Industrial standard-setting is soft diplomacy. Australia, as the world’s largest producer of lithium and other environmentally critical minerals, is a major player in enabling the world to meet Paris climate commitments. 

Environmentally critical minerals refer to those which facilitate clean energy transition. For example, electronic vehicle batteries require five environmentally critical minerals: lithium, cobalt, manganese, nickel, and graphite. Evidence shows that critical minerals  are extracted in an unsustainable way from among countries in the Global South and from among vulnerable communities, such as First Nations People in Western Australia. Sustaining these resources will require global cooperation, anchored by agreed standards.

Demands for environment, social, and governance (ESG) disclosure are growing internationally. The trustworthiness of such disclosure relies, in part, on traceability reporting tools, which will be key to supporting the sustainable mineral global value chain.

Mineral traceability reporting digital tools are booming – but are they fit for purpose?

The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) is an inter-governmental organisation designed to create “Simple, Transparent and Effective Processes for Global Commerce.” Preliminary research conducted by its Critical Raw Materials (CRM) Traceability and Sustainability Project has identified over thirty major traceability reporting tools including: the Global Battery Alliance Passport, created by the World Economic Forum, the London Metals Exchange Passport, and the EU Digital Product Passport among others.

The sustainability project finds that there exists a complex and evolving landscape of bodies that set standards, certify, and rate ESG performance internationally. However, there is a lack of agreement on structures, approaches, and even terminology, meaning that outcomes cannot be readily compared in order to establish equivalence. Additionally, many traceability solutions exist but there is a clear lack of underpinning technical standardisation for effectively reporting data from varying sources along an entire supply chain. Finally, supply chains are global, but ESG data may be held in domestic (or regional) and even corporate “islands.” If technical data standards were agreed upon, there would still be matters of ownership and access to data to be resolved, as well as legal compliance issues with laws across different jurisdictions. Moreover, China holds dominance in processing some CRM, so relevant traceability depends on data collection from China. However, existing reporting platforms have limited coverage on China. As this suggests, international and comprehensive standards to enhance data interoperability between these tools do not exist today. Limited data interoperability brings regulation risks for governments, confusion to consumers, and high operational costs for businesses.

We can learn from the existing legal systems – and we need more

Even if technical data standards for data interoperability were agreed upon, conflict of laws across different jurisdictions in terms of data ownership, access, and protection still need to be resolved.

Existing traceability legal systems for seafood, “conflict minerals” from war zones, garments and footwear can provide valuable insights such as the need for commonly agreed terminology, protocols and measures, as well as a system for gluing together data originating from different territories. However, data traceability of environmentally critical minerals present a new dimension in the circular economy. Minerals exhibit extended lifespans within the circular economic framework necessary for managing the transition to electric vehicle batteries, for which recycling of critical minerals will be a key element. Notably, current traceability platforms for conflict minerals primarily focus on mining activities, overlooking post-consumption recycling considerations.

Moreover, traceability systems interplay with geo-political tensions. For example, Australian rock lobsters shipped across borders require quality testing, inspection, and certification. There is a tremendous amount of data on what, who, when, and how those quality tests are conducted. In 2020, Beijing stopped importing Australian lobsters after allegedly finding traces of contamination by minerals and metals despite having been tested before leaving Australia. A mutually recognised traceability system may help minimise the possibility of product quality being used as an excuse to stop trade and harm an industry in the future. However, traceability systems may also be used to block trade. This is demonstrated by the debates surrounding the US Inflation Reduction Act that require 80 percent sourcing of critical minerals from the US or its allies.

Minimum international standards?

There is no international convention to support mutual recognition of mineral sustainability certificates and data interoperability across borders. This represents a fundamental barrier to achieving responsible extraction and sustainable management of critical minerals. Useful lessons may be drawn from the success of global mutual recognition of birth, marriage, and death certificates and other public documents across borders under the Apostille Convention, which includes 124 member states in addition to Australia. The Convention aims to abolish the traditionally costly and time-consuming requirement of legalisation for documents issued abroad. It allows a competent authority in the place where the document originated to issue an Apostille certificate, which authenticates the origin of a foreign document so that it can be recognised in all its member states. Through the electronic Apostille Programme (e-APP), the certificates are digitalised to enhance their global interoperability. Mutual recognition means that data within these certificates are interoperable across borders.

An encouraging development from the UN/CEFACT, working with a number of experts from Australia and abroad, has recently presented a template for product data exchange. This template achieves greater transparency over the “credentials” for products (including electronic vehicles and batteries), leveraging the power of digital processes. The project team is further working to produce a standard for ensuring digitally traceable transfer of product information, including ESG data, in a way that cannot be achieved currently due to the fractured way that product credentials are currently exchanged across borders.

The template proposes that sustainability credentials should be verifiably linked with final physical products to manage the revision of these credentials and issuing authority status. It also notes that there are gaps in the existing legal frameworks for cross-border data exchange, which complicates current initiatives due to the uncertain and fluid nature of the legal environment. Additionally, while acknowledging that technology exists to achieve the selective suppression of sensitive data from sustainability credentials, the template notes that such processes cannot be consistently implemented due to the lack of any agreed data access protocols. A more central role for the bodies issuing sustainability credentials may make more consistent application of technology possible.

Australia and its mineral industry needs to contribute to the global effort in navigating geo-political tensions and urgent needs for environmental sustainability and circularity.

Sustaining our planet’s most critical resources will require global cooperation anchored by internationally agreed standards. A clear focus is needed by policymakers and industries to support the development of standards in this important area and then commit to their adoption.

Dr Jie (Jeanne) Huang is Associate Professor at the University of Sydney Law School; Ms. Nancy Norris is an expert with the United Nations Centre for Trade Facilitation and Electronic Business; and Mr. Brett Hyland is Manager, Stakeholder Engagement at National Association of Testing Authorities, Australia.

This article is published under a Creative Commons Licence and may be republished with attribution.