at a recent investor conference in London. 

The Anglo-Australian company has set the goal of halving its CO2 emissions by 2030. 

At the same time, the conditions under which the mining industry can extract mineral resources are growing more difficult.

Over the past 15 years, the copper ore content in Chile’s mines has fallen by almost a third to 0.7 percent. 

Three generations ago, that figure was 2 to 3 percent. 

Today, the industry has to dig much deeper to extract the same quantities of precious metals than it did in the past – and it consumes correspondingly more electricity and fuel.

The deposits that are easiest to extract have already been mined, and no major new deposits have been exploited in Chile in years. 

Only 2 percent of all explorations actually result in the construction of a mine. 

"It takes luck, a lot of perseverance and persistence,” says Antofagasta CEO Arrigiada. 

And on average, it takes 16 years from the discovery of a suitable spot before mining operations begin. 

"Our planning horizon spans decades,” he says.

Indeed, it is difficult to increase the current supply of metals. 

According to IEA forecasts, volumes from active and planned mines won’t be enough to fill demand. 

For example, current mining operations will cover only half of future demand for lithium and cobalt. 

"Supply and investment plans for many critical minerals fall well short of what is needed to support rapid deployment of solar panels, wind turbines and electric vehicles," warns IEA chief Birol.

Arriagada says his company anticipated the uptick in demand in its forecasts, but says that the momentum surprised them. 

The main reason for this is the rapidly growing demand for green technologies. 

He says that electromobility is currently responsible for 1 or 2 percent of copper demand. 

By 2030, that share is expected to rise to more than 10 percent.

"The pandemic has created an awareness that we need to act collectively and quickly to address systemic risks like climate change," says Arriagada. 

His company is profiting from that development.

Electric Cars: Treasures in the Chassis

                   Foto: Dylan Stewart / Image of Sport / ddp

Depending on the battery type, an electric car requires between 150 and 250 kilograms of special raw materials. 

The largest part is comprised of graphite, nickel and copper, with the rest composed of manganese, lithium and cobalt. 

Carmakers are now pushing ahead with the expansion of their e-fleets, and competition has broken out among them over securing supplies of raw materials.

This spring, BMW CEO Oliver Zipse made a bold pledge to his customers and shareholders. 

He proclaimed that BMW would build the world’s "greenest” car. 

It’s not only the air in the cities that should become clean, but also all the links in the value chain. 

For Zipse, this also means that raw materials can’t come from mines where children work, or waters are contaminated by pollutants. 

With cobalt, one of the most important ingredients in modern electric batteries, that often happens.

Zipse’s words may have a whiff of cheap environmental PR, but he's likely being genuine. 

After all, he’s simply following economic logic. 

Electric cars are all about outperforming internal combustion engines on sustainability. 

Otherwise, the most important sales argument falls flat.

Even if the production of the raw materials for an e-car and its battery devours extreme masses of resources, it is still far more environmentally advantageous than driving a conventional vehicle. 

In terms of its carbon footprint, the electric car has a clear advantage.

According to the IEA, an internal combustion vehicle emits 40 tons of greenhouse gases over a life cycle of 200,000 kilometers, more than twice as much as an electric car, despite the CO2-intensive production of the battery.

The weakness of the e-car is that it requires so many more mineral raw materials than internal combustion vehicles, including quite a few critical materials that are often mined under dubious conditions. 

The battery in the iX electric SUV recently unveiled by BMW contains about 6 kilograms of cobalt, 10 kilograms of lithium and 60 kilos of copper. 

These are all raw materials that are seldom or almost never found in a gas or diesel engine.

Around half of the growth in demand that green technologies will trigger over the next two decades is related solely to the foreseeable boom in electric cars and energy storage. 

BMW is forecasting that, by 2030, 50 percent of the cars it sells will be purely electric vehicles, up from a share of only 3 percent today.

The company finds itself in a dilemma. 

Mine workers in Congo shouldn’t have to foot the bill for affluent people in Munich to have clean air. 

"We can’t limit ourselves to just operating sustainably in our own factories,” says Patrick Hudde, head of supply chain sustainability and raw materials management at BMW. 

That has prompted the automaker to take an unusual step.

The company says it no longer wants to rely on intermediaries and their pledges that their raw materials come from clean sources. 

BMW is now buying lithium and cobalt directly from mine operators - not in Congo, where most of the mining is done by hand, but from mining companies in Morocco, Australia and Argentina, which BMW claims it has carefully examined.

Hudde says the selection process was rigorous, and that more than 100 suppliers didn't receive contracts "because we weren’t convinced of their compliance with environmental and social standards.”

But BMW reaches its limits quickly when it comes to its ability to conduct controls. 

The company plans regular and at times unannounced visits by trained auditors. 

Employees at suppliers are also able to issue complaints directly to BMW. 

"If we become aware of violations, we promptly ensure that the grievances are remedied on site,” he says. 

Ultimately, though, they are only spot checks. BMW relies on its partners to comply with contractually agreed social and environmental standards. 

In the event of a violation, the carmaker can ill afford to drop a supplier. 

It would be next to impossible to quickly replace a major cobalt supplier.

Faced with such a predicament, a company could try to reduce its use of raw materials by technological means. 

The first generation of Toyota’s Mirai hydrogen car still required 40 grams of platinum per vehicle. 

In new models, the amount required has dropped by a third; and by 2040, Toyota wants to reduce it to 5 grams. 

But even engineering feats like that at best only alleviate the industry’s dependence on raw materials. 

It cannot be eliminated.

China: More Powerful than OPEC

Foto: Cristobal Olivares / Bloomberg / Getty Images

That reality has a direct impact on relations between Western economies and China. 

With a share of around 50 percent of global demand for raw materials, China now occupies a position of supremacy that was reserved for the United States in the middle of the 20th century, says, Peter Buchholz, the head of the German Mineral Resources Agency (DERA). 

"That’s not going to change anytime soon,” he says.

China is the largest supplier of numerous metals. 

At the same time, Beijing has built up a network of partner countries – and it has made them dependent. 

It pumps capital into countries like Chile, Bolivia and Congo, buying mining rights and access to scarce resources.

China’s dominance in processing is even more pronounced. 

The country is the leading producer of 23 out of 26 refined products, and its share of rare earths is around 90 percent. 

Beijing aims to cover all stages of the value chain, from ore to e-car batteries. 

China controls about 75 percent of all lithium-ion battery production capacity worldwide.

America and Europe have watched with concern as the commodity giant’s market power grows. 

Thierry Breton, the European Union’s internal market commissioner, warns of "total dependence on China,” especially for supplies of rare earths. 

Ten years ago, China demonstrated the leverage it has when it suddenly cut exports of rare earths, leading prices to skyrocket and plunging the world into a supply crisis. 

It provided the occasion for Germany to formulate a first draft of its raw materials strategy.

China is using its investments in Africa and South America specifically for a geopolitical power play. 

It self-confidently secures influence, grants loans worth billions and thus creating ties of dependency with an increasing number of countries. 

According to Hamburg-based economist Thomas Straubhaar, nothing about the moves being made by Beijing is by chance. 

The country pursues a "sober strategy of power,” he says. 

Access to raw materials has become an instrument of foreign policy.

China’s unique position isn’t due to the fact that the soils in the Far East are richer in minerals – there are sufficient deposits of raw materials all over the world. 

In terms of geology, Germany could even cover some of its metal requirements itself.

Regions like the Harz and Erzgebirge mountains already have centuries-old mining traditions. 

But businesses have instead chosen to purchase metal from abroad – at the price of dependence. 

Ultimately, it is cheaper to obtain supplies from overseas. 

The main thing is that they don’t have to get their own hands dirty.

Elsewhere, importing countries have sought to counter China’s superiority by reactivating disused deposits. 

In California, investors restarted the old Mountain Pass mine in 2018 to extract rare earth metals. 

And in Sweden, iron ore mining company LKAB is planning to extract rare materials from the waste generated from its exploration activities. 

Other companies are exploring the planet’s last frontiers: the treasures that lie dormant in the deep sea, billions of tons of metalliferous minerals.

Companies like Deep Green and UK Seabed Resources are exploring ways they can commercially exploit the seabed. 

There have also been advances in conveying technologies. 

Harvesters weighing up to 250 tons are to transport the raw materials upward using an armored hose. 

They need to be highly reliable and able to withstand extreme water pressure. 

It would be too much trouble to have to keep bringing them back up to the surface for repairs.

Analysts at BCC Research are expecting a new commodity rush, triggered by deep-sea mining, with market volume of up to $15 billion by the end of the decade. 

At the same time, environmentalists are warning of the destruction of ecosystems that have barely even been explored if the seabed is plowed through by the square kilometer.

The deep sea can’t be relied upon as a quick, competitive and, more importantly, environmentally friendly, source of raw materials. 

Recovering metals from waste provides greater promise.

Recycling: Shredding for New Resources

Foto: Victor Ruiz Caballero / REUTERS

The island of Peute in the Port of Hamburg is home to Europe’s largest copper works, operated by Aurubis. 

The plant has been producing copper for pipes, sheet metal and wire since 1907, more than a million tons of copper products each year. 

In addition to the ore delivered from Chile, Peru or Brazil, the factory relies heavily on recycled materials.

Mountains of the commodity can be found at the facility, heaps of shiny, reddish copper granulate of varying consistencies, some coarse, others fine – all of it produced from discarded wire. 

Next to the mounds are barrels filled with the shredded remains of computers or mobile phones. 

Christian Plitzko, a metallurgist at Aurubis, grabs a handful. 

"This is where the treasures are that we’re interested in,” he says.

Plitzko, who has been with Aurubis for 24 years, looks down at the shiny green and silver material in his gloved hand. 

"This used to be a circuit board in a computer,” he says. 

Every kilogram of circuit board material contains 250 grams of pure copper.

It is technically feasible to extract other metals from such waste, but the effort remains too great. 

If it were possible to specifically remove, for example, parts made of neodymium from a circuit board with the help of a barcode and a laser, then it might be worth it, says Plitzko. 

"If producers would label their circuit boards, we would later, in the recycling process, be able to specifically remove certain metals before they are melted down.”

Demand for copper has noticeably increased, and the smelting furnaces at Aurubis are working at full capacity – with production at the factory continuing around the clock, seven days a week. 

The company benefits from the fact that copper is an important element in all green technologies and that recycling is a relatively clean method of compensating for the scarcity of the raw material. 

Recovering the metal that is built into a circuit board takes just a 20th of the energy required to extract the metal via mining.

The process enables the industry to cover at least part of its demand for raw materials using methods that do not increase its dependence on source countries. 

More than ever before, recycling has become a key element of commodities supply. 

But there is plenty of potential that isn’t yet being tapped. 

More and more electronic waste is being produced – in the form of discarded mobile phones, televisions and refrigerators. 

But instead of ending up at recycling stations, a lot of valuable raw materials find their way into landfills or waste incinerators. 

In Germany, only about 44 percent of electronic scrap is collected, while the global rate is lower than a fifth.

The wind power industry has a particularly significant role to play. 

Many turbines from the industry’s early days are now ready to be replaced. 

Most of the materials used in the towers and turbine housings can be reused, but its not quite as easy with the rotor blades, since they are frequently made with epoxied carbon fiber or fiberglass. 

Many end up in the incinerator.

The producers of electric cars are eager to avoid repeating that mistake. 

They are working on concepts that will make it easier to recycle the valuable materials that are currently being used to manufacture new vehicles. 

Half of the aluminum that BMW uses in its engines and auto bodies, for example, is recycled, but the share is significantly lower for materials like nickel, cobalt and lithium that are used to produce batteries.

The electric vehicle era, after all, has only just begun, and there isn’t yet a huge supply of used batteries available. 

That, though, will change as soon as e-cars make up half or more of all vehicle traffic in the coming years. 

By then, BMW plans to have introduced a recycling strategy that leads to lower and lower reliance on primary raw materials.

Foto: Christian Charisius / picture alliance / dpa

Electric car pioneer Tesla even hopes that it will one day be able to cover almost all of its raw materials needs with old batteries. 

Jeffrey Brian (JB) Straubel, who has been the company’s technical mastermind for years, alongside Elon Musk, even founded his own recycling company for the purpose. 

He believes there will be a "radical shift” to lower battery prices when huge numbers of batteries can be 95-98 percent recycled.

He believes that would be both an ecological and financial breakthrough for automobile manufacturers. 

Batteries currently account for roughly a third of the purchase price for an electronic vehicle, mostly the result of the expensive materials involved in their manufacture.

A Volkswagen pilot facility has already begun operations in Salzgitter, right next to the site where a factory will begin operations in 2024, churning out an expected 500,000 batteries for electric cars each year. 

The discarded batteries are disassembled in a corrugated metal warehouse and shredded before the valuable substances inside are then filtered out.

In the long term, the company hopes to recycle 97 percent of all raw materials used. 

Currently, VW achieves a quota of around 50 percent, a number that is expected to soon climb to 72 percent with the help of the new recycling facility. 

VW does not consider old batteries to be "hazardous waste” but "a valuable source of raw materials.”

Still, recycling alone won’t be sufficient to cover the vast raw-material requirements in green industries. 

Rates of 45 to 50 percent for copper suggest that there is still some potential for recycling and that the eco-balance of battery systems, wind turbines and solar parks will improve. 

However, this calculation does not add up, says Aurubis expert Plitzko. 

The copper recycled today was produced and used on average 35 years ago, when significantly less of it was produced. 

As such, the rate is more like 80 percent, says Plitzko.

"As a society, we won’t be able to cover our entire demand for copper with recycling,” he says. 

"We will also need primary copper if we want to cover current and future demand.”

Foto: Paul Langrock

That means that even the most ambitious recycling efforts won’t be enough to put an end to the ruthless exploitation of our environment. 

Nature will continue to be depleted, in part because humanity hopes to live, work and travel in a more environmentally friendly manner in the future. 

For as long as we continue to maintain our current levels of prosperity, we will unavoidably continue to consume more resources, which is ultimately damaging to the biosphere. 

If we continue to use more than nature produces, we will exceed our planet’s limits.

 It’s like a bank account, says sustainability expert Wackernagel: You can overdraw your balance for a time, but not forever.

Does that mean that renouncing consumption is the only solution to reducing our hunger for raw materials, as some have proposed? 

Wackernagel grimaces. 

"That sounds to me like far too much individual suffering and sacrifice,” he says. 

A good life, he continues, is also possible within the ecological limits that exist. 

You don’t need a two-ton electric vehicle to transport a person who weighs 75 kilograms. 

An electric bicycle can do the job just as well, he says.

Furthermore, Wackernagel believes, a different factor will be decisive when it comes to our society’s future sustainability: the number of people. 

When he was born in 1962, there were around 3.1 billion people on the planet. 

Today, there are 7.8 billion. 

If the global reproduction rate doesn’t change significantly, there will be close to 10 billion by the end of the century. 

Wackernagel believes that the global population needs to begin dropping again. Fewer people, after all, require fewer resources. 

"In the longer term,” he says, "that is the most important factor.” 

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Does anyone really understand what is going on in the world economy? 

The pandemic has made plenty of observers look clueless. 

Few predicted $80 oil, let alone fleets of container ships waiting outside Californian and Chinese ports. 

As covid-19 let rip in 2020, forecasters overestimated how high unemployment would be by the end of the year. 

Today prices are rising faster than expected and nobody is sure if inflation and wages will spiral upward. 

For all their equations and theories, economists are often fumbling in the dark, with too little information to pick the policies that would maximise jobs and growth.

Yet, as we report this week, the age of bewilderment is starting to give way to greater enlightenment. 

The world is on the brink of a real-time revolution in economics, as the quality and timeliness of information are transformed. 

Big firms from Amazon to Netflix already use instant data to monitor grocery deliveries and how many people are glued to “Squid Game”. 

The pandemic has led governments and central banks to experiment, from monitoring restaurant bookings to tracking card payments. 

The results are still rudimentary, but as digital devices, sensors and fast payments become ubiquitous, the ability to observe the economy accurately and speedily will improve. 

That holds open the promise of better public-sector decision-making—as well as the temptation for governments to meddle.

The desire for better economic data is hardly new. 

America’s gnp estimates date to 1934 and initially came with a 13-month time lag. 

In the 1950s a young Alan Greenspan monitored freight-car traffic to arrive at early estimates of steel production. 

Ever since Walmart pioneered supply-chain management in the 1980s private-sector bosses have seen timely data as a source of competitive advantage. 

But the public sector has been slow to reform how it works. 

The official figures that economists track—think of gdp or employment—come with lags of weeks or months and are often revised dramatically. 

Productivity takes years to calculate accurately. 

It is only a slight exaggeration to say that central banks are flying blind.

Bad and late data can lead to policy errors that cost millions of jobs and trillions of dollars in lost output. 

The financial crisis would have been a lot less harmful had the Federal Reserve cut interest rates to near zero in December 2007, when America entered recession, rather than in December 2008, when economists at last saw it in the numbers. 

Patchy data about a vast informal economy and rotten banks have made it harder for India’s policymakers to end their country’s lost decade of low growth. 

The European Central Bank wrongly raised interest rates in 2011 amid a temporary burst of inflation, sending the euro area back into recession. 

The Bank of England may be about to make a similar mistake today.

The pandemic has, however, become a catalyst for change. 

Without the time to wait for official surveys to reveal the effects of the virus or lockdowns, governments and central banks have experimented, tracking mobile phones, contactless payments and the real-time use of aircraft engines. 

Instead of locking themselves in their studies for years writing the next “General Theory”, today’s star economists, such as Raj Chetty at Harvard University, run well-staffed labs that crunch numbers. 

Firms such as JPMorgan Chase have opened up treasure chests of data on bank balances and credit-card bills, helping reveal whether people are spending cash or hoarding it.

These trends will intensify as technology permeates the economy. 

A larger share of spending is shifting online and transactions are being processed faster. 

Real-time payments grew by 41% in 2020, according to McKinsey, a consultancy (India registered 25.6bn such transactions). 

More machines and objects are being fitted with sensors, including individual shipping containers that could make sense of supply-chain blockages. 

Govcoins, or central-bank digital currencies (cbdcs), which China is already piloting and over 50 other countries are considering, might soon provide a goldmine of real-time detail about how the economy works.

Timely data would cut the risk of policy cock-ups—it would be easier to judge, say, if a dip in activity was becoming a slump. 

And the levers governments can pull will improve, too. 

Central bankers reckon it takes 18 months or more for a change in interest rates to take full effect. 

But Hong Kong is trying out cash handouts in digital wallets that expire if they are not spent quickly. 

cbdcs might allow interest rates to fall deeply negative. 

Good data during crises could let support be precisely targeted; imagine loans only for firms with robust balance-sheets but a temporary liquidity problem. 

Instead of wasteful universal welfare payments made through social-security bureaucracies, the poor could enjoy instant income top-ups if they lost their job, paid into digital wallets without any paperwork.

The real-time revolution promises to make economic decisions more accurate, transparent and rules-based. 

But it also brings dangers. 

New indicators may be misinterpreted: is a global recession starting or is Uber just losing market share? 

They are not as representative or free from bias as the painstaking surveys by statistical agencies. 

Big firms could hoard data, giving them an undue advantage. 

Private firms such as Facebook, which launched a digital wallet this week, may one day have more insight into consumer spending than the Fed does.

Know thyself

The biggest danger is hubris. 

With a panopticon of the economy, it will be tempting for politicians and officials to imagine they can see far into the future, or to mould society according to their preferences and favour particular groups. 

This is the dream of the Chinese Communist Party, which seeks to engage in a form of digital central planning.

In fact no amount of data can reliably predict the future. 

Unfathomably complex, dynamic economies rely not on Big Brother but on the spontaneous behaviour of millions of independent firms and consumers. 

Instant economics isn’t about clairvoyance or omniscience. 

Instead its promise is prosaic but transformative: better, timelier and more rational decision-making.

The revenge of the old economy

Periods of commodity price pressure will reoccur as broad-based demand meets inadequate infrastructure

Jeff Currie 

As infrastructure aged and investment waned, so did the old economy’s ability to supply and deliver the commodities underpinning many finished products © Universal Images Group/Getty

It is tempting to blame today’s shortages in the “old economy” — everything from energy to other basic materials, and even agriculture — on a series of temporary disruptions driven largely by the Covid-19 pandemic.

But outside of a few labour issues, these bottlenecks have little to do with Covid-19. 

Instead, the roots of today’s commodity crunch can be traced back to the aftermath of the financial crisis and the following decade of falling returns and chronic under-investment in the old economy.

As infrastructure aged and investment waned, so did the old economy’s ability to supply and deliver the commodities underpinning many finished goods. 

After years of neglect, today’s rising gas prices, copper supply shortfalls and China’s struggles with power generation are the “old economy’s revenge”.

In the economic stagnation following 2008, policymakers focused recovery efforts via central bank quantitative easing programmes to support markets. 

Lower-income households faced sluggish real wage growth, economic insecurity, tighter credit limits and increasingly unaffordable assets. 

Higher-income households, on the other hand, benefited from the financial asset inflation caused by QE.

This disparity in outcomes hit the old economy hard. 

In the old economy, price appreciation results when the volume of demand outstrips the volume of supply. 

Higher-income households may control the dollars, but lower-income households control the volume of commodity demand given their greater number and propensity to consume physical goods over services.

As the volume of demand for commodities waned, so did the returns for old economy sectors. 

Lower returns led to less long-cycle old economy capital expenditure — which traditionally requires a five to 10-year horizon of sufficient demand — in favour of short-cycle “new economy” in investment in areas such as technology.

By 2013, this weakness backed up into China. 

As the world’s manufacturing engine slowed and commodities began their historic slide, the old economy’s capital flight intensified.

Indeed, the old economy was overbuilt, debt-laden and over-polluted. 

While the old economy only represents about 35 per cent of global gross domestic product, it generated at least 2 times the corporate losses, had about 90 per cent of the non-financial debt and created 80 per cent of the emissions. 

It is no wonder why investors preferred Big Tech to oil and copper.

After the oil price collapsed in 2015, markets were fed up with wealth destruction, nearly halting deal flows across the old economy. 

China stopped aggressively stimulating lossmaking enterprises such as coal mines. 

And as climate change became top of mind, investors put greater weight on environmental, social and governance issues, further restricting capital.

The resulting decline in investment prevented capacity growth in commodities. 

This has been particularly the case in hydrocarbons where divestiture by investors for ESG reasons compounded an already growing under-investment problem.

The severity of these supply constraints has been underlined as countries have moved into recovery mode from the pandemic, exposing just how stretched the old economy has become.

The pandemic also had a further effect, placing social needs more at the centre of policymakers’ agendas. 

Such inclusive growth has only accentuated the demand for physical commodities.

Shocks to one part of the system are now creating ripple effects elsewhere. 

Reduced coal output in China hit aluminium smelting capacity, creating shortages in aluminium. 

Reduced gas availability forced gas-to-oil substitution, generating shortages in oil. 

The rolling impact of smaller, frequent shocks on a stretched system generates the emergent phenomenon in which transitory shocks lead to persistent physical price inflation — the start of which we are seeing today.

This is where the revenge of the old economy will leave its mark. 

Periods of commodity price pressure will reoccur as broad-based demand meets inadequate infrastructure.

If policymakers’ goals of broad-based prosperity and a massive buildout in green infrastructure are to be met, commodity prices will need to significantly overshoot to the upside to provide the incentive for investment. 

This is needed to compensate for the growing risks involved in long-cycle capex projects and the inherent complexities surrounding the green energy transition. 

As we argued a year ago, a new commodity supercycle is upon us.

The writer is global head of commodities research at Goldman Sachs

Revulsion at Venezuela is fuelling the hard right in Latin America

By wrecking a country, a leftist regime inadvertently boosts support for the illiberal right

One evening last month Francisco Sagasti, who was Peru’s interim president for eight months until July, launched his new book in Barranco, a bohemian district of Lima. 

Mr Sagasti, an academic, is a centrist who steered the country through a divisive election. 

The event was disrupted by demonstrators who surrounded the bookshop chanting “corrupt” and “murderer” at the author while punching a journalist. 

They belonged to “The Resistance”, a group formed in 2018 under the banner of “God, Fatherland and Family” to oppose communism and liberalism. 

They are one of many facets of a new, more aggressive right wing in Latin America.

Its breakthrough came with the election in 2018 of Jair Bolsonaro as president of Brazil. 

A former army officer scornful of democracy and nostalgic for his country’s military dictatorship of 1964-85, Mr Bolsonaro marked a break with previous political norms in the region. 

Since democratisation in the 1980s, with one or two exceptions, conservative political forces were generally moderate, often influenced by Christian Democracy.

Mr Bolsonaro has spawned would-be imitators, of different kinds. 

They include Guido Manini, a retired army commander who promised to crack down on crime and who as a political outsider won 11% of the vote in Uruguay’s presidential election in 2019. 

In Peru Rafael López Aliaga, a businessman who is a member of Opus Dei, a Catholic movement, won 12% in an election in April on a platform of social conservatism and extreme economic liberalism. 

In Argentina Javier Milei, a libertarian economist, is poised to win a seat in Congress in an election this month, running against the main centre-right coalition as well as the ruling Peronists.

Closest to power is José Antonio Kast, a former legislator who in his first presidential campaign in 2017 said that, if he were alive, General Pinochet, Chile’s dictator in 1973-90, would vote for him. 

For the presidential election later this month he has promised to “restore Chile” with mano dura (“a firm hand”) against crime and violent disorder, a border ditch to stop immigrants, withdrawing from international human-rights bodies and tax cuts to promote economic growth. 

He also claims to defend Chile’s European heritage and national unity against the left’s espousal of indigenous groups and multiculturalism. 

Mr Kast looks set to contest a run-off election for the presidency against Gabriel Boric of the hard left.

Mr Kast is not Mr Bolsonaro. 

Rather, he represents a radical populist right, more in the mould of Álvaro Uribe, Colombia’s president from 2002 to 2010. He insists he is not “extremist” and now doesn’t deny that there were abuses under Pinochet. 

Not all of the new rightists represent a clear threat to democracy itself. But some do. 

All of them are less conciliatory than the old conservative parties. 

Minority groups have reasons to worry.

What explains the rise of the new right? 

One factor is the formation in recent years of grassroots groups with Catholic and evangelical ties which have campaigned against abortion, gay rights and feminism. 

Another is a popular demand for protection against crime. 

As with the radical left, the radical right is benefiting from public disillusionment with economic stagnation and mainstream democratic politicians, who are seen as self-serving if not corrupt. 

But what unites all these new right-wing forces, says Ariel Goldstein, a political scientist at the University of Buenos Aires, is “the spectre of Venezuela” which has sought to export its poverty-spreading leftist dictatorship. 

In that sense, the radicalisation of the right is a mirror of the same process on the left. 

If Mr Kast has a chance of winning, as he does, it is partly because Mr Boric, though himself a democrat, espouses a statist economic programme and has communist allies.

Latin America’s new right is also part of a broader international trend. 

Donald Trump’s victory in the United States in 2016 paved the way for Mr Bolsonaro. 

Mr Bolsonaro’s son Eduardo has close links to the nativist fringe of the Republican Party. 

Now Vox, a Spanish anti-immigrant party, is acting as an agent uniting the new right in Latin America. 

In September it published a “Letter from Madrid”, denouncing communism in the “Iberosphere” and signed so far by almost 9,000 politicians or activists including Messrs Kast, López Aliaga and Milei, as well as Eduardo Bolsonaro.

Liberal democrats in Latin America now have to deal not just with an authoritarian left but with a right that is far more intolerant than in the recent past.

The Taiwan Triangle

The goal of US policy toward the island should be to reduce uncertainty about America’s intentions and its ability to make good on them, while underscoring to Chinese leaders the economic and military costs of aggression. As much as China’s leaders want Taiwan, they also want to maintain power and the Communist Party’s political monopoly.

Richard Haass

NEW YORK – The relationship between the United States and China promises to do much to define this era. 

And what could determine this relationship might well be whether the two countries are able to continue to avoid armed conflict over Taiwan. 

But with signs that the chances of conflict are growing, the question facing the US and its partners is how to avoid that outcome without sacrificing essential interests.

Conceptual framing is always critical to foreign policy. 

This is no exception. 

There are problems and there are situations. 

Problems can in principle be solved. Situations can at best be managed. 

Taiwan is a situation. 

Attempts to treat it as a solvable problem will not just fail, but most likely result in a conflict that will leave the US, Taiwan, China, and others in the region and the world much worse off. 

The reason is that there is no possible outcome that would be universally acceptable.

The good news is that the diplomatic framework that the US and China put in place four decades ago, in which the two sides essentially agreed to disagree over Taiwan, allowed them to avoid conflict and build a productive relationship that helped end the Cold War peacefully and on Western terms. 

The US and China went on to develop a deep economic relationship. 

Taiwan, for its part, became one of Asia’s tigers and evolved from a one-party dictatorship into a robust democracy.

To be sure, US-China relations have deteriorated sharply in recent years, but not because of Taiwan. 

Here I would point to China’s militarization of the South China Sea, its unfair trade practices, its growing repression at home, and its economic coercion of countries in the region.

Now, however, there is speculation that Chinese President Xi Jinping is contemplating the use of force to absorb Taiwan in an effort to realize his goal of China’s “rejuvenation” and build his legacy. 

He may also be trying to shape Taiwan’s politics and strengthen leaders it perceives as being friendlier to the mainland. 

Whatever Xi’s motives, we have seen increased economic pressure on Taiwan, cyberattacks, attempts to sow disinformation and interfere in its democracy, military flights near the island, the deployment of additional military capabilities along China’s coast near Taiwan, and efforts to keep Taiwan out of international organizations.

Official US policy has long been to emphasize the principle that if the status quo is to change, it must be done consensually and with the support of the people of Taiwan. 

The US has also consistently stated it does not support Taiwan’s independence, in an effort to prevent Taiwan from triggering a crisis.

Some in the US advocate accepting what they see as the inevitability of the mainland’s takeover of Taiwan. 

But allowing China to coerce or absorb Taiwan would undermine or even end the US alliance system in Asia. 

Governments would either be inclined to defer to China – an Asian version of Finlandization – or become more autonomous, which could lead to conventional military and even nuclear proliferation. 

There is also the fact that nearly 24 million people would see their democracy extinguished, while China would be able to project power throughout the Pacific, control key shipping lanes, and dominate Taiwan’s vital semiconductor industry. 

Any of these outcomes would reduce regional stability, freedom, and prosperity.

On the other side of the debate are those who believe that Taiwan is a country in all but name and ought to be treated as one. 

But encouraging or recognizing Taiwan’s independence in the face of mainland opposition would almost certainly result in conflict, a rupture in US-Chinese relations, or both.

This means continuing to make clear to Taiwan that it must act with caution. 

Some argue that this gives China too much influence. 

But a successful foreign policy often requires tough tradeoffs. 

To avoid the prospect of war and maintain a working relationship with the world’s second-largest economy – a global power in a position to shape outcomes on issues ranging from climate change to world health to nonproliferation – the US does not have a free hand with Taiwan.

What is needed are policy changes appropriate to dealing with a more capable and assertive China. 

That includes enhancing US military capabilities in the region, building closer defense integration with Japan and Australia, strengthening Taiwan’s defense capacities most relevant to slowing a Chinese invasion, and coordinating with partners and allies in the region and Europe on economic and military measures that would be taken in response to Chinese aggression.

Some of this should be communicated to China; the goal should be to reduce uncertainty about America’s intentions and its ability to make good on them, while underscoring to Chinese leaders the economic and military costs of aggression. 

A declaration by Congress granting the president conditional authority to use military force in response to Chinese aggression against Taiwan should be considered as well. 

At the same time, US President Joe Biden’s administration should make clear that it is not departing from America’s longstanding one-China policy. 

Accordingly, it “recognizes the government of the People’s Republic of China as the sole legal government of China,” maintains unofficial relations with Taiwan, and holds that any change must not come about from the threat or use of force.

As much as China’s leaders want Taiwan, they also want to maintain power and the Communist Party’s political monopoly. 

A costly war of choice to conquer Taiwan could jeopardize this. 

But if Taiwan were to declare independence, or the US were to recognize Taiwan as sovereign, many on the mainland would view an invasion of the island as a war of necessity. 

The goal of US policy should be to deter the former and avoid the latter.

Richard Haass, President of the Council on Foreign Relations, previously served as Director of Policy Planning for the US State Department (2001-2003), and was President George W. Bush's special envoy to Northern Ireland and Coordinator for the Future of Afghanistan. He is the author, most recently, of The World: A Brief Introduction (Penguin Press, 2020).