The G7 is an intergovernmental political forum made up of the following seven countries: Germany, Italy, Japan, Canada, France, the United Kingdom, the United States, and the European Union (EU). It was established in 1975. These nations have historically been among the most significant, possessing considerable economic, political, and military might. In 2023, Japan considered the G7 Presidency, and the 49th G7 Summit is slated to take place in Hiroshima from May 19–23.
The G20 (Group of Twenty) was established with emerging economies like Mexico, Russia, Saudi Arabia, South Africa, South Korea, Argentina, Australia, Brazil, China, India, Indonesia, and Turkey joining the G7 nations and taking into account the growing influence of other nations in world politics. Despite the G20’s 1999 formation, only central bank governors and finance ministers initially attended meetings.
The G20 is the leading forum for economic cooperation since it represents over 80% of the world’s GDP and two-thirds of the world’s population and offers a forum for both developed and developing economies to deliberate and enforce corresponding international reactions on globally significant issues.
The 18th Government and Heads of State Summit of the G20 will take place in New Delhi in September 2023 as a result of India having assumed the G20 Presidency for 2023.
The significance of essential minerals.
Non-fuel minerals that are critical for a nation’s economy and security but susceptible to supply chain interruption are known as critical minerals. These comprise, among other things, graphite, copper, rare earth elements, Lithium, cobalt, and platinum group metals.
For renewable energy systems including solar PV panels, wind turbines, storage batteries, and electric vehicles, these minerals are crucial. As a result, their accessibility is crucial to the shift to sustainable energy.
Critical mineral supply and demand are diverging more and more. According to the IEA, the demand for essential minerals might increase overall by up to six terms by 2040, with the demand for graphite, lithium, cobalt, and nickel potentially rising by up to 50 times in some scenarios due to the increased deployment of sustainable energy technology.
Forecasts also indicate that by 2040, the annual exhibit of these minerals would expand by 5–6 times, reaching a value of over US$250 billion, surpassing that of coal, which will be phased out gradually. This market imbalance may be seen in the 3x and 12x increases in cobalt and lithium prices, respectively, between 2020 and 2022.
G7 Ministers’ Statement
The G7 Ministers’ Meeting on Climate, Energy, and the Environment took place in Sapporo, Japan, on April 15 and 16, 2023. The G7 nations committed a 36-page communiqué to speed up the phase-out of fossil fuels to meet net-zero targets by 2050 and address the energy, climate, and environmental crises holistically. The following crucial decisions were made, and they will have a big impact on how much demand there is for critical minerals in the future:
150 gigawatts of more offshore wind capacity and more than one terawatt of additional solar photovoltaic capacity collectively by 2030.
accomplishing a fully or largely carbon-free power sector by the year 2035.
To achieve 100% electrification of new passenger car sales by 2035 and beyond, or the overwhelmingly penetration of light-duty vehicle (LDV) sales as zero emission cars (ZEVs).
To jointly cut CO2 emissions from G7 automobile stock by at least 50% by 2035 or earlier, in comparison to levels in 2000, as a halfway point to reaching net zero.
The communiqué recognized the growing significance of essential raw materials and minerals for achieving a net-zero economy and the aforementioned goals.
It also emphasized the dangers and risks of crucial mineral supply chain disturbance brought on by monopolization and a lack of supplier variety. In order to foster open, market-based trade and transparent, rules in crucial minerals with traceability, as well as to oppose market-distorting measures and monopolistic policies for critical minerals, it was recognized that responsible and resilient critical minerals supply chains were necessary.
Points of emphasis included adhering to strict environmental, and social, and ensuring benefit to local communities, governance (ESG) standards, upholding human rights, minimizing environmental impact, fostering circular supply chains, enhancing recovery and recycling, fostering innovation and competitiveness, replacing existing materials with alternatives, and encouraging communication between extraction, producer, and consumer countries.
Enhancing the five-point strategy
The G7 communiqué also suggested a “Five-Point Plan for Mineral Security” to facilitate the switch to clean energy. There was a need for demand forecasting and long-term supply, the development of ethical mineral supply chains, the improvement of recycling capacities, the encouragement of innovation for the creation of substitute materials, and the need to be ready for supply interruptions over the near term.
In order to overcome the current difficulties and offer a wider foundation for strengthening mineral supply chains, the G20 must expand on this five-point strategy. India (Rare Earth), Indonesia (Nickel), Russia (Palladium), Australia (Lithium), Brazil (Niobium), China (Gallium, Vanadium, Rare Earth), and South Africa (Platinum) are among the G20 members that are well-positioned to supply essential minerals, develop refining and processing capabilities, and are also likely to be major consumers.
The World Bank Group’s study on “Action for Climate Minerals: The Intensity of the Clean Energy Transition” and the IEA’s flagship reports on “The role of critical minerals in clean energy transitions” are both good places to start when estimating demand. The five-point strategy suggests creating a specialized task force to examine supply-demand projections made by the IEA; this is a crucial first step.
In order to conduct in-depth studies on the demand for individual minerals, trace their supply chains, map existing mineral resources and reserves, identify mining companies, and estimate the investment necessary in the short- to medium-term, the G20 must establish parallel analysis ability in an institution in an emerging economy.
Reusing and generating energy
The G7 highlighted the recycling of lithium-ion batteries, neodymium magnets, home recycling facilities, the collecting of e-waste, and its environmentally useful processing.
By pledging to establish required standards, directives, and laws for the compilation and recycling of e-waste and annual reporting by factories, the G20 might go further.
Improved collecting methods, effective sorting, and material recovery through smelting of (WEEE) waste electrical and electronic equipment can improve urban mining, reducing the impact of mining on the environment while relieving pressure on current supply chains.
To increase recycling capacity, makers of solar PV panels, magnets, and electric vehicle batteries should take on (EPR) Extended Producer Responsibility for collecting and recycling.
Co-locating recycling facilities with manufacturing hubs, developing central e-waste, innovative technologies, and collection hubs for cost-effective recovery can all increase synergies and create a recycling ecosystem.
The surge of activity over the previous two years is proof that essential minerals are becoming more and more important. These include the updating of critical mineral strategies by several nations, and adoption of the Inflation Reduction Act (IRA) of 2022’s incentives to support domestic production and supply of critical minerals in the US, and actions taken under the EU’s Green Deal Industrial Plan, such as the European Critical Raw Materials Act.
It is particularly noteworthy how the dialogue on key minerals has evolved in the T7 and T20 forums, which inform the G7 and G20 discussions.
Prime Minister of Japan Kishida extended an invitation to Indian Prime Minister Modi to attend the G7 summit in Hiroshima, and both men agreed to work together in the run-up to the G7 and G20 summits. The strong collaboration and Japan’s and India’s respective G20 and G7 Presidency provide this a special chance to coordinate action on crucial minerals.