Competitiveness implications for mining and metals

This policy brief by the International Institute for Sustainable Development (IISD) examines the competitiveness challenges and carbon leakage risks facing the mining and metals industry due to diverse global carbon pricing policies. It discusses policy mechanisms to mitigate these risks, such as free allowances and border carbon adjustments, while emphasizing the industry's strategic role in providing materials necessary for low-carbon infrastructure.

• Carbon pricing policies vary by country, creating production cost differentials that can lead to 'carbon leakage,' where production relocates to regions with lower costs or less stringent environmental standards. This is a particular risk for the mining and metals industry because it is generally "emissions intensive and trade exposed (EITE)" and produces commodities with globally determined prices.
• Free allowances are used to reduce the costs of carbon pricing for specific sectors, thereby preserving competitiveness while maintaining incentives for emissions reduction. In the EU ETS Phase III (2013–2020), allowances for trade-exposed industries are based on production levels and an emissions-intensity benchmark set by the "emissions intensity of the best 10% of producers".
• Border carbon adjustments (BCAs) require importers to pay a tax or purchase allowances based on carbon intensity, or provide rebates for exports to maintain competitiveness. However, implementing BCAs is challenging because calculating the carbon content of all imports would be "extremely costly" and require extensive data, making them only feasible for a specific set of commodities.
• The mining and metals industry is critical for the energy transition, as materials such as "copper, aluminium, platinum and coking coal" are essential inputs for building renewable energy infrastructure. Policy makers are cautioned not to jeopardize the availability of these mined goods through emissions reduction policies.
• The industry's emissions are primarily driven by on-site energy use, though process emissions (non-energy sources) are often "difficult or impossible to eliminate with current technology" due to fundamental process chemistry. The industry accounts for approximately 2% of global emissions.
• Mining has significant economic importance in specific regions; for example, in South Africa, the industry employs approximately half a million people, representing over 6% of non-agricultural total employment. In some countries, mineral rents exceed 10% of GDP, including Papua New Guinea (29.7%), Mauritania (29.5%), and Zambia (16.4%).
• Investment in the mining and metals industry is characterized by high initial capital costs and long investment cycles, making the sector sensitive to policy uncertainty. In Australia, capital investment for fossil fuels and metals can account for "up to half of total costs".
• The International Council on Mining and Metals (ICMM) has established a climate change program based on seven principles for policy design, which include providing clear policies for a "predictable, measured transition to a long term price on greenhouse gas (GHG) emissions" and applying revenues to manage the transition.

APA

Kitson, L., Wooders, P., & Droege, S. (2011). Competitiveness implications for mining and metals. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/icmm_competitiveness_implications_mining.pdf

Chicago

Kitson, Lucy, Peter Wooders, and Susanne Droege. Competitiveness implications for mining and metals. International Institute for Sustainable Development, 2011. https://www.iisd.org/system/files/publications/icmm_competitiveness_implications_mining.pdf.

Wikipedia

{{cite report |last1=Kitson |first1=Lucy |last2=Wooders |first2=Peter |last3=Droege |first3=Susanne |title=Competitiveness implications for mining and metals |publisher=International Institute for Sustainable Development |date=November 2011 |url=https://www.iisd.org/system/files/publications/icmm_competitiveness_implications_mining.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kitson2011competitiveness, author = {Kitson, Lucy and Wooders, Peter and Droege, Susanne}, title = {{Competitiveness implications for mining and metals}}, institution = {International Institute for Sustainable Development}, year = {2011}, month = nov, url = {https://www.iisd.org/system/files/publications/icmm_competitiveness_implications_mining.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }