When considering the global race for critical raw materials, the tendency thus far has been to measure competition in terms of extractable reserves, refining capacity, and control over supply chains.
An agreement reached in Australia in late July between a mining company and Indigenous communities suggests that investors may increasingly need to consider another factor: consent.
On July 28, Karri Karrak Aboriginal Corporation announced the signing of the Noongar Cultural Heritage Agreement with Talison Lithium, an agreement governing cultural heritage matters connected with Greenbushes, one of the world’s largest hard-rock lithium mines.
The agreement is explicitly based on the principle of Free, Prior and Informed Consent (FPIC), a principle recognised in the United Nations Declaration on the Rights of Indigenous Peoples.
It is important to emphasize that FPIC does not, in itself, constitute a general statutory requirement under Western Australian cultural heritage legislation. Its incorporation into the agreement therefore represents a choice of contractual governance that goes beyond minimum statutory compliance.
The agreement establishes a culturally-led procedure for heritage assessment, consultation with Traditional Custodians and the management risks associated with cultural heritage.
At the same time, Karri Karrak and Talison are negotiating a broader Mining and Cooperation Agreement aimed at governing environmental management, site rehabilitation, community benefits, land management, skill development, and benefit-sharing.
The development raises questions that extend well beyond Australia and that investors in critical raw materials will increasingly have to address.
Indeed, Greenbushes illustrates how the way major mining projects are conceived and developed is changing, at a time when the United States, China and the European Union are competing to secure access to the critical raw materials required for the energy transition.
Lithium serves as a particularly significant example, being one of the key materials underpinning the green transition.
Australia holds an important position in global lithium production thanks to its deposits of spodumene, a mineral belonging to the silicate family. Lithium is extracted from this hard rock through processes that differ substantially from those used in the salares — the vast salt flats of the so-called “Lithium Triangle” spanning Chile, Argentina and Bolivia — where extraction involves pumping naturally lithium-rich brines to the surface.
Although very different, both extraction methods can have significant environmental impacts.
Brine extraction raises serious questions regarding water resource use in arid regions. Hard-rock mining creates a different set of impacts: large-scale excavation, landscape transformation, and potential interference with sites of historical, spiritual, and cultural significance to Indigenous communities.
It is in this context that the Australian agreement acquires a significance extending beyond its specific provisions.
The most interesting aspect is not simply the stronger protection afforded to the Noongar people; it is the fact that local community consent is becoming an integral part of the sustainability of an industrial project.
The Greenbushes case is particularly interesting because it attempts to institutionalise this relationship before disagreement turns into conflict. The process also suggests a broader evolution. Prior consultation, the protection of cultural sites, the minimisation of environmental impacts, the sharing of economic benefits, and participation in environmental restoration are increasingly appearing not merely as corporate social responsibility measures, but as components of the overall governance of mining investments.
This evolution reflects an increasingly evident reality affecting mining projects in many regions of the world.
In recent years, numerous mining projects have been delayed — and have sometimes been abandoned — due to disputes with local communities, regulatory uncertainties, or the loss of the so-called social licence to operate: that is, the social acceptance of a project that goes beyond the mere possession of administrative permits.
In this context, obtaining a mining licence or administrative authorisation is no longer sufficient, in itself, to guarantee that a project can be developed according to the expected timetable and conditions.
Resource availability, legal entitlement and social legitimacy are not the same thing. A country may possess the mineral; an investor may hold the necessary licence; yet, the project might still lack the social and institutional conditions required to operate with predictably over time.
Recent events offer significant examples of this.
In 2023, the Cobre Panamá case demonstrated how social opposition, institutional conflict, and legal vulnerability can combine to halt even one of the largest mining investments in the Americas. After weeks of nationwide protests, Panama’s Supreme Court declared the law approving the renewal of the concession contract unconstitutional, leading the government to initiate an orderly closure process.
In Australia, a previous case had already highlighted another dimension of the same issue. In September 2022, following legal action brought by Dennis Tipakalippa – a Traditional Owner from the Tiwi Islands – the Federal Court set aside NOPSEMA (National Offshore Petroleum Safety and Environmental Management Authority)’s approval of the Environmental Plan for the Barossa project’s drilling activities, finding that the relevant Traditional Owners had not been adequately consulted. This decision demonstrated how deficiencies in the consultation process can affect regulatory approvals, resulting in delays and potentially substantial costs for the investment.
This trend is also evident in Africa.
The 2018 reform of the Democratic Republic of Congo’s Mining Code, for example, introduced mechanisms intended to channel a portion of the economic value generated by mining activities toward affected communities. This included a minimum contribution of 0.3% of annual turnover to community development projects, as part of a broader overhaul that also increased the State’s share of mining revenues and re-evaluated the balance between investors and the resource-producing countryThe model differs from the Greenbushes one and does not equate to FPIC. However, it reflects the same broader trend: the relationship between the State and the mining company is no longer the only one that matters for the long-term sustainability of an extractive project.
These are, of course, very different contexts. Yet, a common element seems to emerge: the mere availability of the resource is no longer sufficient to guarantee the stability of the investment.
For international investors, these developments do not represent mere local disputes. They affect risk assessment, the cost of capital, and the predictability of economic returns. A project stalled for years by litigation, conflicts with local communities, or changes in the legal and regulatory framework can undermine the economic sustainability of the entire investment.
Consequently, the quality of relationships with local communities and the ability to prevent conflicts become factors that directly affect the financing of extraction and refining activities and, ultimately, the competitiveness of critical raw material supply chains.
It is precisely her that the law reveals a function that is often underestimated.
Its role is not merely to authorise or restrict economic activity. The law can also create the framework of rules that makes investment predictable — and that, in some cases, makes them possible.
Seen from this perspective, Greenbushes offers an interesting example. The legal entitlement to exploit a resource and the social legitimacy required to do so over time belong to different dimensions. Agreements capable of incorporating community interests into a project’s governance can help bridge these two aspects.
This does not mean that consensus eliminates conflict, nor that contractual arrangements can replace public regulation. It implies something more limited, yet economically significant: potential sources of conflict can be addressed before they become sources of investment uncertainty.
However, there is no simple path leading from community consent to investment predictability. Communities themselves may be divided regarding the costs and opportunities associated with mining, raising difficult questions about representation and whose consent ultimately matters. Furthermore, investors operate in contexts characterized by varying regulatory, financial, and political constraints: this might create competitive disparities between companies required to adhere to rigorous consultation and due diligence standards and those operating under different governance models. Added to this is another tension: the energy transition requires the rapid development of critical raw materials, whereas truly meaningful consultation processes take time. The challenge, therefore, may not be limited to simply securing consent, but rather lie in creating institutions capable of combining legitimacy, predictability, and speed.
It is unlikely that the Greenbushes agreement will remain an isolated case. And it sends a powerful message.
In a world increasingly dependent on critical raw materials, competitive advantage does not depend solely on the richness of the subsoil or the efficiency of extraction technologies.
It also depends on the ability to establish a stable legal framework capable of turning community consensus into investment predictability.
In today’s competition for strategic resources, raw materials remain indispensable.
But they are no longer enough.
The resulting sequence is therefore more complex than the traditional race for resources might suggest:
resource availability → legal entitlement → social legitimacy → investment predictability.
In today’s competition for strategic resources, raw material remains indispensable.
But they are no longer enough.
WHERE THE REASONING LEADS
- Access to critical raw materials depends on factors extending beyond reserves, refining capacity, and supply chain control.
- A mining licence provides legal entitlement, but does not necessarily guarantee the social and institutional conditions required for predictable long-term operations.
- FPIC at Greenbushes is particularly significant because it is incorporated into contractual governance beyond minimum statutory requirements.
- Community relations, the protection of cultural heritage, and protection and benefit-sharing are increasingly becoming integral parts of the governance — and risk profile — of investments in the extractive sector.
- The law can do far more than simply authorise extraction: it can help institutionalise potential conflicts before they become sources of investment uncertainty.
- However, consent is not a simple variable: communities may be divided, investors operate under different governance constraints, and meaningful consultation takes time.
- The next challenge may therefore prove even more difficult: will projects involving critical raw materials manage to reconcile community legitimacy, investment predictability and the speed demanded by the energy transition?
