Redesigning Mining - Ep151: Mark Cutifani

Michael Liebreich  
Hello, I'm Michael Liebreich and this is Cleaning Up. The mining industry lies at the heart of the net-zero transition. Not only is it responsible for coal which still produces more emissions than any other commodity, it will also have to deliver the minerals required for the new clean energy and transport sectors. No one in the world knows the mining sector better than my guest this week. Mark Cutifani started his career in coal mining nearly five decades ago. He then worked on a number of different minerals before ascending to the CEO role at Anglo American. He's now chair of Vale-Base Metals, leading the charge on extracting nickel and copper in particular, which will be so essential for the net zero transition. 

ML 
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ML 
Over the holidays, we moved the Cleaning Up newsletter to Substack where you can find it on mlcleaningup.substack.com, that's mlcleaningup.substack.com. And don't forget there are over 170 hours of conversations with extraordinary climate leaders on cleaningup.live, that's cleaningup.live. One more thing before we get going. I'm also in the process of launching a brand new substack called The Thoughts of Chairman Michael. The aim is to create a single hub, bringing together all my written, audio and video output. You'll find everything from links to my conference speeches and Bloomberg NEF columns, exclusive thought pieces on the transition and miscellaneous blogs on stuff I found interesting. I'll be posting new content regularly, so make sure you subscribe: search for The Thoughts of Chairman Michael on Substack, or if you can spell my name, go to mliebreich.substack.com, that's mliebreich.substack.com. See you there. 

ML
Cleaning Up is brought to you by our lead supporter, Capricorn Investment Group, the Liebreich Foundation and the Gilardini Foundation. And now let's bring in Mark Cutifani. 

ML  
Mark, thank you very much for joining us here on Cleaning Up. 

MC  
Great to be here, Michael. Thank you. 

ML 
So I've got two overall goals or two themes that I'd like to explore overall during our conversation. Obviously, during the transition, we're going to use a lot more minerals. And so one theme or one question is going to be have we got enough? Is this going to be feasible? And the other one is assuming that we can do it, how do we do it ethically and with justice? And can we expect this mining industry - of which you've been a huge partner, huge leader for 40 plus years - can we expect that industry to do it in a way that is just? And so those are the two themes. Can we do it? And how do we do it right? Can we start by you explaining to the audience- you've been described to me as "the daddy of of mining", that's the the podcast where I first heard you speak, which is a great friend of mine- a mutual friend I think, Adam Matthews and David Hickey, they described you as the daddy of mining I think and- but can you explain your- you know, give us the potted-bio, the short version because you've done so much of what you've done and what you're doing now? 

MC
Well, first thing is I'm glad they didn't call me "the granddaddy of mining" so they haven't aged me too much. But probably the "daddy" is a fair reflection. I guess Adam's referring to the time I've been around. 47 years in the industry, started in a place called Wollongong, just south of Sydney, working in coal mines. So I literally walked out of high school, working underground a place called Coalcliff, producing coal for a steel manufacturer. Did that for 12 years with a company called Rio Tinto which you probably know. I then worked in the gold fields of Western Australia where we develop the world's- or sorry, we developed Australia's largest gold mining operations. I then worked back on the east coast, the Hunter Valley in coal again, then back to the West Coast working in nickel, copper and small amount of precious metals. I then worked with a couple of companies again in gold, Sons of Gwalia and Normandy. I then went to Canada, working for Inco in copper, nickel, precious metals, cobalt. I then went to South Africa, working as the CEO of AngloGold Ashanti, again a large South African-based company, but it was a global- global operations. And then 10 years - almost 10 years - in Anglo American here out of the UK, retired in-

ML  
And you should say as CEO.

MC
As CEO, yes, yes.

ML
I don't know if that was modesty or an omission, but definitely the leadership role. Yeah.

MC  
Yeah. And then I retired in- I retired, handed across the role in April 2022. And since then, I've taken on the chair role for Vale Base Metals, and that's another interesting role, which is very much focused on the energy transition in terms of the products it produces. I'm also a non-executive director of Total Energy so I get to watch the energy transition from on the inside. Also a senior non-executive director for Laing O'Rourke, a construction group out of the UK, chairman of the Power of Butrition, based out of the UK, Global Foundation, Development Partner Institute, a whole range of other activities that are around charities and non- NGO-type activities. 

ML  
Right. So now, if that doesn't establish your sort of right to speak or your credentials, because you've talked about, just in that short overview, you've got some coal, you've got actually oil and gas as well through Total Energies, because that's their heritage, you've mentioned nickel, you've mentioned copper, you've mentioned some- well a lot of precious metals. I don't know about base- well base metals, whether you've got some rare-earths in there as well, I'm sure you have. You've also been, during that period, a major spokesperson for, broadly speaking, I don't know if we're allowed to call it ESG anymore, but responsibility within your industry. So give us the sort of- what's the timeline of that? I mean, is that something you realised right from the start, back in the Wollongong days, that this industry needs to shape up? Or is that something that dawned on you because- to the point where you then became a leading figure in that trend? 

MC 
Well, it's always been at the surface, or somewhere bubbling around the surface of who I am. I grew up in a coal mining city, Wollongong, which also had a steelworks. So I understood the interaction of mining with local communities. My first manager's job was at a coal mine and I can remember, we had a flood, coal washed down into the local neighbor's backyards, and I was out in the backyard digging the coal and cleaning the outback up with Mrs. Smith, literally. And the importance of engaging in- and her appreciation, the fact that we were all down there, cleaning her yard up, and we got chatting, and she didn't realise I was the manager. And we ended up chatting. So I used to go back for a cup of tea once every six weeks, and she'd tell me about the community, what was happening in the community, I'd tell her about the business and what we were doing, and she appreciated that we're an important part of the community, because so many of the locals were employed. And at the same time, that engagement and talking with her about what was happening helped us play a more effective role in the community connecting with the neighbourhood. And we became - or we were - part of the community. So that's always stuck with me. And I've always tended to be somewhat socially-orientated as well. And so, as you, I guess, grow and develop, and you see different ways that you can have an impact from the position you have in the business, and how positive the response from the community can be. So it's just been part of my DNA, I guess and growing up. 

ML 
And- but that journey from that time, took you to be really a very vocal champion of the mining industry as a force for good and also as a force for environmental good. Can you explain your logic? Because most people listening, would say it's a kind of necessary evil and quite a big evil. But you don't subscribe to that. 

MC
Well firstly, I'm also probably one of our harshest critics as well, when things aren't managed well. So I think you have to tell the story both ways, and there's no doubt when things go wrong. As leaders, we have to be front and centre, we have to make sure it's cleaned up, we have to deal with the issues, we have to learn from the issues, and I remember going to South Africa back in 2007, and in the first week on the job, we'd lost nine employees at work. And for the year, we had 35- 34 sorry, fatal incidents. And so what we did to correct those sorts of issues were very important. So you have to tell the whole story, not the bits you like, in terms of mining. A very simple point that I make, and something that we don't do very well: mining conjures up an image of digging holes, where we really should be calling ourselves the "materials industry", because everything that we all use in our daily life either comes from mining, or it's grown. And if it's grown, it's usually processed by the products of mining so that it's usable. So in terms of what we provide- the Greeks understood mining's role in society when they talked about air, water, fire, and earth. Today, I use air, water, energy and minerals as being the things that make our lives work. And so telling that story has been something that that has been very important to me, and certainly has generally got a constructive reaction.a

ML 
And regular listeners to Cleaning Up will have listened a few weeks ago to Ed Conway, the author of Material World, and he talks about- he took us through sand, salt, copper, steel, oil (which is shorthand for him for oil and gas) and lithium. And so we've got an audience hopefully out there who understands just the sheer scale and also the complexity of the supply chains and the cleverness of the technologies and how they're processed. But- so yes, minerals, still very important. We don't have a kind of ethereal, digital-only, services-only economy, we're actually still digging up a lot of staff. But you make a strong argument that this is- that without it, the world would be a much worse and environmentally worse place, right? 

MC
Well, I'm making you an even stronger point: that we can't create matter, and everything comes from the earth. Whether it's agricultural products, everything comes from the earth. And so materials, products from the earth have been since have been with us since day one. That is an immutable fact of life. And yet people sort of think we have discretion on money, we don't have discretion. Now we could recycle and do a lot smarter things, but at the end, we can't create matter. And so what I'm saying is, I'm in the industry of materials, I'm just a materials boy. And that's what we do, we produce the materials that make the world work. And we're not very good at telling the story. And certainly, from my perspective, that's been a role I've taken on for a lot of years, when, again, engaging in a whole range of stakeholders, pretty clear they didn't understand how the world works. 

ML  
So we've got the JustStopOil movement out there, possibly also- in fact, probably also, I know some of them listening to this because I have them- I've had even some of the supporters, proponents of JustStopOil or Extinction Rebellion on the show. What happens if we just stop mining or just stop materials?

MC
We die. Period. We die. You're exposed to the elements- so we talk about shelter -food, shelter, all of the things we need to survive come from the earth. Even indigenous groups- in fact, indigenous groups understand the importance of the earth more than we do. And I go back to the ancient Greeks who understand that the use of the earth for everything. And when I say we die, I'm not being glib. Fertilisers. Without fertiliser, we can only feed 4 billion people. So are you or I going to decide which 4 billion don't survive because we stop fertilisers? There was a recent exercise done in the Netherlands and the head of McKinsey, the economist from McKinsey was telling me they had a debate with 400 university students who said, "we should stop producing fertilisers and we're not going to use fertilisers", and they're the most significant exporter of flowers in the world. And so they had a good debate. He said, "can I add one fact to this conversation? That without fertilisers, we can only feed half of the world?" And he said, "would we like to discuss which 4 billion people aren't going to survive as a consequence of the decision we make?" And because they talked about stopping fertilisers around the globe. The debate was, for about the next hour, around that issue, and then he put it to a vote again and said, "so who believes we should stop using fertilisers?" Not one person voted for that decision, the conversation around how we do it better, do it more appropriately and make the right decisions on how those things are used, was the better conversation, and mining: I put it into that same category. We need mining for everything. 

ML
So that's the that's the bull case or the support case, right. But the fact is that this is an industry which has a vast history of misbehaviour as well, whether it's environmental pollution, rivers, watersheds, also tailings collapses, the Brumadinho tailings dam disaster, which killed a few hundred people, that was a Vale mine, the majority owner of the company you now chair, you've got the issues of corruption, bribery, people flying around, just- and we're not talking about history, we're talking about recent, recent events, you've got the Juukan Gorge, the Rio Tinto blowing up, this incredibly important, you know, 46,000 years of continuous human activity, and some mining companies just decides that- and I guess, I'm interested in whether this feeling that we're doing so much good and everybody dies without us justifies- is used psychologically, to justify that sort of behaviour?

MC
Firstly, you use the word behaviour as though there's a deliberate action to do those sorts of things or do the wrong thing. And let me say that, in my experience, most people associated with the mining industry believe and do the right thing. There are, in all walks of life, people that don't follow the rules, don't do as they should, and we have problems. And we're no different from any other industry where there are problems. But for every case where I see something bad or something that's not done appropriately, I can give you 100 cases where it's been done well, and no one hears of anything, because it's been properly operated. So we've still got a long way to go to improve what we do, and none of us in the industry would say that we've got it all right. And certainly from my point of view, we can do better with risk management, we can do better on environmental, we can do better on safety, and that's a continuous journey, and we've still got a long way to go. And we can tell our story a lot better than we do. So yes, all of those issues are issues, but we're getting better, and I hope we'll continue to get better.

ML
I think, I'll give you the kind of the benefit of the doubt and getting better, that one- 

MC
But the statistics seem to indicate that to be true. 

ML
But the fundamental question: is this a good industry with a few bad apples, or is this a fundamentally, how can I put it: an industry that's got fundamental problems of governance, ethics, etc. I mean, the companies that have been caught doing these things: they're not fly by night operations. We're talking Glencore, Rio Tinto, Barrick Gold fields, we're talking about Vale, I mean, these are the leading players. I mean, if they're not- you know, I haven't mentioned Anglo American, you'll notice, but, you know, you're- so maybe, you know, maybe it's all your other- all your colleagues, but you know, you meet these people at all the conferences, you talk to them all the time, they have the same investors, and those are the companies that are being caught, you know, bribing on an industrial scale, and just, you know- you can't argue that blowing up the the Juukan Gorge was a sort of a mistake by one person. That was throughout that company. And, of course, executives' heads rolled as a result, quite rightly. 

MC
So, firstly, I've never presented the mining industry as being perfect. It is run by human beings, and from time to time human beings make poor judgments, they make mistakes, risk, as we think have issues in control, aren't as in control as we thought. And so there have been issues. I'm not absolving anyone, in any industry, and in particularly mining, from those issues. I won't talk about any specific issue. But if I could talk to, let's say, an experience. So and I use Anglogold, sorry, Anglo American, I could use AngloGold as well, and just point to the improvements we made, which mirror many of the improvements we've seen across the industry. So firstly, safety. Accident frequency rates improved in terms of fatalities occurring at work. We'd reduced by 97%. We had one fatality in 2021, one too many, and obviously zero is the target. First time in 100 years, we had zero fatalities in South Africa, with the deepest mines in the world. Environment: 30 spills or exceedances, down to zero in the last year. We had significant improvements in health. In fact, in 2007, there were 78 people impacted by tuberculosis, which is connected to silicosis. In 2021: zero cases. In terms of 2007: 1000 people in the organisation passed away due to impacts of HIV in 2007: 1. Sorry, 2021: 1 case. So massive improvement on a whole range of areas. In terms of social performance, significant improvement, not perfect, but significant improvement over the years. And if you go to the ICMM statistics for safety, again, significant improvement over a long period of time, but not yet at zero. And there are very few industries that are at zero, but we're approaching what we call safe industry status on those statistics. So there's a whole range of examples showing that we're improving, but we're not perfect, still got a long way to go, whether it be a corruption issue and other issues. Now, the other point I would make is we have the formal sector, but we have a greater amount of people actually involved in the informal sector, which is artisanal mining, that requires a lot more work. Now, a lot of the larger companies are now starting to work with governments to help the governments develop guidelines for managing artisanal mining, for safety, health, environment, and for example, De Beers doing GemFair in Sierra Leone, a number of other companies are now working with the artisanals to try and improve their practices with government. So long way to go, yes, you can point to issues and problems in the industry. But we are getting better. But we agree that we've got a long way to go and everyone's trying to get there.

ML  
So that's very persuasive to the point that we can do mining in a just way, because those are fantastic case studies. It's poignant for me, by the way, because I do a lot of work on road safety, and particularly bus safety in London, where most of the people listening to this would think, well, there's no problem. And they could not be more wrong. London has the least safe bus system of any European city. And we actually have more killed and seriously injured on the buses in 2022/3 than in 2016. And it's just blighting families in the hundreds. It's killing people, you know, in the dozens during each mayoral term, and there's no cultural sort of acceptance of that, not within Transport for London and not within the general public. So, you know, the parallels there are pretty strong.

MC
But now you're talking my language. So one of the ways that we've been able to explain what we do in the industry and our performance is to bring it back to social norms, or things that people connect to. So if I said to you today, South Africa, the mining industry, it's actually safer to work in a deep underground mine in South Africa, than it is to ride in a London bus. Now, that would be a bit of an extreme comparison- 

ML
It's not the riding in the bus that's dangerous. It's the being anywhere near the bus, outside the bus that's the most dangerous. Although slips, trips and falls, actually people do get injured and and even killed because of the buses zooming into and out of bus stops. 

MC
If you look at the fatality frequency right now, and it's a lovely conversation, it's actually a very good conversation. I asked Jim Joy, professor of risk management at Queensland University, and I said, "How should I think-", this is in my- as an operations manager in nickel back at Western Mining, back in 2004, and I said, "how should I think about what level of safety performance is acceptable to society?" And he said, "Mark, you should look at the fatality frequency rate on the roads." He said, "as a mining industry, we've got to be doing much better than that statistic, because people can relate to driving a car and it's something they can connect to. And if you said "we're much safer working in an underground mine than driving your car on the roads," you're connecting with people, you're connecting with what people can relate to." So, by the time we finished in my period at that operation, we were five times safer than driving the car on the roa. And it was a significant improvement. But we've got to keep improving because road safety keeps improving, we all keep improving. The airline industry's done some wonderful work in terms of safety that we use as a guide in terms of risk management. But it's a continuous improvement story. 

ML
It's a fantastic conversation and we- I could, I could happily spend the next half an hour on that. Because, you know, as society, it's very strange. We accept zero for fatalities when we fly, but on the roads, actually, in the US now, it's something like 40,000 fatalities a year, and they're just kind of accepted. It's just extraordinary. And in mining, it sounds like parts of it are moving towards that kind of zero-fatality acceptance, but there are still parts of it that are perhaps not there. But if that speaks to the question of whether we could achieve very high ESG, environmental, social and governance standards, we could get there. There's- the industry is in the crosshairs of a few major pressures. So one is the whole divestment, or the whole how-to reduce what it's doing on the fossil fuel side, and the other is how to grow in the copper, the nickel, the base metals, the rare earths and so on. Let's take those in order. In terms of the coal, so at Anglo American, you de-merged. So you took the thermal coal activities, which were only about a few percent- 

MC
Less than 5%. 

ML  
-less than 5% by value, you put them into a separate company.  Can you talk through, why did you decide to do that? Because there were other options available to: shutting it down, selling it to somebody else. Why did you de-merge, and what happened?

MC 
Firstly, shutting it down was not an option. The government owns those resources. We pay a fee to rent exploit, sell-

ML
These were in South Africa, principally, at the time?

MC 
Yes. So from their point of view, the coal was a resource, their resource, we explored, found, invested in and extract those resources for export. And they said, "well, that's not your decision to stop. So you don't get to make the decision to stop. You can sell you can do whatever you like, as long as it's commercial and appropriate, but you don't get to stop developing those resources, because they're a resource for the country, and that's our decision, not yours." That was very clear. When we looked at it, we could have taken the cash or we could have de-merged, and for our investors, what we thought was, we will de-merge so they'll have two pieces of paper, and for those investors that said, "you know what, we don't want to invest in thermal coal," they could sell out and hold their Anglo shares. And for other investors, who said, "you know, what, I think thermal coal is gonna be a really good place to invest in, we'd like to keep our share." So we gave them the choice, and for us, we thought that was the best way to deal with the issue with a very open and transparent way. The government was satisfied with the way we did the work. There are a number of environmental commitments that were made as part of the demerger, and those things have been honoured by July and the team, and at the same time, investors got to make their own decision about what they were prepared to invest in. So I think it turned out to be a model for those that are looking at separating from their thermal coal assets.

ML  
From the perspective of the business community, the investor, certainly. That business, I'm not sure how it's pronounced, [Thungela]?

MC 
[Thungela].

ML
Thungela. Record profits, buying other mines, investing, growing the amount of coal from a climate perspective, that's pretty disastrous, is it not? 

MC 
Well, again, it's not for me to judge what they've done separately. But again, what they've done is consistent with what the government has said is within their policy limits. And again, the one thing we couldn't do was put constraints on them after they were outside Anglo American on the basis of the feedback from the government. So these issues are matters of policy, and we work within those policies, but again, we said, "look, people don't want us to be operating in thermal coal," we made the decision to step out, it was a small part of the business. The other thing with those assets is they had relatively shorter lives. And so for us, it was one of those debates that within the next five years, we probably would have divested in any case. So it wasn't a difficult decision for us to make. But at the same time, people think we're in control of those resources. We're not. The government- they're subject to government policy, as they should be.

ML 
So once again, this may be- it may be that your case study, that the ones that you have been involved in, are sort of poster child pin-up of how to do this, but isn't the risk more broadly within the industry is that the better-run companies, which are as we've established, other than Anglo American, perhaps not that well run, because they're lagging in these things, but the better-run companies, divest to people who really are not interested in any of this, not safety, not environment, not climate, and are much more opportunistic, and not subject to governance, not subject to transparency?

MC
So it's a difficult one, but you're asking the right point. Now, in my view, those types of assets are probably best kept with those that you know, will do the right thing and manage them appropriately through the transition. But unfortunately, that's not how the world is working at the moment. JustStopOil is a good example; the world can't afford to JustStopOil. It can't afford to keep going where it is, either. So how do we transition in a way that looks after the whole global village, it can't be just this group or that group, we've got to transition in an appropriate way. So these things are far more complex and require a lot more thought and "JustStop this" or "JustDo that" doesn't work if you want to preserve people and planet.

ML 
Right, so "just stop", which I've brought into the conversation, I mean, that, we've agreed, is a naive approach, the "just stop". But, 

MC 
But I understand it, but I do understand it.

ML 
If you take the 2050, or in the case of a Global South country that has committed to 2060, I think South Africa, 2070 - India, over the next 3/4/5, maximum 5 decades, we absolutely have to just stop, because that's what the planet- that's just the physics of the planet. And so, the transition does involve essentially two pieces. Running down - and you can call it transitioning away, you can call it phasing down, phasing out- but it does involve exiting one set of resources and growing another. And I suppose we'll get on to how do you grow the other, the transition minerals that we need, but are we- where are we in terms of, how do we phase down, phase out, transition away from- do you think we're on track to do that? Are the signals being sent to the owners, whether they're governments, investors, companies? Or are they just going to keep investing and creating demand by investing?

MC 
Look, I think there's no doubt based on the data we've seen, we're all moving too slow. That, for me, is a really important issue. And the dialogue has been, in my view, naive in many ways. Now, let me use the comment on Scope 3 emissions. So Scope 1, Scope 2, you're in control of your emissions, and that's been a real focal point of the companies I've been associated with, in reducing our Scope 1 emissions, whether it's solar, introducing solar renewables, clean energies, building the world's biggest off haul road truck which is both fuel cell battery and powered by solar, those sorts of things we did in trying to make sure the Anglo footprint was reduced materially, including the use of [] and a whole range of other things. We have to make sure that we can do everything we can to improve those positions, but at the same time, there's a cost. And so the pace at which you can do that has to be invested in and you've still got to deliver a return. So how do you get all those moving parts working together?

ML 
But also in the mining industry Scope 1s, particularly thermal coal, I mean, if you look at Thungela, their Scope 1, Scope 2 will be 3%, or 5% of the real problem is, their lifeblood is selling thermal coal, with the CO2 going up into the atmosphere. 

MC
So let me go to Scope 3, which I think it's the wrong metric. It's almost, you know, it's irrelevant. It's actually the Scope 4 emissions. And people say, "what do you mean by Scope 4?" I'm saying, well, wait a minute. Scope 3 just stops at the steel-producing plant. So in many of the major groups, their most significant Scope 3 emission is at the steel plant. But what people forget is steel is the most single most important metal in the energy transition. So when you take steel, and we did some calculations that showed that at 45%, where the world's got 45% of its primary energy is coming from renewables, the amount of steel that is used to support that production would be net carbon-neutral, even with metallurgical coal being used, because of the credit you get back for the cabin elimination. So in actual fact, we should be measuring Scope 4, that is full lifecycle cost of those materials, scope through his arbitrary I've shared this with the political leaders in the UK, and I'm hoping that that lands and we actually measure these things properly. 

ML
But that is, with respect, what you've done there- I see what you've done, right, because I've been doing this for nearly as long, not quite as long as you but nearly as long. What you've done there is you've taken credits for avoided emissions, right, and the problem with that, is that some piece of the economy being zero emissions, and then some other piece emitting but saying, "well, we're allowed to admit because it would be worse without us" doesn't get you to net-zero. 

MC
No, no, I agree. But it's a better measure than Scope 3, because the Scope 3 doesn't drive the right [balance]. Now, the second part, which I do concede, which should be done is then, how do we make sure the steel-producing is in fact, carbon-neutral on the basis that we get to the hydrogen- now, that's 20 years away. But how do we encourage the right behaviours all the way through the process is absolutely critical. 

ML
And by the way, you may not know this, but I'm a very big critic of Scope 3, which is actually designed to act as collective punishment. And a lot of people like using Scope 3, because it points the finger at the fossil fuel companies and it makes them responsible for what essentially we are all doing. The question that I posed, though, was the the danger, and you know, if you absolve them completely-

MC
So I'm aligned with you Michael, I'm aligned with you.

ML
Maybe, but because there's a but. The but is that if you have these fossil fuel companies or countries, whether it's UAE, Saudi Arabia, Canada, whoever, once they invest in the fossil fuel output, does that stimulate demand? In other words, if the real goal is to shut down the demand, replace the demand, so we can still have good lives, but do it in a clean way, but if you've got a bunch of people who've invested, who've got stranded assets, who've got pension fund money invested in production of fossil fuels, does that not stymie attempts to ratchet down demand? By definition, it's going to reduce the cost of fossil fuels and stimulate their use. 

MC
So I think, the points you raise are absolutely right. Shouldn't we be in a debate how we do this together and transition quicker together, and the government has to be the one to actually promote the right conversation. Now, I've made this point to both government and opposition members and said that it's really important to get to the Scope 4, or the broader circular economy,  we should be talking to the circular economy in this debate, to get those issues resolved. Because while we, I think, fiddle and fight around with Scope 3, it's the wrong debate. It has to be circular economy, how do we get to a place where we really are taking carbon out of the mix? And I don't think we're in the right conversations yet. We think we are, but we're not.

ML
We're certainly not, and some of the, you know, we see the debates kind of almost like a fake debate, or as kind of these are ritualised debates and things like the COP meetings. But however we hold that debate, there will be winners, and there will be losers, because you are transitioning from one set of assets to a different set of assets. And so the losers are, I would suspect, however you debate with them, not going to go gently into that good night. And that's part of the issue. But I want to switch to the other side, which is the winners, right? There's a whole bunch in your industry, and you are the chair of a company set up to expand dramatically the output of particularly nickel and copper, I understand from the Vale assets. So let's talk about the transition minerals, the winners in all of this are going to be these minerals that are going to be used in clean energy, whether it's electric vehicles, whether it's transmission grids, whether it's the steel in all of those offshore wind turbines, or the rare earth that goes into the magnets that are required and so on. Is there enough of this stuff? Are we spinning our wheels - and we're going to- I'm sure we're going to talk about nuclear as part of this - you know, are we spinning our wheels or spinning our turbine, spinning our PV panels, thinking that there's enough of these minerals to largely effect the transition based on renewables? 

MC
Well, there are enough of these minerals on the planet, but getting access to them and developing them in the right timeframes, I would say there's not enough to achieve our outcomes, and that is something that we have to address together. But I don't think it's that simple either because humans are innovative and can find different pathways and routes, and if the price of copper goes too high, or the price of nickel goes too high, then there'll be substitutes, there'll be other ways we can do things, they'll be- the material sciences, I think, are going to be critical in finding solutions: where we don't have enough of this, then we'll use another product, might not be as efficient, but'll get us there. So I think there'll be lots of work: when, we don't have enough materials, or we can't get those materials quickly enough, we'll end up making compromises, we'll, what we call, reduce our consumption, we will use different products. But again, I think humans are very innovative and will find solutions, but it's going to be a bumpy ride, because the straight line access to getting there is not a straight line. And that's the problem. 

ML
So it's an optimistic picture. Let's just frame it in terms of you know, 2050, net-zero, or 20- I mean, I've always thought that by 2100-

MC  
It's actually a hopeful picture, not necessarily an optimistic picture. 

ML
Ah, but there's two different sorts of optimism, which I love. There's some Paul Romer, that Co-Nobel Prize winner talks about, I don't know how he phrased it, but it's sort of passive optimism, "I hope I get a nice Christmas present", versus active optimism, which is "that's an amazing tree, I could build a great tree house in it". And so you're more- you're the active optimist?

MC
Correct. And so my work is about weighting the debate so that we can get access to the materials, so we can get access to the materials and do the right things, and also think about the backup plan that won't work. And so I've always said, in my industry as a materials guy, my relationship with the materials or the material sciences groups is really important to understand. What's the best material? What's second best, what's third best, how might industries develop? Because I've got to be thinking about, if it's not copper and nickel, and clearly they are two preferred products, what are the alternatives, and should I position in some of the alternatives because maybe this is going to be difficult? So that's about business planning, positioning yourself for opportunity, but it's also about, you know, I've got seven kids, I want them to have a better life than I've had. And for the first generation in, I don't know how long, we're probably not going to give or leave our kids with a planet that's in as good a shape as we found it. 

ML
So your active optimism, this is what you're working on. Can we do it by 2050? Because that's the one and a half degree goal that everybody has sort of glommed on to says that we need to be net zero by 2050, globally. Are there enough minerals by 2050, or should we be running a book as to when we actually might be able to get the minerals required? 

MC
If we started today, connecting these conversations the right way, and talking circular economy, talking Scope 4 and solving the real problem,  yes, we'd get there. But unfortunately, we're human. We're human. We have our own issues. We have our own agendas. We're in different countries with different views on the world generally, and it's going to be a bumpy ride, and it's going to be difficult to get consensus on those matters that need to have consensus. But that's not going to stop many of us working as hard as we can, annoying lots of people, having good conversations with people like yourself, who I see dedicated to try and make a difference, and these are the right conversations. At least if we can inspire people to think and stand up and get involved and take the time to understand how these things work, we can make a difference. And I think we've all got to try and make a difference. 

ML 
And just sort of for the record, I think 2050, we can't, and not just because of the minerals, but there are other reasons. But 2070, which is nearly 50 years away, we definitely can. And so that's kind of a two degree world, which is better than where we're headed right now, which is whatever it is, 2.5- 

MC
Yeah but for me, it's not a physical issue, it's human nature, that'll be the barrier, it'll be: we will be the only barrier to stopping ourselves. 

ML
We but that will be broadly- that will be human nature, that will be the economy, that will be the capital invested in existing in the capital base, there'll be other priorities. Ed Conway talked about in - author of Material World - talked about how much- you and I have got 15 tons of steel embodied in the economy in the developed world. And in the developing world or in the Global South, there's only a ton or so, so they've got a lot of catching up and we can't we can't possibly say "you have no right to have, you know, metal roads and decent buildings and concrete floors-" 

MC
That was my point earlier, about 4 billion people on the planet, let's stop fertilisers. Well, who's going to make a decision about that 4 billion we can't feed? 

ML
Right. And there are just some- there's some time constants in addressing that that are very difficult. But if we just come to the-

MC
Can I make one other point?

ML
Absolutely. 

MC 
The institutions on a global basis aren't fit for this purpose. And it's clear as a bell with the issues that we've got on a global basis, they aren't working in terms of, whether it's hotspots in terms of military issues, whether it's trading, World Trade Organisation is no longer fit for purpose, a lot of rework across the globe required, all of those things need to be dealt with. And that's something I think we've all got to take an interest in.

ML
That's a whole other episode, we probably going to have to have your back to talk about the governance of global institutions. And I've just come off the Board of Trade, the UK Board of Trade, and so I'm well aware of some of the weaknesses of the WTO. And also, by the way, I've worked with the UN and the weaknesses of that institution. Let's come back to the transition, the actual the energy transition, maybe do a bit of a deep dive into some of the materials overall. So Bloomberg NEF, the team that I created, I no longer have an executive role, but I still write for them and I use their- I still think it's the best research team out there. Five fold growth in mineral demand from clean energy technologies. Lithium up, of course, hugely, 14 times more lithium required by 2050. Rare earths growth by 11 times, largely because of electric vehicles and wind turbines. Copper, six times increase,  I mean huge increase, and this is not an industry- it's not a new industry. Lithium, you could say, "well, we're only just getting startedb" but copper, been around for 3000 years. Cobalt, very difficult from a human rights perspective, child labour, artisanal mining, that's going to double. We've got- I'm not across the numbers for graphite needed in the batteries, but very significant challenge. How on earth do we deliver those sorts of growth figures? 

MC
Well, it's its exploration, its development, it's working with communities, getting support for those developments, you go back to indigenous issues, they're all connected. And it requires a different approach. It requires an open approach and it requires transparency. It requires us to help people understand how our industry fits into the scheme of things. And some of the great books that are out most recently are starting to help people understand what we do. But again, it's about dialoguing and getting the message out, and it's about these types of conversations. 

ML 
So I had Ban Ki Moon, the former Secretary General of the UN came on to Cleaning Up. I worked with him when we were putting together Sustainable Energy for All which is now SDG Seven, and he came, we talked about human rights and climate change, and he said something absolutely extraordinary. He said, I'm going to paraphrase, but the transcript is there and it's completely clear. He said that climate change is so urgent that we should deal with it first, and human rights afterwards. Do you subscribe to that? 

MC
Well, if we want access to the materials to deal with climate change, he's right. However, I'd put a very strong caveat around that, is we all have basic human rights. And we all- and people talk about FPIC: free prior informed consent. And in my view, and let me be practical as a miner, as a materials guy: accessing the materials we need to deal with climate change means that we're going to have to negotiate and find solutions to get access to those materials. That doesn't mean we bulldoze our way through and ignore people's human rights. But at the same time, at some point, we need access to the materials, and we need to work out how we can land an agreement. And so what does that look like? How do we make sure we protect people's rights? But since time immemorial, individuals have given up some rights for the greater good. I keep thinking when I say greater good, I think of a Simon Pegg movie, but it really is that principle of the greater good is something that's really important. But again, protecting of human rights is central to who we are and how we operate. So how do you get that balance, right? So it's a balance. How do you get that right? 

ML  
But haven't we in the past, really, particularly in the developed world and throughout colonial history, we've essentially said, "ell, you know, the greater good is-" of course, the greater good as we interpret it, and if that then puts the burdens onto- and some of those burdens are just horrendous and tragic beyond imagining, and they've been out of sight, out of sight, out of mind. And in some cases, even in sight and in mind, but not cared about. 

MC
Well, look, people know I'm a champion for indigenous rights engagement. I'm speaking at the First Nations Major Group in February talking about FPIC and the application of those basic principles, and I make the point that as a mining company, if you're going to develop a deposit, and you're doing it expressly in opposition with a local committee, add 30% to your costs, because that's what will occur, people getting- people picketing, barricading, not trying to help in terms of its development, it'll cost you more than you likely can afford, if you don't do it with the local community and Anglo American at Ki Iveco, where we built a five and a half billion dollar mine at four and a half thousand metres, in the end- through Covid, 

ML
This is in Chile?

MC
No in Peruth- on-time, in-budget, and don't forget, they've got a record of stopping developments, on-time, on-budget through COVID. Most important issue: it became the community's project, because we sat down with the community and said, "okay, what would we need to do for you to be able to support this development?" and they came up with 26 projects, it was quite interesting. We then looked at those 26 projects, and we looked at the costs, and for us to take those projects, and substitute them for the things we thought they should have, cost was virtually not- there was no difference. But now that project became the community's project. And so I think the responsibility on us as developers, is to work out how we can actually get that conversation with a local community of support. Now, I'm- I'm an optimist, but at the same time, I also recognise there are going to be times when people don't want that development to occur. That's when society has to take a view. Okay, yes, we think their concerns are legitimate, we support them, or someone may say, "you're the only person that's got access to water and as far as you're concerned, nobody else gets water and everybody else can die." The community says, "Well, wait a minute, that's unfair, we're gonna make a different decision," then someone else has to make that call. And that's how the world works. 

ML 
But we've already established that you know, you are- you are without blemishes, you've done these marvellous, 

MC
We've all made mistakes. 

ML
But you've shown that it can be done, let me put it that way. But the countries in which this is going to happen, Papua New Guinea, you've given me an example of Peru, but then there's Mongolia, there's Russia, there's, I mean, even countries like Serbia, which is kind of, you know, teetering on the edge of, you know, acceptability within the European family- but many of the countries are very fragile, and, you know, you're expecting these very sophisticated debates about the rights of individuals versus the rights of the collective, and then, you know, that you would expect then compensation, money or whatever those 26 projects were to be well managed by the local governments. I mean, isn't that kind of wishful thinking?

MC 
Yes, it is. In part, if you look at the work that Catherine MacPhail did probably 20 years ago, analysing countries where mining has been significant success versus failure, successes have been where governments have had good governance structures, where companies have worked with governments in building communities, and they've had wonderful outcomes: Chile, Ghana, to some extent, other examples of successes, but there have also been those failures, and those failures come back to companies not doing the right thing and no governance, where the revenues and the benefits of mining aren't being channelled into broader infrastructure development. So as miners, I think we have a responsibility to make sure that we work with governments and we put the governance structures in and support the government building its capacity. That's critical for me. 

ML
And there's a fascinating conversation, or a very difficult one, actually, where the governments are inadequate. And then what is the responsibility of the extractive player? Example would be Shell in Nigeria, the Ogoni Delta, sort of, you know, the government was incapable of ensuring that there wasn't- that the pipelines were not being breached and, you know, oil stolen and causing this incredible environmental catastrophe. And Shell's line at the time was, "well, you know, what can you do? That's the government's responsibility," and in fact was- and then there are lots of examples where extractive companies putting the responsibility onto a government but the government not being capable to deliver. How do you deal with those situations?

MC
So I'm not commenting on the Shell situation, I don't know the details. However, my experience has always been in any of those environments, you have to take accountability for what happens with the government, you have to support and provide support. And we've seen this example where companies have actually provided legal advice, arm's-length, through the government, so they negotiate in an appropriate way. Because if it doesn't work, then it doesn't work for the company, either. So we have to take the long view. 

ML
But the danger is that it's neocolonialism, that you're sort of supporting the government, propping-up the government and then paying the government and helping the government to negotiate with yourselves as extractive player. 

MC  
I understand that point. The intention is not to be a colonialist, the intention is to at least square the conversation so they can adequately protect and represent their long term interests. So how do you do that? And by the way, a lot of our faith-based work has been about engaging in groups and other players that are supportive, we work with the governments, and give them different perspectives that we can negotiate with that help create long term outcomes. Because if it's not a long term outcome, it doesn't work for us either. 

ML
And it's about establishing healthy legitimacy of the voice for the local communities,. You've used this acronym FPIC: free prior informed consent a couple of times. Tell us about that and some of the history of the institutions that that you've worked with that are trying to promote that and ensure it happens.

MC
Okay, free prior informed consent is the concept where local communities have the ability to say no. And free, so it is their choice, prior, that is the choices made before the development occurs, the fact that informed means you've got to take them through the whole proposal, and they have the final word on consent. And I think the principle, particularly for indigenous groups, and local communities, and I see them both, they can be one and the same or they can be different, but I see it for both, is really important if you want to build a partnership with the community. And for me, it's critical. And as I said earlier, if you don't have the the support of the local community, add 30% to your cost, in my experience, so you'll want that to occur. However, from time to time, it's an almost impossible task to get one individual -and I can give you examples where 9 out of 10 people want the development to occur, but there's one person that stops it. Now, all of this stuff, we picked up when we develop what we call the Development Partner Institute, which was a group that was formed out of Northwestern University in the US. Peter Bryany was a research fellow or a research partner with the innovation school. I came to talk about our experiences in South Africa, improving safety in the deep mines, and we started to talk about how mining could do a better job with local communities. So we started with the group. We had faith-based organisations, we had indigenous groups Mark Podlasly from the Canadian- he also ran the Harvard indigenous programme and a whole range of stakeholders in that group, we said, "how can we form partnerships to support and do a better job in the mining industry?" So a lot of the initiatives you see came out- that I work on came out of that original conversation back in 2011.

ML 
But there's a lot of initiatives that many of them perhaps spawn from the Development Partners Institute, but you know, you've got the, the ICMM - the institute-

MC
It's the major mining companies in the world, 60% of the world, if you look at market capitalization, of the companies that work there.

ML  
Right, so the ICMM, you've got Publish What You Pay, the World Bank Climate Smart Mining Initiative, Towards Sustainable Mining Initiative- you've got the Initiative for Responsible Mining Assurance, the Fair Cobalt Alliance, the Investor Mining and Tailing Safety- why do these terrible things still keep happening? I mean, is this, you know, you have all these initiatives, but are they really just skimming across the surface? 

MC 
Look, there are many good examples of work that they're doing, or many examples of good work that are being done. IRMA, which is about making sure that the supply chains-

ML 
That's the Initiative for Responsible Mining Assurance, yeah.

MC
And that's also being done with NGOs. So they've had a big say in terms of how that's structured. So, lots of well-meaning ,and in many cases, doing good work initiatives. But again, yes, there's lots of them. In the DPI, we tried to bring it all together. And the the ICMM is a great organisation with mining companies represented. The trouble is it is sometimes seen as mining industry talking to itself. So the Development Partner Institute was meant to be a safe space where the mining industry is a participant with NGOs and representatives and all these other groups, debating the real issues and how we might find common ground with those stakeholders. And they said, "we don't want to sit inside a conversation with a group that's sponsored by the mining industry. We want a safe space." So the Ford Foundation, other foundations are funding, so that we can have a discussion about industry where the industry is a participant, not the convener, and that has tended to build in some momentum and there's a lot of interest around that conversation today because of the nature of the work.

ML
So that's about moving from ICMM, mining industry talks to itself, to this principle of free prior informed consent, which absolutely is all about other stakeholders.

MC
Well the good news about the ICMM: it's a group of members that believe in doing a better job, and looking at policing those standards across its industry and being a participant in those conversations. What the NGOs are saying is, "well, we're not going to sit inside that group, we're happy for you to be a participant, but we want a neutral space, we want a safe space for those debates, it is different. 

ML
Okay, thank you. I want to move back to the need for these new mines, because in my space, the thinking is, look, we're going to need 5 times as much of this, 7 times- 14 times as much lithium, etc. But can you put that in perspective, because the real numbers- those are assuming- they seem to be an assumption that that's coming from zero, or that the only industry is the energy industry. The reality is something like the copper industry is that we're using an awful lot of copper already, and so although we need to increase the energy use of copper, it's not 5 times increase in the copper industry, is it? 

MC
No, well, one point I would make is that you've got to remember that we're scaling down thermal coal operations, which are land-hungry, if you like. And we're changing the nature of the mining. I was in a Cape Town session, where I talked about de-merging the thermal coal mines, and one of the people in the session, one of the NGOs said, "it's wonderful, no more mining.: I said, "well, no, we have to mine more copper, we have to mined more nickel." And I said, "from an area intensity point of view, it's probably less than thermal coal." So the good news is it will disturb less land. But there's lots more copper, lots more nickel, because that's- where do you think these materials come from?

ML
Volume-for-volume, it's actually tiny compared to coal, and the fly ash from coal- people- everybody's,"oh, you know-

MC
So it's a net-positive outcome.

ML  
"Turbine blades are being scrapped and PV creates all this waste" and it's this miniscule amount compared to just fly ash from coal. So it is reducing. So just the figures that I've got is that if we take 85 million cars built every year, and they're going to need let's say 80 kilos of copper versus 20, you do the maths and it works out that we need 5 million tons more copper per year, off an industry that's already producing 25 million tonnes. So it's only a 20% increase. 

MC
Yes. Your point about the 5 times consumption is an energy sector number, not necessarily a global consumption of that product. That's correct. And it depends on the products. But I also make the point that if we don't have enough of a particular product, there are substitutes in many cases that can be used. So that's why I'm saying, that I'm a little more optimistic that we can balance consumptions with different products depending on availability, but we are still net short, I think, but not as desperate as it sometimes appears from some commentators. 

ML 
One of our most popular episodes was with Simon Morrish, who's the CEO and entrepreneur behind XLinks, a cable from Morocco to the UK - and I'm- you know, disclosure: I'm a small investor. But the core of that cable will be aluminium, not copper. So substitute- of course copper would be better, but copper would be a lot more expensive. So substitution is very, very real.

MC
But now, I think that scratches at how we might think about different financial models in our industry. So for example, the bulk of India's electrical reticulation is using aluminium. And one of the things we were talking about, if we thought maybe copper consumption isn't what we'd like it to be, this is going back a few years, maybe we could sell the copper at a much lower price, and then charge a rental fee that it was- because copper has a much lower cost, the life-cycle of the asset, than aluminium. So we said, "well, why don't we become a little bit smarter and say, "look, we'll sell it lower, but we want to rental fee on an annual basis, that gives us the equivalent of the savings that copper has compared to aluminium."" There are different ways we can think about the way we use and finance our products.

ML
So straight after we finish this conversation, I'm going to go and buy the URL, the internet domain: copperasaservice.com, because that's what you're talking about. It's copper-as-a-service. But we're going to need a lot of new mines. And one of the challenges and one of the criticisms of net-zero, the potential showstoppers, is that this just takes an awful long time: 16 years to open a new mine. So we've got these materials, how long will it take to open the new mines, copper, nickel, for business of Vale Base Metals, specifically, but also graphite, cobalt, molybdenum, all of these kinds of weird and wonderful materials we're going to need more of, do they really take 16 years to open mines and to produce output? Because if so, we're going to be very behind on net-zero.

MC  
If you looked at basic processes for approval, making sure the environmental issues are covered and all the community issues, you could develop mines in somewhere between five to seven years. And we've got examples of seven years for copper mines. The 16 to 20 years that we're now seeing across the globe is more a function of government processes and requirements and duplication and these sorts of issues, and a lot more stakeholder interest and input. I wouldn't like to reduce the right type of inputs, but I believe we could certainly get it back to seven years, which would make a big difference. But it depends on the jurisdiction. Some have got the capacity, some don't have the capacity. So it is a challenge.

ML 
It's hugely important this issue, because if it's- we've got 26 years to 2050, which is this iconic year, and so if it's a seven year cycle, start the process, open a mine, start the process, open a mine-

MC 
We've got to find the mine first, find the ore. 

ML 
But you've got kind of four cycles. But if it's 16 years, you've got two cycles. And so in one world, we probably will- we'll get largely there, maybe not all the way there, but in the other world, we just won't.

MC
But we are seeing expedited approval processes in some parts of the US, in other parts of the world. But it's the exception, not the rule, and we need a lot more of that going on to help. But again, I also say that we need to make sure all the key issues are properly covered. Because again, the worst thing we want as an industry is to set a bad example, because everybody remembers that bad example, and we can't afford that sort of press, I guess, is the right way of saying it, we don't want to see it either.

ML
And I want to finish by going back to the two themes that I said that we were going to kind of push on, which was: can we get the minerals that we need for the transition? And then: can we do it right? So where I'm coming out, I think we can, I think we can do it right, I'm perhaps less optimistic, less actively optimistic than you that we will do it right in terms of justice and governance, and so on, but I'm not sure that we'll do it fast enough.

MC
Now- and I would agree with you on both points. For me, the longer period you have, the better you can do it. The imperative- the time imperative is a big one and with the time imperative, there's more chance for tripping up on the way through. So what's the worst evil? But again, in our interest as an industry, we've got to do it right. We've got to connect with our stakeholders, we've got to make sure that local communities are properly served, you've got to make sure that the country benefits from the development, we've got to make sure that those materials go to the right places to make a difference. And there's a lot of things that have to go right for us to get there. So I think you're being realistic. I'm being maybe a little optimistic, but I've always been a little bit more on the optimistic side. But at the same time, I'm not sitting there saying, "I'm hoping," I'm out there with people like yourself talking about the right issues and trying to encourage those things to occur in the right way.

ML
So we've got to do it, we've got to do it right, and we've got to do it fast. Mark, thank you so much for joining us today.

MC
Michae, absolute pleasure. Thank you.

ML
So that was Mark Cutifani, former CEO of Anglo American, now chair of Vale Base Metals. As always, we'll put links in the show notes to the episodes of cleaning up which we mentioned, that is Ed Conway, Episode 149, the Material World, and Simon Morrish, Episode 92, which was called 650 Leagues of HVDC Under the Sea. If you've enjoyed today's conversation, please remember to like, share, and subscribe to Cleaning Up, or leave us a review on your favourite podcast platform. And do please spread the word tell your friends and colleagues. And if you want more from cleaning up, sign up for our free newsletter on the publishing platform substack at mlcleaningup.substack.com, that's mlcleaningup.substack.com, or visit us on cleaningup.live that's cleaningup.live.