Australia and its partners must move towards frameworks that manage, rather than merely lament, the negative side-effects of critical mineral extraction.

As the world scrambles to meet the demands of a clean energy transition, it’s tempting to focus on the environmental, social and human security costs of mining. But focusing solely on these negative externalities obscures a hard reality: without mining, there is no energy transition.

The United Nations Office on Drugs and Crime (UNODC) 2025 report on mineral crime lays bare a global crisis. Rising demand for critical minerals amplifies environmental degradation risks, organised crime and corruption. Gold is a central case study with its high value and ease of laundering. But this is also a story of market failure, regulatory lag, and global systems’ inability to enforce credible environmental, social and governance (ESG) standards across mineral supply chains.

The world wants cheap minerals quickly. Demand for lithium, cobalt, rare earths and nickel has soared as governments and industries chase net-zero targets. Yet global markets remain reluctant to pay the ESG premium necessary to ensure these minerals are mined and traded ethically. This has created a distorted incentive structure that rewards opacity, weak governance and criminal infiltration, particularly in producer states already under stress.

The UNODC report reveals how transnational criminal networks are seizing on these gaps. From West Africa to Latin America, cartels, armed groups and corrupt elites are embedding themselves in mineral economies. They leverage violence, fraud and influence over regulatory agencies to secure access to sites and smuggling corridors. These actors displace communities, damage ecosystems and launder illicit profits through legitimate mineral exports.

ASPI’s 2023 and 2024 Darwin Dialogue reports highlight that the concentration of processing capacity and supply in fragile or authoritarian jurisdictions creates dangerous chokepoints. Criminal interference or geopolitical tension could disrupt clean-energy supply chains at scale, delaying the global transition and undermining confidence in net-zero commitments.

These reports also stress that the energy transition mustn’t come at the cost of social cohesion or regional stability. In resource-rich countries, mineral crime fuels discontent, fractures governance and deepens inequality. This threatens development outcomes, investor confidence and diplomatic relationships. When extraction undermines the communities it’s supposed to uplift, the legitimacy of the energy transition comes into question.

Social cohesion risks are particularly acute in regions where state authority is weak and extractive industries operate through informal, unregulated or criminal structures. The Darwin Dialogue identified these vulnerabilities as points of concern across Southeast Asia, the Pacific and Africa: regions where Australia’s critical mineral engagement is rapidly expanding.

The implications for industry are no less serious. Complex refining and logistics systems make it harder to verify mineral origins. This frustrates compliance with emerging ESG regulations, creates reputational risks and further undermines investor confidence. Companies that cannot guarantee the integrity of their supply chains risk being locked out of premium markets or facing costly litigation.

This is where Australia and its partners must lead. The Darwin Dialogue reports call for a new international effort to define what it means for a mineral to be fit for purpose. That definition must include both physical characteristics and ESG compliance. If a mineral is insecure, environmentally destructive or tainted by corruption, it simply isn’t fit for purpose in a climate-resilient future.

This problem demands a coordinated response from the public and private sectors. Governments must incentivise traceability and responsible sourcing, ensuring that these practices go beyond symbolic gestures. ESG requirements must be a core part of securing ethical and resilient mineral supply chains, embedded in public procurement, trade agreements and supply chain finance. Where markets fall short, strategic investments, such as the Australian Critical Minerals Strategic Reserve announced on 24 April, can stabilise by providing price signals and reducing dependence on insecure sources.

Australia and Canada should drive this agenda. Our miners already operate under strong legal and regulatory frameworks, and both countries are building credibility in critical mineral diplomacy and standard setting. The Darwin Dialogue has provided a forum for partners including Japan, India, the European Union and the United States to align strategies and develop common frameworks for investment, ESG compliance and infrastructure development.

However, credibility cannot rest on rhetoric alone. Australia must strengthen ESG certification systems, invest in diplomatic and technical capacity, and work with producer countries to improve regulatory oversight and governance. It must also recognise that ESG leadership is a commercial and strategic asset in an increasingly contested global market.

International coordination is vital. The UNODC warns of data fragmentation, varying definitions and weak enforcement, creating space for criminal activity and undermining collective action. Multilateral forums such as the Darwin Dialogue must be used to build the analytical, regulatory and enforcement muscle needed to strengthen transparency and disrupt mineral crime.

Mineral crime is not a fringe issue; it’s a litmus test for whether the global energy transition can be secure, inclusive and sustainable. Solutions lie not only in criminal enforcement but in redesigning the systems that enable exploitation. Getting this right will require bold thinking, coordinated investment and a readiness to confront uncomfortable truths about markets, supply chains and state capacity.