Publication: “Metal trade: The blind spot in the supply chain”
On 29 August 2024, from 9:00 a.m. to 10:00 a.m., experts from academia and the NGO sector informed about the role of metal traders in supply chains and their responsibility for human rights violations and environmental degradation. The press briefing was organized by the Berlin-based NGO PowerShift, on the occasion of the publication of the publication “Metal trade: the blind spot in the supply chain”.
Metallic raw materials are essential, not only for the urgently needed expansion of renewable energies, but also for the progressive digitalization of our society. From mobility and communication to almost all other areas of life, the demand for metallic raw materials will continue to increase in the future.
However, there are also numerous social and environmental challenges associated with the supply chains of metallic raw materials, which are often not considered:
1. In Ecuador, Trafigura is currently financing the construction of the El Domo Curipamba mine. According to various contracts, the company has invested at least $55 million. However, according to local environmental organisations, the environmental impact assessment was not carried out correctly.
2. In the Xinjiang Uyghur Autonomous Region, Glencore is one of the most important partners of Chinese aluminum producer Tianshan, who also uses Uyghur forced laborers in its production. There is a possibility that aluminium produced by forced labour may also enter the EU through commodity traders.
3. In Tsumeb, Namibia, the Swiss commodity trader IXM melted copper with a high arsenic content for years. Investigations revealed increased levels of lead and arsenic among local residents, and several former employees died of cancer. As a sole buyer, IXM had economic control over local production. Research in the course of the publication has shown that the melt, which belongs to the Canadian company DPM, was just sold to a Chinese investor at a ridiculous price. The local people fear that the companies want to take themselves out of responsibility in this way.
4. From the Toromocho mine in Peru, Trafigura obtains highly arsenic-containing copper concentrates at a reduced price. Dismantling has devastating effects on people and the environment. However, since Trafigura mixes the concentrates to make them exportable, traceability to the mine is impossible.
For the first time in Germany, the publication ‘Metallhandel: the blind spot in the supply chain”, the significant role of metal traders in global commodity trade and their responsibility for human rights violations and environmental degradation. PowerShift has conducted extensive investigative research in recent months based on data from analysis of contracts between dealers and mining companies, company reports, court documents and interviews. Based on these findings, recommendations for action and demands on the Federal Government were formulated.
The most important findings of the publication:
- Raw material traders are key players in metallic raw material supply chains: You must take responsibility for transparency and standards.
- Commodity traders make a significant contribution to the construction of new mining projects through direct loans and pre-financing loans. For example, commodity trader Trafigura had credit lines of around $75 billion at about 150 banks in 2023 and used them to invest in new mining projects.
- In warehouses around the world, commodity traders collect large quantities of concentrates and mix concentrates from different mines. This makes traceability a major challenge. As linkages, commodity traders bear a special responsibility here, which they have not yet met due to the lack of regulation.
- Insufficient attention: So far, the media and politicians have ignored the problem.
- Legal obligations required: Binding laws must be introduced to hold commodity traders liable for their environmental and human rights violations.
- The Federal Government should strive to further develop existing legal standards at international and EU level, for example by including the financial sector in the already adopted EU Supply Chain Act.
Statements by the experts:
“The commercial practices of major commodity traders such as Glencore or Trafigura continue to lead to serious human rights violations and environmental degradation. However, these companies are virtually unregulated. It is high time for politics to take responsibility and finally enforce strict regulations!" says Vanessa Fischer, Resource Officer at PowerShift and author of the publication.
"Two thirds of all metals are traded through Switzerland, but the sector remains non-transparent and unregulated. It is high time for the billion-dollar raw material hub to take responsibility", says Anna-Sophie Hobi, who is researching raw material trading networks at the Norwegian University of Life Sciences, among other things.
“The Morococha mine case in Peru shows that despite promises of modernisation, the country is not prepared for expanding mining exploitation. Mining is geared to international demand, crowding out problems and exploiting price opportunities. The consequences are expropriations, evictions, pollution and health damage”, says Vanessa Schaeffer-Manrique from the Peruvian network Red Muqui and the Archdiocese of Freiburg about the local impact of the metallic commodity trade in Peru.
Further information:
More information on the topic can be found directly in the publication or in the associated podcast. If you have any further questions, please do not hesitate to contact: Vanessa Fischer, +49 (0)1575 4768413, vanessa.fischer@power-shift.de
