How social enterprises can play a crucial role in mining of critical minerals

[SINGAPORE] Mobile phones and other consumer gadgets are everywhere in today’s society, with most of them continuing to evolve with the rise of energy-hungry artificial intelligence.

Adding to electricity demand are electric vehicles (EVs), which mostly use lithium-ion batteries. While wind turbines and solar farms generate clean energy, like EVs, they are far more mineral-intensive than the fossil-based systems they are replacing.

JPMorgan Global Research found that global demand for lithium – a critical mineral – is expected to rise 16 per cent year on year in 2026, with 58 per cent of this demand coming from EVs and 30 per cent from energy storage systems. By 2030, the demand for lithium is projected to increase a further 36 per cent.

As the need for green energy solutions also grows, so will the demand for critical minerals. This could lead to a market deficit and other issues, the report noted.

As critical minerals continue to be extracted, it is important to ask under what conditions they are mined, and who shapes these conditions. For example, communities near mines run by corporations could suffer from problems caused by their operations.

In the Philippines’ Palawan province, nickel projects approved with flawed consultation ended up mobilising communities whose actions contributed to a 50-year moratorium on new mining permits, noted Jeffrey Berger, a principal at Dalberg Advisors.

And in Chile’s Atacama, roads near critical salt-flat sites were blockaded. Communities that felt sidelined in a major public-private lithium partnership disrupted engagement and complicated final approval processes.

Who calls the shots?

Most of the companies involved in critical mineral extraction are for-profit entities. These include Australia’s BHP Group, which has a market capitalisation of A$304.5 billion (US$211.5 billion), and Switzerland’s Glencore, whose market cap stood at £62.6 billion (US$84.2 billion) as at Jun 23 on the London Stock Exchange.

In some countries such as China, these players are state-owned enterprises. 

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But whether the businesses are government-controlled or corporate, the stakes involved are high, noted Berger.

“The logic is that whoever controls the critical minerals supply chain will control the 21st century economy,” he said. “But beneath this scramble lies an inconvenient truth: The global pursuit of mineral security is once again shifting social and environmental risks onto some of the world’s most vulnerable regions.

“The conditions for this pursuit are set largely by the operators, traders and the capital providers behind them.”

While many companies have made progress in being more deliberate about mining critical minerals, the most compelling short-term incentives for doing so still tend to favour speed, cost control and risk management for investors – not necessarily community outcomes or long-term sustainability, he added.

“That creates a gap. In many mining regions, especially in countries with limited government capacity where regulations are not consistently enforced, community expectations are rising (more quickly) than the systems in place to engage them, share benefits and manage social and environmental risks,” said Berger.

“Community trust and ‘social licence to operate’ remain core business risks, yet the ecosystem supporting those areas is still thin.” 

But he added that impact-oriented actors such as social enterprises are well-positioned to fill that gap. They can help to define stronger norms around engagement, benefit-sharing and environmental performance, rather than leave those issues to be addressed reactively.

“The challenge is to meet that demand in a way that minimises harm and maximises long-term value,” said Shyam Sundaram, global operating partner at Dalberg Advisors. “While it’s worth continuing to ask ourselves ‘how do we mine less?’, it’s increasingly crucial to also ask ‘how do we mine better?’”

What impact-oriented actors bring to the table

Awareness of the areas in which impact actors can help to move critical mineral projects forward, reduce risk and create a model someone is willing to pay for is essential, noted Donna Kitsos, managing director of consultancy group Rata Ventures.

“Critical minerals are now tied to almost everything people depend on, but mining is often oversimplified,” she said. “It gets reduced to exploration or extraction, when the harder part is moving a project from resource to reserve, to financed asset, to operating mine.”

This takes many years and risk changes at every stage, depending on factors such as the mineral, ore body and processing route. Various minerals, geographies and whether the operation is upstream, midstream or downstream all have different risk profiles and consequences if not done right, she added.

Impact-oriented actors can also provide a localised and practical perspective and help to support the government. 

For example, BHP partnered not-for-profit enterprise C-Res to manage its Local Buying Program in Australia. C-Res administers all transactional activities, while also providing ongoing support, engagement and mentoring to registered local suppliers.

The initiative enables small local businesses to supply goods and services to BHP via a competitive tender process with reduced payment terms, said Kitsos.

Berger agreed and added that impact actors are able to provide insight into decisions made in critical mining as:

● Without values-aligned actors at the table, governance defaults to operators who will run to bottom of cost chain, often with weak labour, environmental and community standards.

● Social enterprises could anchor community benefit-sharing, local procurement and land rights protections as operational norms rather than afterthoughts.

This is particularly acute in fragile or low-income contexts such as Zimbabwe, where governance is weakest and local populations most vulnerable.

Berger noted that Impact-oriented organisations can also add value in several areas:

● Community engagement and trust-building. Locally rooted organisations can act as credible intermediaries, designing consultation processes, grievance mechanisms, and monitoring systems that communities actually trust.

● Benefit-sharing and local economic development. They can help move beyond one-off compensation towards more durable models, such as local procurement, workforce development, and community-linked enterprises that create longer-term value.

● Traceability and responsible sourcing. As supply chains face greater scrutiny, there is growing demand for credible, on-the-ground verification of environmental and labour conditions. Organisations embedded in producing regions are often better placed to provide that than remote auditing models.

● Mine closure and post-mining transitions. Closure is still treated largely as a compliance exercise. Impact-oriented actors can help turn it into a platform for land restoration and economic transition.

Hence, as the world rewires its economy for AI, clean energy, and advanced robotics and manufacturing, minerals such as lithium, cobalt and nickel have become the new oil – strategic, scarce, and geopolitically charged, said Sundaram.

 “It is therefore more important than ever for impact actors such as social enterprises to play a major role in issues such as the mining of critical minerals,” he added.