Policy Recommendations China Copper en
Policy Recommendations China Copper en
Policy Recommendations China Copper en
A CHINESE PERSPECTIVE
The International Institute for Sustainable Development (IISD) contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change and energy, and management of natural and social capital, as well as the enabling role of communication technologies in these areas. We report on international negotiations and disseminate knowledge gained through collaborative projects, resulting in more rigorous research, capacity building in developing countries, better networks spanning the North and the South, and better global connections among researchers, practitioners, citizens and policy-makers. IISDs vision is better living for all sustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Government of Canada, provided through the Canadian International Development Agency (CIDA), the International Development Research Centre (IDRC) and Environment Canada, and from the Province of Manitoba. The Institute receives project funding from numerous governments inside and outside Canada, United Nations agencies, foundations and the private sector.
CONTENTS
Policy Recommendations for a Sustainable Copper Supply Chain: A Chinese perspective ....................2 Extraction........................................................5 Environmental impacts ...................................5 Social impacts...............................................5 Refining ..........................................................5 Environmental impacts ...................................5 Consumption ....................................................6 Environmental impacts ...................................6 Social impacts...............................................6 Disposal ..........................................................6 Environmental impacts ...................................6 Social impacts...............................................6 Recommendations and opportunities....................7 Recommendations for the international community...9 Endnotes .......................................................12
Photo credits: Pages 2 & 13: iStockphotoChristopher Pollack Page 5: iStockphotoTim Buckner Page 6: iStockphotoJohn Woodworth Pages 9 & 10: iStockphotoMichael Fuller
ACKNOWLEDGEMENTS
This report summarizes the main findings and recommendations of the Chinese Global Copper Supply Chain Sustainability Analysis Project. IISD would like to thank the Chinese Ministry of Commerce (MOFCOM), the Swiss State Secretariat for Economic Affairs (SECO) and the International Council on Minerals and Metals (ICMM) for their financial and in-kind support, without which this project would not have been possible. More specifically, we would like to acknowledge the personal commitment and input of Weijing Yin from MOFCOM, Hans-Peter Egler from SECO and Anthony Hodge from the ICMM whose moral support and guidance was critical throughout the project. Finally, but definitely not least, we would like to thank the team of expert contributors to the project for their pointed, sometimes challenging, but always compelling, input, questions and overall guidance. The contents of this report represent the views of the authors and do not imply agreement or endorsement of the projects expert contributors.
Project Implementers:
IISD: Project Leader: David Runnalls Project Manager: Huihui Zhang Technical Coordinator: Jason Potts MOFCOM: Project Leaders: Weijing Yin/Zhonghe Mu Project Manager: Yuguo Zhao Authors: Jason Potts Fushan Shang Bo Zhao Shaofu Duan Zunbo Zhou Martin Streicher-Porte John Atherton Expert Contributors: Jiahua Pan Zhongkui Wang Christoph Lang Yannick Roulin Arthur Hanson Anthony Hodge
China accounts for only 6 per cent of global production of copper ore concentrates, it is the single largest producer of refined copper products (21 per cent of global production) and copper semis (50 per cent of global production). Moreover, while Chinese refined copper production has been steadily growing at an average of 15 per cent per annum over the past decade, it has not matched the countrys consumption of refined copper. Between 2002 and 2008, Chinas total copper usage (refined and scrap) doubled from 3.7 Mt to 7 Mt, accounting for just under a third of global copper usage.3 Notably, China has rapidly been increasing its use of scrap copper as a source of copper for meeting its consumption needs. Growing from around 100,000 tons in 1980 to over 3 Mt per annum in 2008,4 China currently supplies over 40 per cent of its copper needs through copper scrapa scrap contribution that is notably higher than the current global average. The remaining 60 per cent of Chinese copper supply comes from virgin sources in the form of copper concentrate or refined copper. China itself is the fourth largest supplier of copper concentrate which is almost entirely destined for Chinese refining and consumption, Chile is by far the single largest foreign
The consumption of refined copper has tripled since 1970, reaching 18 Mt in 2008, and continues to grow at an average of 4 per cent per annum.1 Refined copper consumption makes up about 65 per cent of total copper consumption, with the remainder being supplied by copper scrap. In 2008, copper scrap supply was estimated at approximately 8 Mt.2 It is expected that copper consumption will more than double by 2035, reaching approximately 37 Mt (see Figure 1). Meanwhile, it is expected that China will account for 68 per cent of the global increase in copper consumption over this period. China has already played a major role in expanding global access to copper-based products through its efficient and low-cost manufacturing base. Although
supplier of both copper concentrate and refined copper to China, accounting for over half of total non-scrap copper supply to China. The majority of imports from other countries are in the form of copper concentrates, with Peru, Australia, Mongolia and Kazakhstan leading the way (see Figure 2). These source countries for Chinese copper represent key targets for managing the sustainability of the Chinese global copper supply chain. FIGURE 1: PROJECTED GLOBAL CONSUMPTION OF REFINED COPPER5
40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 CAGR 1960-2010: 2.7% 3 CAGR 2010-2035: 2.9%
FIGURE 2: CHINESE COPPER CONCENTRATES, BLISTER/ANODE AND REFINED COPPER (MAJOR IMPORTING COUNTRIES)
1,628
Chile
Kazakhstan
149
20 05 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 20 20 25 20 30 20 35
World China
78 1,333 377 640
1,057 700 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1 ,700
Chinese demand for refined copper is being driven by its own growing industrial base. In 2009, the manufacture of industrial products and consumer goods, accounted for 46 per cent of Chinese refined copper demandin part stimulated by Chinas role as the single most important producer of electronics and machinery products globally. However, copper consumption is also being stimulated by Chinas own economic development to supply infrastructure and construction demands at higher rates than in more developed copperconsuming countries (See Table 1). Chinas growing presence in the global copper supply chain is generating demonstrable social and economic benefits both within and outside China. The Chinese Nonferrous Metals Industry Association (CNIA) estimates that more than one million people within China are directly employed in the copper extraction, refining and manufacturing processes.7 Similarly, growing foreign direct investment in key supply countries such as Chile, Peru, Mongolia and Zambia is driving significant infrastructure development and providing an important platform for economic growth.8 Moreover, Chinas prominent role in global copper supply chains is itself a direct reflection of its unique capacity to turn raw materials into highvalue manufactured products at a low cost. Chinas efficient and low cost production base provides the
global community with increased access to a wide variety of copper-based products which in turn contribute to overall human well-being. The role of China within the global copper supply chain is therefore fundamentallyand undeniablycharacterized by increased global social welfare. At the same time, growing demand for electronics and other copper-dependent products also implies an intensification of the social and environmental challenges associated with the production and trade of copper products.9 Because copper is a non-renewable resource, its consumption is systemically challenged by limited global reserves. Current copper reserves are estimated at 550 Mt and are expected to be exhausted by 2060 at current utilization rates. Therefore, re-use, reduction and enhanced extraction efficiency are all imperatives within the sector as a whole to ensure its long-term sustainability. More immediately, growing copper consumption presents a number of environmental and social challenges resulting from expanding activities at the extraction, manufacturing and waste disposal stages of the supply chain.
TABLE 1: DISTRIBUTION OF COPPER CONSUMPTION AMONG MAJOR CONSUMING MARKETS (BY SECTOR) China Industrial Equipment Building & Construction Infrastructure Consumer Products Automotive 29% 24% 21% 17% 9% European Union 23% 40% 10% 15% 12% United States 13% 52% 8% 16% 11%
EXTRACTION
The extraction stage of the copper supply chain is faced with the most significant environmental and social challenges: Environmental impacts: A cradle to gate10 lifecycle assessment commissioned by IISD attributes 7075 per cent of environmental impacts to the extraction and primary ore-processing stages of the copper supply chain.11 The main sources of environmental degradation at extraction are related to: Land degradation: current stocks of copper ore have an average of less than 1 per cent purity. As a result, more than 100 tons of material must be extracted to produce one ton of copper giving rise to very large extraction impact on the land surface.12 Many copper mines are open pit and lead to the removal of all forms of vegetation over the area of the mine.13 Other sources of land degradation relate to the roads, tailings dams and mine facilities that typically accompany a mining site. Land degradation can significantly disrupt existing ecosystems and contribute to greenhouse gas emissions.14 Toxic chemical release: copper mining generates massive amounts of waste rock that, when exposed to air and water, can lead to acid rock drainage, a process whereby the natural elements present in the rock react to produce an acidic or neutral runoff with dissolved metals thatif left unmanagedcan flow into water streams.15 Tailings dams are built to contain the tailings indefinitely but need to be managed over time andparticularly in certain environmentscan be vulnerable to leakage. This can represent a serious threat to local waterways and water tables and the ecosystems dependent upon them. Social impacts: Mine workers are exposed to a variety of occupational health and safety hazards related to the use of heavy machinery and other practices associated with ore extraction. Communities will often experience higher noise and dust levels as a result of nearby mining operations. Copper is both a finite resource and a public good:
its extraction from a given locality comes at a social cost to that community which may not be covered by market prices or actual employment conditions.
REFINING
The refining process is predominantly defined by its environmental impacts: Environmental impacts: The refining process generates between 20 and 25 per cent of the copper supply chains environmental impact. The main environmental impacts from the refining process arise from: Air pollution: The copper refining process, particularly smelting operations, leads to the generation of significant quantities of potentially toxic airborne particles and gases. These constituents include sulphur dioxide, carbon dioxide and nitrogen dioxide (Non-ferrous metals account for about 8 per cent of global sulphur dioxide production). In addition, they may include toxic concentrations of numerous metals such as arsenic, nickel, lead, cobalt, mercury, etc. Energy consumption: The copper refining process can involve the heating of copper concentrate to high levels which require significant amounts of electricity. As copper demand and production grow, the per ton greenhouse gas emissions are expected to rise due to a higher reliance on coal power sources. In Chile, for example, Chinas most important source of refined copper, a 50 per cent increase in refined copper production by 2020 is expected to result in a doubling of greenhouse gas emissions (to 36 Mt by 2020).16
CONSUMPTION
The use phase of copper is generally associated with a range of social and environmental benefits. Environmental impacts: As a conductor of electricity, the consumption of copper is often linked to the consumption of electricity, which can have negative environmental impacts. However, relative to other industrial materials, copper is a highly efficient conductor of electricity and therefore can be used to improve the efficiency of industrial machinery and appliances. Some of the applications that copper can be used in as a replacement for less energy efficient substitutes include electric motors, power cables, transformers and solar panels. Social impacts: Copper is used for a variety of industrial and consumer applications. About 65 per cent of copper is used in electrical applications with the majority of that being applied to electrical cables and lines. 50 per cent of copper consumption is for the construction sector, making it the most important single use of copper.17 Industrial and business applications represent the second and third most important uses for copper at 22 per cent and 10 per cent respectively. The multiple uses of copper lead to significant gains in social welfare and human well-being.
DISPOSAL
Copper is 100 per cent recyclable and can be reused indefinitely. The disposal stage of the copper supply chain therefore has significant potential for reducing the overall environmental impact of the copper supply chain. Environmental impacts: By recycling copper scrap, the environmental impacts of copper production can be reduced by up to 75 per cent. At present, recycling currently accounts for approximately one third of global copper production; however, those rates are increasing and represent an important opportunity for improving the overall environmental footprint of the sector. Imperfections in recycling processes, and the co-use of copper with other materials in electronics products, can generate the release of toxic materials into the environment. Social impacts: The main social impacts associated with the disposal stage are related to worker exposure to heavy metals and organic compounds due to the recycling of e-waste. China faces special challenges and opportunities for maximizing the positive social impacts in the disposal phase due to its exceptionally active informal recycling industry.18
China corporate social responsibility (CSR) policy for copper companies operating in host countries:
As a complement to direct investments in building governance capacity in key source countries, the Chinese government can also leverage market forces to support and reinforce the objectives of improved governance at the extraction phase by specifying relevant requirements for both state-owned and privatelyowned Chinese enterprises operating overseas on copper mining projects (building on the Stateowned enterprises operating in China on Corporate Social Responsibility Reporting and Protection of Labour Rights as well as the draft Guidelines on Corporate Social Responsibility Compliance by Foreign Invested Enterprises).
technologies and ensuring that mine waste and reclamation are properly managed. A global fund aimed at promoting and supporting best practices in copper extraction could play an important role in bringing developing country supply up to international accepted standards.
International cooperation on technologies for energy efficiency and emissions reduction throughout global copper supply chain:
Energy efficiency and emissions reductions at the extraction, refining and consumption stages of the supply chain represent key targets for building the sustainability of the global copper supply chain. Energy demand and energy-related environmental impacts are spread across the global copper supply chain. The international character of the energy challenge within the copper sector necessitates a global approach to building energy efficiency throughout the chain. A global action plan and consortium aimed at promoting the development and use of energy efficient technologies at the extraction, refining and equipment design phases of the supply chain could reduce the global impact of the supply chain significantly. Prioritization should be placed on phasing out high-energy consuming technologies such as reverberatory furnaces.
10
Capacity building for safe and sustainable copper extraction practices in developing countries:
The greatest environmental impacts of the global copper supply chain are found within developing country suppliers. Chile, Mongolia and Kazakhstan represent major suppliers of primary copper resources to China and the rest of the world and generate higher than average environmental impacts through the copper extraction process. China and the global community have a role to play in facilitating the adoption of cleaner
Copper / Primary / North America Copper / Primary / Latin America Copper / Primary / Europe Copper / Primary / Asia and Pacific Copper / Primary / Indonesia Copper / Primary / Global China Average 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9
Human Health
Ecosystem Quality
Resources
FIGURE 4: DISTRIBUTION OF THE ENVIRONMENTAL IMPACTS ACROSS THE COPPER SUPPLY CHAIN (BY PROCESSING LOCATION AND PROCESSING METHOD).
GLOBAL REPRESENTS GLOBAL AVERAGE. CHINESE REPRESENTS CHINESE AVERAGE.
11
Vanuykov / Global Ore Vanuykov / Chinese Ore Reverberatory / Global Ore Reverberatory / Chinese Ore Outocumpu / Chinese Ore Outocumpu / Global Ore Noranda / Chinese Ore Noranda / Global Ore Blast Furnace / Chinese Ore Blast Furnace / Global Ore Ausmelt / Global Ore Ausmelt / Chinese Ore 0% 10%
Mining
76.2% 73.0% 76.6% 75.5% 76.2% 75.2% 76.3% 75.8% 76.2% 73.3% 76.2% 76.8% 20% 30%
Reduction
22.4% 26.1% 21.9% 23.5% 22.3% 23.8% 22.3% 23.2% 22.4% 25.8% 22.3% 22.1% 50%
Conversion & Anode Casting
40%
60%
70%
Electrorefining
80%
90%
Transport
100%
The environmental impacts of the copper supply chain are concentrated at the mining stage of production which account for more than 75 per cent of overall environmental impacts. Impacts of Chinese-based production are either lower or equal to those of comparative global processes.
ENDNOTES
1 2 3 4 5 6 7
International Copper Study Group (2009). The World Copper Factbook. Jolly, J.L. (2010). The U.S. Copper-base Scrap Industry and its By-products. Copper Development Association Inc. International Copper Study Group (2009). The World Copper Factbook. International Copper Study Group (2009). The World Copper Factbook. CRU Strategies (2010). As data was unavailable for Namibia in 2009, this value is from 2008. See http://www.iisd.org/pdf/2011/sustainable_development_chinese_copper.pdf. CNIA notes the number is significantly larger if related sectors are included. In 2009 China invested an estimated $4.6 billion in the mining sector. See Wang E. (2009, May). Chinas investment in Africa for copper production. IWCC Joint Meeting, Seoul. Available at http://www.thebeijingaxis.com/upload_files/download/Presentations/China's%20Investment%20in%20Africa%20for%2 0Copper_May2009.pdf Increasing demand is also creating increasing pressures on trading relationships. The diversity of uses of copper prevented the performance of a full copper lifecycle analysis at the supply chain level. The IISD commissioned cradle to gate lifecycle analysis was performed by EMPA and covered the copper supply chain from extraction to processing into semis (plates, rods, pipes etc.). See http://www.iisd.org/pdf/2011/sustainable_development_chinese_copper.pdf von Gleich, A., Ayres, R.U., & Gssling-Reisemann, S. (2006). Sustainable metals management: Securing our future-steps towards a closed-loop economy. Dordrecht: Springer. Note that the degree of actual impact varies depending on the local conditions and climatemany copper mines are in desert regions where land degradation impacts are reduced. Sustainably managed mines will reduce the long-term impacts of land degradation by taking remedial action following mine closure. See the International Network for Acid Prevention at www.inap.com.au for more info. Gaete, P. (2009, Dec.). Copper sector stands to double carbon dioxide emissions by 2020. Business News Americas. Retrieved from http://www.bnamericas.com/news/mining/Copper_sector_stands_to_double_carbon_dioxide_emissions _by_2020_-_Cochilco UNEP (2010). Metal stocks in society: Scientific synthesis. International Panel for Sustainable Resource Management, Working Group on the Global Metal Flows. While the informal recycling sector can expose workers to dangerous chemicals, it also provides significant employment and environmental opportunities for China. See IISD (2008). Sustainable electronics and electrical equipment for China and the world: A commodity chain sustainability analysis of key Chinese EEE product chains.
10
12
11 12
13
14
15 16
17
18