Green Premiums: More Myth Than Reality in Metals Industry, Experts at Resourcing Tomorrow Warn

Vale

During the Resourcing Tomorrow conference in London, leading voices in the metals industry, including Vale's Jeff Gaulin, emphasized that metals producers should not rely on green premiums to offset a lack of innovation or competitiveness. The consensus among experts is that the idea of green premiums for critical raw materials will likely remain just that—an idea.

Reassessing the Value of Green Premiums

Jeff Gaulin, head of corporate affairs at Vale, expressed skepticism about the practicality of green premiums during economically volatile times. He highlighted that no original equipment manufacturer (OEM) has shown a willingness to pay significant premiums for minerals, even if they are produced under environmentally and socially responsible conditions. "It's not a consumer-facing product, and people are not going to make that economic decision when no-one else is looking," Gaulin remarked, suggesting that the focus should instead be on driving down costs to spur innovation.

The Realities of Funding and Development in the Metals Sector

Other panelists, including Antoine Troesch from Demeter Investment Managers, echoed Gaulin’s sentiments. They pointed out that OEMs are reluctant to pay any premium on raw materials. Troesch advised seeking upfront capital for projects that meet environmental, social, and governance targets, rather than expecting higher prices for raw materials themselves.

The Path Forward: Innovation and Competitiveness

The panelists discussed the importance of competitiveness, particularly given the intense demand for critical raw materials amid high political interest yet low commercial viability due to slim profit margins. Former UK Deputy Prime Minister Dominic Raab and Euromines Director-General Rolf Kuby highlighted the challenges in Europe, such as long lead times for opening mines and high operational costs, which hinder resource development.

Gaulin concluded with a call for a triple-focused strategy in Western jurisdictions: revitalizing industry with local extraction and refining, fostering collaborations due to geological limitations, and pursuing an innovation agenda to discover alternative sources and technologies.