Human rights advocates are calling on the Australian Government to ramp up efforts to stop sourcing the critical minerals needed for the clean energy transition from countries with poor human rights records.
Human rights lawyer and anti-slavery expert Fiona David, founder and CEO of Fair Futures, says imported critical minerals may appear “cheap”, but they don’t factor in the real price of human rights abuses up to and including forced labour and slavery.
“We need to consider these hidden human costs to ensure our efforts to decarbonise are not inadvertently contributing to human rights abuses offshore,” she says.
The comments are part of the organisation’s submission to the Senate Economic Legislation Committee on the federal government’s Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024.
The bill was introduced to Parliament in late November 2024 and includes the proposed establishment of a Critical Minerals Production Tax Incentive (CMPTI) worth 10% of relevant processing and refining costs for Australia’s 31 critical minerals.
It will apply to critical minerals processed and refined between 2027-28 and 2039-40, for up to 10 years per project.
While Fair Futures supports the proposed bill, it does not believe the Statement of Compatibility with Human Rights accompanying the bill adequately addresses the issues of human rights abuses.
With Australia’s critical minerals sector still in its infancy, the country is very heavily reliant on imported critical minerals.
However, provenance – or the origin – of a commodity has come under greater scrutiny in more recent years in a bid to stop the purchase of commodities sourced from miners engaging in modern-day slavery, child labour, war, or unsafe mining practices.
Fair Futures points to numerous instances of human rights abuses in the supply chains of many critical minerals – including nickel, rare earth elements, silicon and cobalt – in its submission.
Indonesia is the largest miner of nickel and biggest exporter of refined nickel, but in 2020 the government banned the export of unprocessed nickel to encourage in-country refining.
Fair Futures says there have been reports of workers being “deceptively recruited” in China to work in Indonesian nickel smelters.
“These reports suggest that upon arrival, these workers have allegedly received lower wages and longer work hours than agreed upon, had their passports confiscated, been subject to arbitrary deduction of wages and experienced physical and verbal violence,” the organisation says.
“There have also been reports of exploitative and dangerous working conditions in Indonesian nickel smelters generally.”
The US Government has placed Indonesian nickel on its 2024 List of Goods produced by Child Labor or Forced Labor.
Meanwhile, cobalt from the Democratic Republic of the Congo (DRC) is also on the list following reports of modern slavery.
The African country is the world’s largest miner of cobalt, accounting for around 75% of global cobalt production in 2023.
Fair Futures notes that while most instances of modern slavery occur in artisanal and small-scale mines, which make up around 20-30% of the DRC’s cobalt production, there is also evidence of substandard working conditions in industrial cobalt mines.
“At present, there are no mechanisms in place to enable these hidden human costs to be factored into price so Australian critical minerals remain financially uncompetitive by global standards,” the organisation says.
Fair Futures suggests the Australian Government amends the Statement of Compatibility with Human Rights accompanying the bill to reflect the fact that the CMPTI positively engages with human rights, namely the right to just and favourable conditions of work and the right to freedom from slavery and forced labour.
“We welcome the CMPTI’s influence on Australia’s obligations to prevent forced labour by encouraging domestic supply, produced under Australia’s robust labour conditions,” David says.
“Only then can we ensure that Australia’s energy transition is both green and ‘fair’, rather than being built on the back of human rights abuses on foreign shores.”
BDO Australia has also made a submission to the Senate Economic Legislation Committee suggesting ways the Australian Government can enhance the effectiveness of the bill.
Among other things, the consultancy suggests the bill include provisions to protect the access of unincorporated joint venture (UJV) participants in the CMPTI.
BDO says UJVs are a common structure used in the Australian resources sector.
“The Explanatory Memorandum at paragraph 2.29 acknowledges each participant may claim its own share of the expenditure incurred as part of the UJV,” the consultancy notes.
“However, this does not appear to specifically be addressed in the provisions of the bill. This ambiguity leaves this open to interpretation by the regulators and taxpayers.”
BDO also suggests the legislation include a “safe harbour” provision whereby if a taxpayer can demonstrate that at least 80% of an expense has been incurred in qualified production activities, the entire expense should be considered eligible for these activities.
“This safe harbour aims to reduce the administrative burden associated with verifying whether the remaining 20% of the expense was incurred in production activities,” the consultancy says in its submission.
Write to Angela East at Mining.com.au
Images: Makor Resources
