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As Prepared

Thank you so much, Simon, for your kind introduction.  

It is great to be back talking to Benchmark; I have always enjoyed our conversations. 

We really value the analyses you publish and appreciate the important work you do to shine a light on a market that all too often seems opaque. 

And thanks to everyone tuning in to this conference, for taking some time out of your day to hear about the Energy Resource Governance Initiative, a key pillar of the Department of State’s efforts to increase international cooperation on energy minerals.   

I wanted to start off by saying a few words about what guided our thinking, not only in launching the Initiative, but also in making mining policy a priority for the State Department’s Bureau of Energy Resources. 

We work on ensuring the energy security of the United States and its partners and allies by supporting the diversification of energy sources, supplies, and routes.   

We also aim to reduce barriers to energy trade and development by promoting open, transparent, and market-based energy sectors to advance U.S. economic interests. 

Importantly, we strive to identify new trends that will shape the future of energy markets and energy diplomacy.  

One of the biggest trends that we follow is increased deployment of clean energy technologies: the energy transition. 

Wind and solar are now the cheapest forms of power generation for two-thirds of the world’s population. 

According to International Renewable Energy Agency data, almost three-fourths of new capacity additions to the grid today are in renewable energy power generation facilities and renewable sources share will continue to increase. 

This news is not limited to the power sector.  We have seen some especially eye-popping predictions for the scale of growth in electric vehicles. 

Worldwide, there are currently about seven million electric vehicles on the road.   

But the International Energy Agency (IEA) predicts that by 2030 there will be 130 million electric vehicles.   

Compounding these trends are an exploding global population and a growing global middle class. 

Population growth and further development of energy intensive sectors will significantly increase energy demand. 

The Brookings Institute estimates that the global middle class will grow from the current 3.5 billion people to 5.3 billion in just a decade.  These populations have agency and insist countries and companies provide cleaner forms of energy. 

The U.S. Energy Information Administration (EIA) projects that world energy consumption will grow by nearly 50% between now and 2050.   

Most of this growth is expected to come from countries that are outside the Organization for Economic Cooperation and Development (OECD), and is projected to be focused in regions where strong economic growth is driving demand. 

This is all tremendously exciting news, but how all this demand will be met is an immense challenge that we need to address now.   

Many people do not fully understand the enormous scale of growth that will need to occur in mineral extraction to meet impending market demand for clean energy technologies. 

The World Bank recently updated an exceptional paper that describes raw materials demand for different renewable deployment scenarios.  The Bank concludes that the production of several energy minerals would need to increase more than 500 percent through 2050. 

The World Bank is far from alone in its projections.   

The IEA and IRENA provided similar analyses.  They agreed that minerals for batteries, such as lithium, cobalt, and nickel, will experience an unprecedented increase in demand. 

IRENA’s recent report on the geopolitics of the energy transformation included a chapter dedicated to the importance of minerals for energy storage, electric vehicles, and renewable power generation.   

It also recommended that countries looking to develop these resources take the time to understand best practices in the global extractives sector. 

I’m sure this audience knows this well, so I will not belabor the point. 

The market that we have right now will have to change drastically. There is important work to be done to ensure that this energy transition is inclusive, transparent, and does not suffer from energy mineral supply chain choke points.  

A recent report by published by the IEA stated that the market for lithium ion batteries is far more concentrated than oil.   

We see that in the dominance of the nickel market by Indonesia and Russia, the cobalt market in DRC, and the role that China plays throughout the entire battery supply chain. 

What we need to do is ensure that a greater diversity of players are able to compete in the supply chain of the future.   

We would like to see more countries and more companies start to enter this nascent market and we are taking steps at the State Department to provide the tools policymakers can use to that end. 

The global energy transformation is happening and we want it to continue; having a secure, reliable, and ethically sourced supply of critical energy minerals is essential to the growth of clean energy technologies and electric transportation solutions.     

What we would like to see is an inclusive transition, one in which many people and many countries benefit from the vast potential of the energy transition. 

The scale of the problem we face is immense.   

I think as energy professionals we are all aware of that.   

The question is what role can we all play in providing the solution.   

Taking into consideration this impending challenge, and in response to the issue of critical minerals generally, the United States Government issued an executive order on critical minerals in 2017 and another in September of this year.  

Though it addressed the issue of critical minerals broadly, energy minerals are an important subset of it.  

The executive orders were mainly meant to stimulate the domestic mining sector, but we know that the United States cannot solve this problem alone, so there are specific portions of both orders dedicated to international cooperation – and that is where the State Department comes in. 

In the Bureau of Energy Resources we created the Energy Resource Governance Initiative, or ERGI.    

The Initiative is designed to promote sound mining sector governance and resilient energy mineral supply chains. It brings countries together to engage on advancing governance principles, sharing best practices, and encouraging a level playing field for investment. 

At the State Department we know it’s always best to work in partnership with other countries to achieve our diplomatic goals. 

We were thrilled that the governments of Australia, Botswana, Canada, Peru, and the United States came together as the Founding Partners of ERGI at last year’s UN General Assembly to promote best practices across the international mining sector. 

We know we are living in a period of unprecedented energy transformation, both in terms of energy supply and demand patterns, and rapidly innovating technologies to meet the world’s appetite for energy.   

Having a framework under which we can easily and quickly engage with other countries will go a long way to ensuring our shared energy security. 

So what does our Initiative do? 

First, the ERGI Founding Partners developed a Toolkit to identify and share specific mining best practices throughout project life from exploration to closure and reclamation. The Toolkit is the first of its kind and available free and online to anyone.

The Toolkit recognizes that every mining sector, project, and policy decisions are different and, as such, offers practical insights of past successes. Underlying each module of the Toolkit are the concepts of community and environmental stewardship, and how to encourage parties to seek Value Beyond Compliance.   

Second, information is helpful but some countries may want help in implementation. In response, we expanded bilateral and multi-lateral technical assistance programs to build capacity and demonstrate ERGI principles in action.  Within the last year, we have committed over $10 million to support regulators to do just that.   

Third, by implementing ERGI principles, countries reasonably expect to attract world class investors and companies. In order to catalyze that investment, we have integrated ERGI principles in the $60 billion U.S. Development Finance Corporation’s lending criteria to reward countries that embrace best practice. 

What we are seeing play out now is that some of the countries that have the highest concentrations of critical energy minerals cannot, for one reason or another, attract private investment at the levels necessary to fully benefit from the resources they possess. 

These countries lack either the regulatory or governance frameworks or the right investment climate to fully leverage their resources for their own economic growth and benefit of their people. 

Awareness of the link between minerals and clean energy is not limited to policy wonks in think tanks or mining sector stakeholders, nor is it always positive.   

Unfortunately, some groups view investments in mineral-intensive technologies not as an opportunity for economic growth and prosperity, but as a tool for oppression and subjugation.  

We all know that new opportunities in mineral extraction are positive if they spur economic development in countries where it is most needed, but the harm can be significant if mining is not done properly.  There are potential issues with human rights, environmental degradation, corruption, and governance.   

If resources are developed improperly, it can exacerbate inequality, corruption, and other problems and cause a backlash from consumers, trading platforms, or investors, which limits countries’ access to global markets and capital.

As we look to the energy landscape of tomorrow, critical energy minerals and mining will play an outsized role in the energy transition. 

Though it might not be immediately apparent, ensuring that we have a diversity of supply as well as a resilient and ethically sourced supply chain will be critical to the world’s energy security.  

I’m happy to take your questions on any of this.

U.S. Department of State

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