Digital technology is becoming a defining factor in the future of mining operations. Robotics and automation through drones, autonomous vehicles and remote-controlled operational systems will be rolled out more widely to enhance exploration efforts production. Cloud computing, information sharing and big data enable work to be performed remotely and more flexibly taking employees away from hazardous on-site events and improving health and safety conditions.

1. New World Economy - Tech Giants Go Into Mining
Late last year, the International Rights Advocates filed a lawsuit in a Washington DC court on behalf
of fourteen (14) Congolese families against several companies, alleging that their children were killed
or injured while mining for cobalt in the Democratic Republic of the Congo (DRC).
The lawsuit further alleges that the young children are being forced to work full-time jobs under
extremely dangerous conditions at the expense of their educations and futures with the defendants
knowingly benefiting from and providing substantial support to this artisanal mining system.
Cobalt extraction is beset with concerns of illegal mining, human rights abuses and corruption and
this could be regarded as an ordinary suit lodged by human rights advocates and interests groups
against erring mining companies operating in Africa. This is in fact a landmark suit in the annals of
the mining industry.
More than 60% of the world’s supply of cobalt is mined in the ‘copper belt’ of the south-eastern
provinces of DRC. Cobalt is a mineral used to produce lithium-ion batteries for electric cars, laptops
and smartphones. What makes this case interesting is that among the defendants in the case are
some of the world’s largest tech companies - Apple, Alphabet (which is the parent company of
Google), Microsoft, Dell and Tesla. The tech companies are accused of aiding and abetting the
deaths and serious injuries of children working in cobalt mines,a vital cog in the corporations’ supply
chain in the manufacture of their products.
Digital Technology Drives Demand for New Economy Minerals
Digital technology is becoming a defining factor in the future of mining operations. Robotics and
automation through drones, autonomous vehicles and remote-controlled operational systems will be
rolled out more widely to enhance exploration efforts production. Cloud computing, information
sharing and big data enable work to be performed remotely and more flexibly taking employees away
from hazardous on-site events and improving health and safety conditions.
On the demand side, technology is also impacting the market for mining’s outputs. The rise of electric
vehicles and the production of an ever-growing variety of high tech and green technologies, have
also boosted demand and competition for new economy minerals. ‘New economy minerals’ is an
umbrella term for a range of metals and mineral elements used in many emerging technologies
including electric vehicles, renewable energy products, low-emission power sources, consumer
devices, and products for the medical, defense and scientific research sectors. Technology have
also expedited the dramatic rise of the ‘sharing economy’, where consumers use their smartphones
to share goods and services such as accommodation, transportation, and finance, as well as
streaming of entertainment and data.
According to a recent report by McKinsey, some 1.8 billion people are expected to “join the global
consuming class by 2025”, a huge 75% increase from 2010. The mining industry will be hugely
affected by this growth, with predicted shortages of a range of metals and minerals including copper,
nickel, cobalt and lithium.
Tech Companies - Emerging Big Miners?
Flushed with capital and brand-savvy, technology companies who are major users of mining
products, want to take full control of their supply chains and are out-competing incumbent
conventional miners, who are struggling for the capital, skills and capacity to innovate. These new
players have access to cutting edge technologies and a track record of success in highly regulated
environments such as healthcare, finance or defense. They know they can do a better job and are
free of legacy issues attached to the mining industry. These new entrants can take advantage of low
valuations and asset fire sales from the conventional miners.

2. Technology companies have becomedirect or indirect investors as a way of shoring up and securing
supply and are moving to control whole value chains from raw material sourcing up to product
delivery of new economy minerals. Using blockchain technology, new technology entrants can
engage in mining without owning any mines or distribution infrastructures in the same way that Uber
does with no cars and Airbnb, with no real estate listings.
The transformation to digital technology and low-carbon clean energy was further expedited by the
onslaught of the Covid-19 pandemic, which disrupted lives and operations but heightened the use
of the app economy. Amazon, Apple, Facebook, Google and Microsoft are now aggressively placing
new bets as the coronavirus pandemic has made them near-essential services, with people turning
to them to shop online, entertain themselves and stay in touch with loved ones and business
colleagues.
New investments by tech giants are transforming the landscape of the resources industry. Among
those leading the charge are tech billionaires Bill Gates, Jeff Bezos and Richard Branson, who have
all built their careers on innovation, thinking outside the box and pushing through disruptive change.
They are backers of technology fund, Breakthrough Energy Ventures (BEV), which joined forces
with hedge fund a16z to invest in mineral exploration company KoBold Metals and its search for
‘ethical’ cobalt. Google, on the other hand also entered into a partnership with a global consulting
firm to boost productivity in mining in Kazakhstan.
Back in 2015, automotive and energy storage company, Tesla signed early stage agreements with
junior mining companies, with no prior existing production, to supply their new ‘gigafactory’ in Nevada
with lithium. The deal signaled to the world’s incumbent lithium miners that new customers like Tesla
are not frightened to explore high-risk, high return alternatives when they find that current market
conditions do not suit their needs. Tesla CEO Elon Musk is reportedly considering taking the
company into the mining business to gain more control over its supply chain and the scalability of
raw materials for its electric car and battery work.
Meanwhile lawmakers and regulators in Washington and Europe are sounding the alarm over the
tech giants’ concentration of power and how that may have hurt competitors. Without any pushback
from regulators, big tech companies would almost unquestionably come out of the pandemic more
powerful.
Clean Energy Transition - Goodbye Fossil Fuels? Hello Minerals!
The pandemic has caused disruptions to the renewable energy industry in its supply chains, and
slowdowns in permitting and construction have delayed projects. Still, analysts agree the renewable
energy sector’s fundamentals are strong. Technologies have matured and prices dropped, to the
point where renewables in most cases provide cheaper energy than fossil fuels. Policymakers are
now starting to shift their focus from pandemic challenges to economic recovery and energy
infrastructure plans.
The fossil fuel industry is among the hardest hit by the coronavirus crisis, with leading oil, gas and
petrochemical companies losing an average of 45% of their total market value. The challenge from
the coronavirus for oil & gas companies has been heightened by the oil price collapse and continuing
price uncertainty because of weaker demand from the transportation and power industry. With the
crisis also hastening a global shift to cleaner energy, fossil fuels will likely be cheaper than expected
in the coming decades, while emitting the carbon they contain will get more expensive. These two
simple assumptions mean that tapping some petroleum fields no longer makes economic sense.
British Petroleum announced that it would no longer do any exploration in new countries. The
pandemic will likely discourage exploration and about 10% of the world’s recoverable oil resources—
some 125 billion barrels— is expected to become obsolete and stranded assets. Some larger
companies would evaluate its portfolio of discoveries and leave some undeveloped. Complicated
projects could be shelved in favor of fields that are quicker to develop.

3. Less than a decade ago, Exxon Mobil was the most valuable company in the world. On the last
working day of August this year, it was taken out of the Dow Jones industrial average after nearly a
century of inclusion in the index. Exxon and other oil giants mostly missed out on the fracking boom,
and on the move away from fossil fuels. Apple which became a US Dollar Two Trillion company in
market capitalization is now the world’s most valuable company. Today the personal wealth of Jeff
Bezos of Amazon is worth more than Exxon. Exxon and the oil industry is giving way to a dominant
tech industry with Exxon’s spot in the stock exchange being taken over by a tech company:
Salesforce.com.
One will ask, what is the role of mining in the clean energy transition. A new World Bank Group
report, “Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition”, analyzes
how the clean energy transition will impact future mineral demand. The report finds that the
production of minerals, such as graphite, lithium and cobalt, can increase by nearly 500% by 2050,
to meet the growing demand for clean energy technologies. It estimates that over 3 billion tons of
minerals and metals will be needed to deploy wind, solar and geothermal power, as well as energy
storage, required for achieving a below 2°C future.
The report also finds that even though clean energy technologies will require more minerals, the
carbon footprint of their production—from extraction to end use—will account for only 6% of the
greenhouse gas emissions generated by fossil fuel technologies. The report underscores the
important role that recycling and reuse of minerals will play in meeting increasing mineral demand.
It notes that even if the recycling rates for minerals like copper and aluminum is scaled up by 100%,
recycling and reuse would still not be enough to meet the demand for renewable energy technologies
and energy storage.
Amidst the pressure to continue or even increase the use of clean energy and electric cars, a report
by the Manhattan Institute entitled “Mines, Minerals, and ‘Green’ Energy: A Reality Check”
postulated issues that were left out in the discussions of the environmental and supply-chain
implications in renewable energy technology.
According to the report, no energy system is actually ‘renewable’, since all machines require the
continual mining and processingof millions of tons of primary materials and the disposal of hardware
that inevitably wears out. Compared with hydrocarbons, green machines entail, on average, a ten-
fold increase in the quantities of materials extracted and processed to produce the same amount of
energy.
This means that any significant expansion of today’s modest level of green energy will create an
unprecedented increase in global mining for needed minerals and radically exacerbate existing
environmental and labor challenges in emerging markets. Among the material realities of green
energy cited by the report are:
• Building wind turbines and solar panels to generate electricity, as well as batteries to fuel electric
vehicles, requires, on average, more than ten times the quantity of materials, compared with
building machines using hydrocarbons to deliver the same amount of energy to society.
• A single electric car contains more cobalt than a thousand smartphone batteries; the blades on
a single wind turbine have more plastic than five million smartphones; and a solar array that can
power one data center uses more glass than fifty million phones.
• Replacing hydrocarbons with green machines under current plans will vastly increase the
mining of various critical minerals around the world. For example, a single electric car battery
weighing a thousand pounds requires extracting and processing some five hundred thousand
pounds of materials. Averaged over a battery’s life, each mile of driving an electric car
“consumes” five pounds of earth. Using an internal combustion engine consumes about 0.2
pounds of liquids per mile.
• Oil, natural gas, and coal are needed to produce the concrete, steel, plastics, and purified
minerals used to build green machines. The energy equivalent of a hundred barrels of oil is
used in the processes to fabricate a single battery that can store the equivalent of one barrel of
oil.

4. • By 2050, with current plans, the quantity of worn-out solar panels—much of it non-recyclable—
will constitute double the tonnage of all today’s global plastic waste, along with over 3 million
tons per year of non-recyclable plastics from worn-out wind turbine blades. By 2030, more than
ten million tons per year of batteries will become garbage.
Green machines mean mining more materials per unit of energy. Since clean tech is about supplying
energy in a more ‘sustainable’ fashion, one needs to consider not just the physical mining realities
but also the hidden energy costs of the underlying materials themselves. Finally, in any full
accounting of environmental realities, there is the disposal challenge inherent in the very large
quantities of batteries, wind turbines, and solar cells after they wear out.
Ethical Sourcing of Minerals for Tech Companies - Smarter and Greener?
Ethical supply chains and ‘green’ practices will be on the agenda for tech giants with mining ventures,
a brand promise that the minerals that go into their products are produced in the most responsible
way and meeting the changing expectations of their consumers.
A poll completed by Forbes in 2018 showed that 88% of consumers would like brands to be more
environmentally friendly and ethical. As such, it is unsurprising that companies are increasingly
starting to investigate not only their sustainability but also that of their supply chain. One condition
that can slow a company’s growth is poor sustainability performance, as measured in environmental
and social impact, as well as permission from consumers, investors, and regulators to do business.
While tech companies may declare their deep commitment to the responsible sourcing of ‘ethical’
minerals that go into its products, how can a company ensure the sustainability of its supplier? With
supplies of metals like nickel becoming depleted, companies may have to broaden their supplier
pools if they wish to expand but doing so will increase the risk of having to rely on suppliers that do
not meet sustainability standards.
Elon Musk promises a ‘giant contract’ with the miner that can supply nickel for Tesla batteries at low
costwith minimal environmental impact. However, the nickel projects expected to supply a large part
of the demand being built in Southeast Asia will rely on coal, fuel oil or diesel to run their operations
leaving a very large carbon footprint. In Indonesia which holds about a quarter of all nickel reserves,
companies operating there are investing in projects that will use acid to process low-grade nickel ore
and produce high-quality battery chemicals.The diluted byproducts will be piped out to the sea using
a process known as deep-sea tailings disposal.
Apple, recently has been accused of abetting child labour and environmental damage. In recent
years the company has sought to clean up its act by collaborating with suppliers to increase their
usage of renewable energy and altering designs to reduce its usage of key aspects like aluminium.
A significant proportion of cobalt and tantalum, both used in handheld gadgets, is produced by
artisanal miners in countries where regulations can be lax or non-existent. In addition, data of origin
from the mine site passes through seven stages from mine to manufacturer and can be changed
along this process, thus data credibility is endangered by unscrupulous traders and middlemen.
Monitoring by tech companies of their raw materials suppliers would be increasingly complicated.
While companies have no real power to make their suppliers pursue sustainable practices, some
tech companies are joining forces with the purpose of helping suppliers guarantee the ethical
sourcing of such minerals. These companies share secured information using enterprise-grade
blockchain middleware in solving the mineral sourcing problem faced by technology companies.
Others are creating platforms that provide technology companies transparency on the origin of the
minerals they use to avoid funding conflict or child labour, while also giving them the control to make
contracts with the miners directly.
From Trade War to Tech War

5. The world’s largest economies obviously the most voracious users of new economy minerals are
also involved in securing the commodities owing to its economic and strategic value. Rare earth
metals, a suite of 17 elements, are crucial to important technological applications ranging from
electric cars and smartphones to satellites, lasers, fighter jet engines and missiles. China owns 36.7
per cent of global reserves and is the world’s largest producer and exporter. Its output last year
accounted for 62.8 per cent of the world’s total, according to the US Geological Survey. Because
rare-earth elements have essential uses in a range of civil and military technologies such as
weapons guidance systems, China’s control of supply is a powerful commercial and diplomatic
bargaining chip.
China supplies the US about 80 per cent of its rare earths requirements from 2015-2018. However,
exports of rare earth elements decreased down to 1,620 tonnes in July 2020, a drop of 69.1 per cent
from a year earlier and down 44 per cent from June, according to Chinese customs data. Earlier
threats to cut-off supplies of the elements, especially the two most important heavy rare earths,
neodymium and praseodymium, have caused short-term disturbances in the market.
Part of the decline can be attributed to the risks of relying on China for rare earth supplies and the
US restarting operations last year at mines in California. As the US is launching sanctions against
Chinese technology companies and threatening to punish Chinese financial institutions, there are
voices in China saying the country can take countermeasures by restricting rare earth exports to the
US. The rising calls on rare earth trade cameas the escalating rivalry between the world’s two largest
economies has fueled concerns over a trade war turning into a technology war. Whether China
intends to proceed with a trade embargo on rare earths is unclear but the threat itself has sparked a
reaction which involves the U.S. government and several allies in pushing ahead with plans to
develop non-Chinese supplies of rare earths.
The rollout of fifth generation, or 5G, network technology would be a battlefield in the US-China tech
war. The upgrade from 4G to 5G is expected to exponentially increase internet-connectivity in
industries that require big data, improve off-load computing to the cloud, and enable huge advances
in automation and artificial intelligence. The 5G infrastructure will intertwine factories, power plants,
airports, hospitals and government agencies.
Huawei Technologies, a Chinese company which is the world’s biggest telecommunications
company and also the largest manufacturer of smartphones, has all but cornered the market for the
roll out of 5G networks. The US has security concerns over the company and has accused it of
rampant theft of intellectual property and selling U.S. tech to hostile states like Iran and North Korea.
The advent of 5G using Huawei’s technology and network infrastructure brings with it enormous geo-
strategic implications to the defense and security of the US and its allies.
The US is doing everything it can to slowdown Huawei’s technological advance not only in the US’
domestic market, but also putting intense pressure on allies around the world to ban Huawei from
their 5G networks on national-security grounds. So far, the UK government has heeded the call to
ban Huawei from participating in its 5G mobile network. Australia, New Zealand, Japan, and India
have imposed similar bans while numerous countries alleged that the company’s products may
purposely contain security holes and malware that China’s government could use for spying
purposes. Huawei also faced numerous supply chain, chip and software partner challenges amid
new U.S. regulations against the company. Google, Intel, Qualcomm, Xilinx, and Broadcom are
cutting supplies to Huawei, according to multiple reports. However, industry executives and experts
warned that U.S. restrictions on Huawei are likely to choke the Chinese company’s access to even
off-the-shelf computer microchips ultimately disrupting global tech supply.
TikTok, a popular video-streaming app and social media platform developed by China’s ByteDance,
is similarly accusedof data privacy violation by the Trump administration. Trump issued an executive
order forcing ByteDance to sell or spin off its U.S. TikTok business. Under the order, ByteDance is
expected to destroy all its copies of TikTok data attached to U.S. users.
Conclusion

6. There are two stark realities arising from the digital and clean energy transformations - the mining
industry is here to stay and tech money is flowing into the industry. There will be also be disruptions
in the way that mining is done as the industry migrate to a digital core. Not only will digital technology
be an integral part in the mining value chain but companies will also need to address the
sustainability and ethical challenges demanded from them not only by direct stakeholders but from
consumers as well. The tech sector, bereft of legacy issues, offers to innovate and improve
operational efficiency, reduce costs, enhance productivity, and improve safety and environmental
performance. Let’s see if they can live up to their promises. As the cliche goes, “Go ahead, put your
money where your mouth is”.
Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and
Business Development.He may be contacted at fspenarroyo@gmail.com for any matters or inquiries
in relation to the Philippine resources industry. Feel free to follow Atty. Penarroyo’s professional
blogsite at www.penarroyo.com
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