Are Countries Ready to Manage Revenues from Transition Minerals?

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Copper and gold mine in Chile's Region del Maule • Jose Luis Stephens via Shutterstock

The global supply of minerals that are essential to cleaner energy production, transmission, and storage technologies—minerals such as lithium, cobalt, nickel, copper, rare earths and graphite—will help determine how fast the world can transition to a low-carbon future. But are countries rich in these minerals prepared to manage the revenues they earn from mining them?

Countries expecting significant transition mineral revenues must prepare

Managing extractives revenues well is key to benefiting from them. According to one estimate from GIZ and Econias Consulting, resource-rich countries as a group could stand to gain a total of $100 billion to $500 billion in additional government revenues by 2040. While unpredictable changes in technology and markets make the scale of revenues uncertain and therefore risky for countries to count on, countries must still prepare to manage revenues.

According to The Economist, Australia, Chile, China, Democratic Republic of the Congo, Indonesia and Peru stand to gain the most from transition minerals. This aligns with the GIZ/Econias analysis, which suggests that the same countries (plus Russia) will have the highest sales of energy transition minerals under the IEA’s Stated Policies (STEPS) energy transition scenario. In another group of countries and territories, the “transition minerals” mentioned above already play an important role relative to the size of economies (or are likely to do so as the energy transition progresses); these include Cuba, New Caledonia, Mongolia and Zambia.

While Australia and China have large, diversified economies, in most of the other countries listed, transition minerals could provide a sizeable share of government revenue. Figures 1 and 2 below set out the value of transition minerals in selected countries, in aggregate and per capita.  On average, governments tend to collect tax revenues equal to around 16 percent of the value of mineral sales revenues. So, the value of reserves gives an idea of what these reserves could mean for countries, in terms of public revenues, if the reserves were ultimately extracted.

In this post we focus on the countries and territories where transition minerals could provide a sizeable share of government revenue, and the challenges that they may face in managing transition mineral revenues based on their current track records of mining revenue management.

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