Banks Financing Critical Minerals Fail To Protect People And The Environment
Governments and companies are pushing hard for a "Energy Transition"—shifting from oil and gas to renewable energy. But here is the catch: wind turbines, solar panels, and especially the batteries in electric vehicles (EVs) and iPhones don't grow on trees. They are built from metal.
To save the planet from climate change, we have to dig up the earth. We need massive amounts of critical minerals like lithium, cobalt, copper, and nickel. Governments are rushing to claim their share of critical minerals, leaving the most vulnerable people and ecosystems behind.
A new report from Oxfam titled "Financing Critical Minerals but Failing Critical Safeguards" reveals a troubling truth: the European banks and investors paying for this mining boom are failing to protect the people and the environment where the mining happens. This report comes on top of a recent report highlighting the role of underground crime in facilitating the critical mineral supply chain.
In the words of one of my favorite authors, the green energy transition is more of SSDD (same shit, different day).
What Are Critical Minerals?
Before we dive into the money and the problems, let’s look at the periodic table. "Critical minerals" are raw materials that are economically important and have a high risk of running out or being hard to get.
For the energy transition, five minerals are the MVPs (Most Valuable Players):
Lithium: The main ingredient in the batteries for your phone and electric cars.
Cobalt: Helps batteries store energy without catching fire.
Copper: The best conductor of electricity. It’s in every wire, motor, and wind turbine.
Nickel: Used to make stainless steel and high-performance batteries.
Graphite: Used in the "anode" (the negative side) of almost every EV battery.
Because we are building millions of EVs, the demand for these minerals is skyrocketing. By 2040, the world will need six times more of these minerals than we produced in 20225.
Following The Money Trail
Digging huge holes in the ground requires billions of dollars. Mining companies need loans to build roads, buy excavators, and hire workers. This is where Financial Institutions (big banks and investment firms) come in.
The report tracked the money flowing from the European Union (EU) to 93 major mining companies. The numbers are huge.
Loans: Between 2016 and 2024, EU banks loaned $69 billion to critical mineral companies.
Investments: As of late 2024, EU investors held $16 billion in shares and bonds of these companies.
Who are the big players?
The biggest lenders are mostly French, Dutch, and German banks. The top three lenders were BNP Paribas ($12.8 billion), Crédit Agricole ($8.0 billion), and Société Générale ($7.9 billion).
These banks hold the "leash." Because they control the money, they have the power to tell mining companies, "We will only give you this cash if you promise not to pollute the water or hurt local people."
The problem? They aren't pulling the leash tight enough.
The Reality on the Ground
The report highlights that while the banks sit in comfortable offices in Europe, the people living near the mines in the "Global South" (developing countries) are paying a heavy price. The report highlights four real-life examples of how "green" mining is hurting communities.
Brazil: The "Green" Lithium Myth
In Brazil, a company called Sigma Lithium claims to produce "green lithium." However, the local communities tell a different story.
The Issue: Residents say explosions from the mine have cracked the walls of their houses.
Water Crisis: The region is known as a "water tank" because of its natural springs, but the mining activity has reportedly messed with the water supply. The company had to start delivering water trucks to families because their natural sources became unreliable or feared contaminated.
No Voice: The local Indigenous and traditional communities say they weren't properly asked for permission (Free, Prior, and Informed Consent) before the digging started.
The DRC: Copper and Conflict
The Democratic Republic of the Congo (DRC) has massive copper reserves and has a long history of human rights complaints around mining. At the Kamoa Copper mine (partly owned by a Canadian company), things have gotten ugly.
Pollution: Residents say the mine discharges polluted water into rivers, making it unsafe to drink or use for farming.
Displacement: Villages were forced to move to make room for the mine. The new land they were given was poor quality, making it hard to grow food.
Silencing Dissent: When villagers protested peacefully in 2024 asking for fair compensation, 72 of them were arrested, and some were shot and injured.
Mozambique: The Graphite Grievance
The Balama mine in Mozambique produces graphite for EV batteries.
Land Grabs: The mine took over 5,800 hectares of land (about the size of Manhattan). Farmers lost their fields.
Broken Promises: Years later, many farmers say the compensation money ran out, and they have no land left to farm to feed their families.
Strikes: The situation got so bad that protestors blocked the mine in 2024, forcing it to shut down temporarily.
Peru: Toxic Dust
In Peru, the Glencore Antapaccay copper mine has been accused of polluting the environment for over 20 years.
Heavy Metals: Government studies found leakages containing arsenic, mercury, and lead contaminating the water and soil.
Health Risks: Local women have high rates of anemia, and communities report that their animals are getting sick from the bad water.
Are Banks Doing Enough?
The researchers graded 8 major European financial institutions on their policies regarding the environment, human rights, and corruption. The maximum score was 10.
The Result? They are failing.
Average Score: 3.2 out of 1026.
The "Best" Score: A Dutch pension fund called ABP scored a 4.0 (which is still a failing grade in most schools).
The "Laggards": Major banks like Allianz, BBVA, and Crédit Agricole scored below 3.2.
Where are they failing specifically?
Indigenous Rights (FPIC): There is a concept called FPIC: Free, Prior, and Informed Consent. It means Indigenous people have the right to say "no" to a mine on their land. While banks say they support this, they rarely check if the mining companies actually do it. They don't require companies to prove they have consent from everyone affected.
The Environment: Banks scored an average of only 2.8/10 on environmental rules. None of the banks require companies to have a solid plan to clean up the mine once it closes (mine reclamation). They also ignore the issue of air pollution caused by mining dust.
Protecting Defenders: Mining is the most dangerous industry for activists. People who speak out are often threatened or killed. Yet, only one bank (ING) even mentions the risk to human rights defenders in their policy.
Supply Chains: Banks check the main mining company, but they rarely check the "supply chain"—the smaller companies that supply the mine or buy the metals. This is often where the worst abuses happen.
The Law – A Safety Net Full of Holes?
The European Union (EU) knows this is a problem. They have passed laws to try to fix it, like the Critical Raw Materials Act (CRMA) and the Batteries Regulation.
These laws are supposed to ensure that if you sell a battery in Europe, the minerals inside it were mined responsibly (no child labor, no poisoning rivers).
There is a new proposal called the "Omnibus Package". It sounds boring, but it's dangerous. It is an attempt to "cut red tape" to help businesses grow. But in doing so, it might cut out the safety rules.
Diluting Due Diligence: The new rules might say that companies only have to check their direct suppliers. But mining happens far down the chain. If companies don't have to look deep into their supply chain, they won't see the abuses at the mines.
Delays: The implementation of the Batteries Regulation is already being delayed.
The report argues that by weakening these laws, the EU is basically saying it wants clean energy for Europe, even if it means dirty environments and human rights abuses in the Global South. This goes against the idea of a "Just Transition"—a transition that is fair for everyone, not just rich countries.
Successes and Solutions
The "success" here is that the world is finally moving away from fossil fuels. We are building the technology to save the climate. Also, some financial institutions are starting to improve their governance scores (averaging 3.8/10), meaning they are putting systems in place to track these issues, even if they aren't perfect yet.
But to turn these challenges into successes, the report outlines clear steps for the future:
For the Banks
Follow the Money: Don't just fund a company; check their suppliers. Make sure the money isn't fueling conflict.
Listen to Locals: Set up grievance mechanisms (complaint hotlines) so that if a mine cracks a villager's wall, they can call the bank that funded it.
Stand Up for Defenders: Publicly state that you have "zero tolerance" for violence against activists.
For the Mining Companies
Get Consent: Do not dig without the Free, Prior, and Informed Consent of Indigenous people.
Pay Up: Ensure workers get a "living wage"—enough to actually support a family, not just the legal minimum.
Clean Up: Plan for how to fix the land before you start digging.
What You Can Do
Awareness: Know that your phone and future car connect you to people in the Congo and Brazil.
Advocacy: Support laws that demand transparency. When companies know their customers care about how a product is made, they change their behavior.
The transition to renewable energy is the most important challenge of our generation. We absolutely need to stop burning oil and gas. But we cannot replace a system that destroys the climate with a system that destroys local environments and communities.
We need critical minerals, but we also need critical safeguards. The banks have the money, and the governments have the laws. Now, they need the will to use them to ensure the green future is green for everyone, not just those who drive the electric cars.
