Smart or Destructive? Reflections on MDBs’ Critical Minerals Agenda

The Asian Development Bank (ADB) announced at its 58^th Annual Meeting, held in Milan, Italy, on May 6, 2025, that it intends to launch a regional fund facility to invest and support mining projects in the Asia-Pacific region, under the framework of critical minerals and manufacturing value chains. The ADB proudly stated that this plan is anchored in its climate-smart mining framework, developed under the Critical Minerals to Clean Energy Technology (CM2CET) initiative, which aims to foster responsible and sustainable supply chains for critical minerals used in clean energy technologies.

However, environmental rights defenders and climate justice groups argue that the ADB is taking the wrong path with this initiative and fund facility, potentially increasing the risks and vulnerabilities of mining-affected communities.

Climate-smart mining is the latest strategy being promoted by International Financial Institutions (IFIs), purportedly to address climate change and respond to growing concerns about the environmental destruction and human rights violations associated with mining projects.

Historically, IFIs have supported mining projects in the Philippines, often by financing mining operations. In recent years, however, such support has primarily been channeled through the private sector arms or financial intermediaries. The ADB has not directly invested in or been part of mining projects for over three decades. This shift marks a complete turnaround in the bank’s investment policy on mining.

Asian Development Bank and mining in the Philippines

In the 1980s, ADB provided a $ 40 million dollar loan to Placer Dome, owned by Marcopper Mining Corporation, to finance a gold mining project in Marinduque, an island province in the Southwestern Tagalog Region in the Philippines. Placer Dome owned 40 percent of the mining corporation, which operated the mine.

The project was effectively controlled by the late dictator Ferdinand Marcos, the father of the country’s current president, and namesake. Crony capitalism and graft and corruption hounded the entire mining project, aside from the resulting environmental disaster and social injustice.

Apparently, cronies1 were profiteering from the mining project – siphoning off funds and disregarding environmental regulations, leading to several repeated environmental violations every year. Eventually, these resulted in two major mine spills in 1991 and five years later, in 1996. These disasters released over 200 million tons of mine tailings, effectively killing Mogpog and Boac Rivers in Marinduque. The Calancan Bay area was also devastated, causing long-term damage to the island’s fragile ecosystem. The disasters affected around 20,000 people. A generation later, communities still suffer the impacts of the disaster on their health, livelihoods and environment. Despite the scale of the damage, a long-running legal case has yet to secure compensation for the residents.

The ADB completely washed its hands from any responsibility, arguing that the investment was not subject to its disclosure policy introduced in the 1990s. Until now, Placer Dome, now associated with Barrick-Gold and its current owner, CopAur Minerals, has avoided accountability and any meaningful resolution of the issue.

The Marcopper case along with other mining projects funded through financial intermediaries share the same underlying pattern. These mining companies are frequently violating the Philippines’ environmental laws or are failing to comply with their own contractual obligations. In the long run, mining in the Philippines has increased threats, vulnerabilities, and risks faced by affected communities. These risks are further intensified by the impacts of climate change, including landslides and flash floods caused by extreme weather events, as well as declining agricultural harvests and fish catch due to reduced access to irrigation and marine resources.

It isn’t so smart

When we, at Alyansa Tigil Mina or ATM (Alliance to Stop Mining) first learned about ADB and the other IFIs promoting climate-smart mining, we reached out to climate justice groups in the Philippines to better understand the initiative. We came to the conclusion that when Multilateral Development Banks (MDBs) refer to “climate-smart mining”, they are essentially providing interventions that benefit specific mining projects or the mining industry as a whole. This may also be true with fossil fuels, infrastructure projects and other energy initiatives. 

Essentially, when MDBs talk about climate-smart mining, it basically involves initiatives for mining companies to reduce their carbon footprint or improve operational efficiency in response to climate change. The IFIs are enabling the mining industry to adapt to climate change, but mostly addressing mitigation targets.

On the other hand, most IFI policies, interventions, and investments in technical assistance projects fail to address the increased vulnerabilities and risks faced by the affected communities. At most, they merely provide cosmetic or token provisions within loan or technical assistance agreement. But the more important part – the social justice aspect of mining – are inadequately addressed. Was consent secured? Was the Environmental Impact Assessment (EIA) properly and satisfactorily conducted? Was there transparency in sharing project information and impact analysis? Were affected communities justly compensated?

The big picture is, many of these so-called climate-smart mining policies fail to address the root cause of the problem: the continued expansion of mineral extraction at the expense of biodiversity, water resources, and land rights. The demand for more minerals is largely driven by the unsustainable production and consumption patterns and not necessarily the growing demand for green energy technologies.

A closer look at CM2MET

Our alliance takes an unfavorable view of the Critical Minerals and Clean Energy Technology Manufacturing (CM2CET) policy, recognizing it as an attempt to justify increased investments in mining projects under the guise of supplying the minerals needed for a clean energy transition. We view this approach as misleading and deeply flawed.

First, it is important to clarify that critical minerals are not the same as transition minerals. Countries define what minerals are critical to their industries or national security and different countries have different sets of critical minerals. A critical mineral for Germany or the United States may not necessarily critical minerals for Indonesia or the Philippines. It begs the question then, who is actually benefiting from extracting this “critical mineral,” as defined by the ADB or other MDBs? On the other hand, the United Nations Environment Program (UNEP) defines transition minerals as naturally occurring substances, often found in rocks, that are ideal for use in renewable technologies. For example, lithium, nickel and cobalt are essential components of batteries used in electric vehicles. Rare earth elements are part of the magnets that drive wind turbines and electric motors. Copper and aluminum are used in massive amounts for power transmission lines. 

Second, without updating national mining laws, CM2CET will be a hollow intervention. National mining laws in Indonesia, India, Philippines and in Pacific countries are more than two decades old. Most of these mining laws are not responsive to gender justice, human rights, the SDGs or the Paris Alignment. Hence, CM2CET will not make any significant contribution in addressing the myriad problems of mining projects.

Third, pushing for more mining projects and increased extraction of transition minerals risks creating a new “sacrifice zones.” Governments and corporations often justify the expansion of nickel, lithium, and cobalt mining by citing the urgent need for transition minerals. In doing so, they will sacrifice the rights of Indigenous peoples, biodiversity, the integrity of fragile island ecosystems, critical watersheds, for what is conveniently considered as “the greater good”. This is potentially a dangerous and scary scenario, where the rights and well-being of marginalized and impoverished communities are disregarded to serve the interests of those demanding these minerals for their “economic growth” or “defense requirements” or in the name of “national security.”

Fourth, like many other safeguard frameworks promoted by Multilateral Development Banks (MDBs), the CM2CET initiative appears to be little more than a rebranding of destructive mining practices. Noting that the World Bank (WB) and the Asian Development Bank (ADB) have standing policies that prohibit direct investment in mineral extraction projects, interventions under the CM2CET framework is effectively a rebranding strategy along the lines of “responsible” or “climate-smart” mining. If the ADB’s proposed regional fund facility for critical minerals gain momentum, we are likely to see a surge of private investment in mining projects on a scale we have never seen in the past decades. This could mark the beginning of another supercycle of extractivist ventures across Asia, with deep implications for communities, ecosystems, and the region’s long-term sustainability.

Challenges to ADB and other MDBs

We challenge the ADB, the AIIB, the WB and the rest of the MDBs, to go beyond the public relations approach of responsible mining, and to adopt the more ambitious international standards available such as the Initiative for Responsible Mining Assurance (IRMA), Extractive Industries Transparency Initiative (EITI) and the Responsible Mining Initiative (RMI).

Finally, the CM2CET framework fails to deliver the legitimate and transformative changes that the planet and its people require. Let us not be distracted from this important point. The expansion of mining projects will only deepen the suffering of the marginalized communities, exacerbating inequality, environmental degradation and social injustice. And this is directly against the visions of ADB and the MDBs which are to promote inclusive and sustainable development.

Who benefits?

Given these arguments, it is difficult to understand what is truly smart about “climate-smart mining” – when in reality, it will only benefit corporate interests and results in the displacement and suffering of affected communities.

For genuine climate justice to happen, we must demand degrowth, a significant reduction in consumerism, particularly from the developed countries, and the pursuit and popularization of the circular economy principles. These demands have been consistently raised by ATM, the Just Energy Transition Partnership (JETP) and the Friends of the Earth-Philippines – Legal Rights and Natural Resources Center (LRC). The UN Secretary General has even issued Guiding Principles on Critical Energy Transition Minerals. The narrowing timeline to avert a disastrous global warming beyond 2.0 degrees is fast approaching – there is no room for false solution. We have to act now.

Any proposed policies from the MDBs that fail to recognize these three core principles will never be adequate to meet our fundamental demands to ensure a livable planet for the next generations. 

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Jesus Vicente C. Garganera is coordinating an alliance of environmental and human rights organizations in the Philippines. His organization is a founding member of a national network on transparency and accountability on the extractive industry in the Philippines.

Disclaimer: This published work was prepared with the support of the Heinrich Böll Stiftung. The views and analysis contained in the work are those of the author and do not necessarily represent the views of the foundation. The author is responsible for any liability claims against copyright breaches of graphics, photograph, images, audio, and text used.