• We’re going to need a lot of copper… and coal?
  • Australia has volunteered to be net zero’s open pit
  • The best way to profit from net zero

In Nigel Farage’s interview about net zero, set to grace your screens within days, he warned that we’d have to turn South America into one giant pit to get at the copper needed for the energy transition (or something like that).

But I have good news for my South American friends because Australia has volunteered to dig up the Outback instead. The Australian Financial Review newspaper had me in fits with this coverage of Australia’s not very much anticipated government policy:

The Albanese government will adopt a new definition for “critical minerals” influenced by the needs of Australia’s defence and trade partners, in a move that could drive domestically abundant commodities such as coking coal, bauxite and iron ore onto the list.

Yes, believe it or not, we must add coal to a list of “critical minerals” because it’s crucial for “decarbonisation infrastructure”!

However, the Resources Minister Madeleine King went even further: “Ms King said she worried that activism targeting gas and mining projects would put the energy transition at risk.” Yes, fossil fuels are now needed… for the energy transition… which makes them a good thing… depending on who is in government.

All of this comes on the back of Australia being so desperate for coal that it compelled its coal miners to sell some of their output to Australian coal power plants – that’s how critical the mineral is.

Now, I don’t know about you, but I don’t think mining is especially environmentally friendly – even if it is for the coal that the energy transition needs. I mean, I can still remember when left-wing politicians were promoted based on how many coal mines they’d tried to prevent, not permit. Heck, they used to protest against the mines they now want to prevent opposition to by declaring them “critical minerals”.

But I suppose environmentalists have been their own worst enemy for quite some time now…

Just when they managed to prevent carbon-emissions-free nuclear power from becoming our dominant source of energy, they discovered that carbon emissions are the next big threat on their agenda.

Just when they seem to have saved the whales, their favoured offshore wind turbines are accused of beaching them.

Just when they’ve established Germany’s Energiewende as their idol, Germany’s energy system fails miserably and the country demolishes a wind farm to get at the coal underneath.

Just when Australian environmentalists laud preventing a hydropower project because of its impact on the environment as their greatest success, pumped hydro becomes the national energy storage project designed to make intermittent renewable power plausible. And just when environmentalists come around to that idea, the project’s costs are revised upwards more than sixfold…

Just when they’ve completed their list of toxic chemicals and refining practices, successfully driving them overseas, they discover their favourite green tech relies on those chemicals.

Just when they manage to put the mining industry into a straitjacket of environmental regulations, they discover their favourite forms of renewable energy are incredibly resource-intensive to build.

It’s that last one I want to focus on today…

My problem is not with the mining nor with saving the planet. It’s the fact that the two seem a little contradictory to me if you pursue them for the same reasons.

Not to mention the incredible energy intensity of mining in the first place. In fact, I’m not convinced that a wind turbine produces enough energy to build a wind turbine, once you include all the energy expended in exploration, development, mining, processing, manufacturing, installation, demolishing and recycling of the thing. But that’s another story, which will also feature in the coming days.

Perhaps we’d be better off pursuing other avenues that both cut pollution and don’t deface vast swathes of the planet with mines to do it? (Yes, we’ll publish on that topic soon too.)

Ironically enough, I think the Australian government has got its position on mining right… in a sense. Turning Australia into the world’s green energy transition mine makes good economic sense, anyway. It’s also good news for investors. Back to that in a second because I want to put the environment first.

That list of “critical minerals” is getting a bit long, isn’t it? If we’re going to include iron and coal in the resources needed for the energy transition, why don’t we just get rid of the stupid constraints on mining rather than exempting certain minerals from some of the ridiculous regulations by classifying them as “critical”?

Indeed, I don’t think you’ll be able to find a mineral that isn’t “critical” once enough lobbyists/environmentalists get involved.

But back to the real argument here: why are we digging up the planet to save it? Since when is nuclear power more environmentally damaging than the incredible amount of mining needed to build the renewable energy plants and infrastructure needed?

If you ask me, the electrification of the global car fleet alone would require more metal than the global mining industry can provide without digging up half of South America, as Nigel joked. This won’t leave much for building renewable energy creation and infrastructure. And, if you evade nuclear, you need all three combined and, at the same time, to go carbon neutral.

The UK’s Natural History Museum did the maths for the UK’s car fleet back in 2019, before environmentalists began to admit that we’ll have to share cars in the future:

If we wanted to replace all [the UK’s vehicles] with electric vehicles today (assuming they use the most resource-frugal next-generation batteries), it would take the following:

  • 207,900 tonnes of cobalt – just under twice the annual global production
  • 264,600 tonnes of lithium carbonate (LCE) – three quarters the world’s production
  • at least 7,200 tonnes of neodymium and dysprosium – nearly the entire world production of neodymium
  • 2,362,500 tonnes of copper – more than half the world’s production in 2018

Even if we only wanted to ensure an annual supply of electric vehicles, from 2035 as pledged, the UK would need to annually import the equivalent of the entire annual cobalt needs of European industry.

What about the rest of the world?

Now let’s think beyond the UK. At the moment, there are about a billion cars in the world. By 2050, there will be two billion.

Based on 2018 figures, experts have worked out that for those two billion cars to be electric, annual production of neodymium and dysprosium would have to increase by 70%, copper output would need to more than double and cobalt output would need to increase at least three and a half times for the entire period from now until 2050 to satisfy the demand.

That’s a lot of mining, just for electric cars – the point Nigel Farage was making. Add in the resource demands of energy infrastructure and power plants and you get… environmental degradation.

Environmental degradation which the Australian government is holding up as a paragon of… environmentalism. We’re sacrificing the Australian environment so that other countries can have enough iron ore and coal to save the environment…

Just in case you don’t care about kangaroos, what are the investment implications of Australia’s questionable priorities?

You’ll have to wait until tomorrow to find out. My publisher has decided to release “subscribers eyes only” content from The Fleet Street Letter to Fortune & Freedom. So stay tuned, mate.

Until next time,

Nick Hubble
Editor, Fortune & Freedom