Welcome to May 2024’s edition of the Sustainability Spotlight.
In this edition of Sustainability Spotlight, we’re delighted to share details of our recently published Carbon Border Adjustment Mechanism (CBAM) consultation and sustainability discussion paper. We'll also update on the latest developments for LMEpassport, share brand compliance results following the responsible sourcing ISO submission deadline on 31 December 2023, and provide the latest on our sustainability-related events calendar.
Last but not least we welcome this edition’s guest writer, Anastasia Kuskova, on the potentially transformative impact of AI in the metals and mining sector.
CBAM consultation and sustainability discussion paper
On 1 May 2024, we launched our sustainability consultation and discussion paper. We are seeking feedback on our proposal to integrate the EU CBAM requirements into the LME rules to support the aluminium value chain in implementing this pivotal policy. We have also issued a discussion paper, building on our existing sustainability achievements and goals, encouraging market feedback on various ways to drive forward initiatives that underpin the global transition to a sustainable economy.
The paper includes:
- Consultation on the LME’s proposed actions to support the market in meeting the requirements of CBAM.
- Discussion paper on broader sustainability considerations, including the role of sustainability data and growth thereof, the future of supply chain traceability, and the circular economy.
- Additional information on CBAM, and technical documents to support the LME’s CBAM proposal including an example reporting format and the redline version of the LME’s Rulebook.
The full paper, additional documentation and an overview can be found here >
The feedback period ends on 14 June 2024 at 17:00 (BST). Please send any comments, questions or feedback to sustainability@lme.com. We look forward to hearing from you!
Figure 1 The topics discussed in the LME’s sustainability discussion paper
LMEpassport
In 2023, LMEpassport enjoyed a remarkable 63% growth in sustainability disclosures, further establishing the system as the go-to digital register for sustainability data in the global metals industry. We have recently added a new feature to LMEpassport that allows producers to upload their net-zero targets and create customised targets, goals or commitments.
Responsible sourcing
Milestone reached!
An important deadline for LME responsible sourcing was reached on 31 December 2023, with LME-listed brand producers required to submit ISO 14001 and ISO 45001 certificates (or their equivalent). At the same time, brand producers following Track A needed to submit their audit reports to the LME.
90% of brand producers sent in the required compliance information; and the remaining brands and those that did not meet the requirements were either suspended or delisted. All suspended brands have the option to restore their deliverable status once the requirements are met, and we expect that many of them will do so in the near future.
LME notice 24/005 outlines the results of the December 2023 submissions, providing further details including explanations of the ongoing transparency of the programme.
LME publishes its second year of the Red Flag Assessment Summary Statistics
The LME recently published summary statistics for the compliance submissions for Track C brands (using the Published LME Red Flag Assessment (RFA) Track) for the second year.
In 2023, 20% of LME-listed brands chose to use Track C. After the LME review process, 91% of those RFAs remained classified as Track C while the remainder were reclassified to Track A due to the presence of an OECD red flag. Among the accepted RFAs, the LME saw significant improvements in brand producers’ supply chain due diligence policies and systems, including:
• embedded standalone policies which are integrated into supplier relationships
• improved Conflict-Affected and High-Risk Areas (CAHRA) determination methodologies.
• requiring suppliers to adhere to the producer’s due diligence policies
• increasing engagement with non-compliant suppliers
• improving data systems for more comprehensive information collection and analysis.
Roundtable on the Responsible Recycling of Metals (RRRM) findings released
For the last 18 months, the RRRM has been working to understand recycled metal value chains and make recommendations to improve management of environmental, social and governance (ESG) risks. The initiative brought together metals recyclers, industry associations, voluntary sustainability standard setters, certification bodies, academics, NGOs, refiners and others and found that, while recycling delivers key socio-economic and environmental benefits, recycling metals may harm people or the environment without appropriate controls in place.
The LME is delighted to have been part of the process and we will integrate the findings into its own sustainability and responsible sourcing strategy.
The detailed findings and recommendations will be published in a series of reports which will be launched at the OECD Forum on Responsible Mineral Supply Chains in June. A summary report, one-page route map and risk profile are now freely available at https://www.rrmroundtable.org/.
Sustainability-related events coming soon
LME webinar – Green nickel: the importance of harmonised carbon assessments
Join us on Wednesday 5 June 2024 to explore the topic of "green” nickel and how sustainability-related pricing differentials can be established. Experts from the LME, Metalshub and the Nickel Institute will discuss their views on low carbon nickel assessment methodologies and price discovery mechanisms, and answer any questions you may have.
LME Asia Metals Seminar 2024
The LME Asia Metals Seminar 2024 is taking place in Hong Kong on 27 June 2024. The premier annual metals conference in the region brings together industry leaders and experts to discuss the latest trends and developments shaping the metals market. Among the sessions on the day there is a dedicated sustainability session "Redefining ESG: shaping the future of sustainability.”
The panel will explore how the commodities sector can sustain its momentum towards greater ESG-related responsibility, amidst the evolving landscape of sustainability demands, regulation and industry expectations. As businesses face mounting pressures to increase their efforts and to disclose their related sustainability practices, the panellists will discuss whether this trend signifies a lasting commitment to ESG principles or merely a passing phase. Visit the website for more information or register by clicking the link below.
OECD Forum on Responsible Mineral Supply Chains
This year’s OECD Forum will take place in Paris in June. LME CEO Matthew Chamberlain will join government representatives in the opening sessions of the Forum to discuss government-to-government cooperation.
The LME will also be joining a partner-led session hosted by CCCMC / RCI and The Copper Mark. These two standards collectively assessed 133 brands under the LME's responsible sourcing programme – the largest group of brands that underwent an independent third-party audit using a recognised standard (Track A).
This panel will discuss the challenges encountered and reflect on the imperative to include all geographies and companies in responsible sourcing efforts.
Market insight: Gaining Ground — AI as the New Driver in Mining Excellence
by Anastasia Kuskova, CEO and Founder of Sirius
Anastasia is the founder and CEO of Sirius, a company that delivers AI-driven sustainability data infrastructure for the metals and mining industry. Previously, she served as the head of Sustainability and Transformation at Eurasian Resources Group (ERG) and as a board member of Re|Source, a metal traceability platform supported by Glencore, CMOC, and piloted by Tesla.
Anastasia has received the Impact Award from Women in AI Netherlands for her contributions to technology and sustainability. Sirius has won the World AI Award and the DPW Award for its innovations in digital procurement. Currently, Sirius works with numerous LME brands to enhance their ESG data management and reporting through advanced AI and automation.
Gaining Ground: AI as the New Driver in Mining Excellence
Today, the mining and metals industry is navigating tough new regulations and the urgent need to contribute to the global energy transition. With high capital demands and long project timelines, efficiency is crucial. It's what differentiates the leaders from the rest.
Artificial Intelligence (“AI”) is emerging as a key enabler, poised to redefine operational efficiency across the industry. Central to this shift, AI optimises resource allocation and asset management—areas vital for competitive survival. I'd like to focus on two key areas where AI is becoming indispensable for the competitiveness of mining and metal companies.
Firstly, AI technologies are already redefining the exploration of ore bodies. Traditional methods, costly and often imprecise, are being replaced by AI algorithms that deliver highly accurate models from existing data, speeding up exploration while reducing costs and environmental impacts. A notable example is Kobold Metals, a mining startup backed by high-profile investors such as Jeff Bezos and Bill Gates. This company uses AI to create a "treasure map" for locating new deposits of materials like copper, lithium, cobalt, and nickel. With the emergence of many new AI startups in exploration, we can expect more innovations in this area.
AI's application begins with advanced algorithms that sift through extensive geological data to locate ore bodies more efficiently than traditional physical sampling. This speeds up the exploration process and improves accuracy, reducing unnecessary drilling and environmental damage. Additionally, AI helps geologists visualise complex underground structures with detailed 3D models, which aids in planning and optimising extraction strategies from the start.
Secondly, AI markedly improves efficiency in supportive processes. By integrating into commodity trading, KYC compliance, and sustainability reporting, AI enhances operational speed, reduces costs, and improves accuracy—establishing new benchmarks for business efficiency.
Drawing from my experience as head of sustainability at a major mining company, I’ve witnessed the escalating burden of compliance firsthand. The industry is overwhelmed with paperwork, bogging down not just sustainability but also procurement, legal, and other departments. The Carbon Border Adjustment Mechanism (“CBAM”) introduces even more complex regulations, adding to this challenge.
It’s unrealistic to expect that a single standard will emerge that will radically simplify our lives. There will be more regulations, more requirements, and more demands for transparency. The ability to handle this chaos effectively and meet customer and regulatory requirements with speed and quality will define the winners in the market.
Industry-standard frameworks like LMEpassport, aimed at creating a single source of information to reduce the reporting burden, provide significant support. When paired with specialised, industry-focused AI tools, they equip industry players with the necessary toolkit to navigate the chaos. These tools streamline data transformation across different formats and integrate it into various systems, from LMEpassport to product passports and traceability tools. By automating routine tasks, AI can cut the time spent on data management by up to 70%, freeing up experts to focus on strategic initiatives that add real value.
As market and regulatory pressures mount, the crucial role of AI in maintaining a competitive edge becomes more apparent. Its ability to streamline operations, reduce costs, and ensure compliance is invaluable. Choosing the right AI tools—those tailored to meet the unique demands and complex challenges of the mining and metals sector—is essential; broad, one-size-fits-all solutions fall short. Reflecting this strategic focus, industry leaders are investing heavily in AI and decarbonisation technologies through their Corporate Venture Capital initiatives. These targeted investments are key to securing long-term success and leadership in a rapidly changing landscape.
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