Sweden has recently found Europe’s largest strain of rare earth elements in Lapland, close to the city of Kiruna that is already known for its giant iron ore mine. These rare earth elements are fundamental for manufacturing things such as mobile phones, electric cars as well as wind turbines and solar panels. Although the process of extracting rare earth elements produces toxic waste-products, it is also necessary for the production of green energy.
For a long time, there has been a risk of shortage in the EU of these elements due to China’s near monopoly on rare earth elements, as well as an increasing demand caused by technological development. Since China accounts for about 97 per cent of the world’s production of rare earth elements, we believe that it also could be beneficial to break their monopoly to remove obstacles towards sustainable development as a possible trade conflict between the EU and China could hinder a green transition.
The extraction of rare earth elements offers great possibilities for helping the transition to a more environmentally safe world. On the other hand, the extractive industry is known to have negative impacts on sustainable development in general, including social justice for Indigenous communities. In that sense, Sweden’s recent discovery might be a blessing and a curse.
The threat to the Sámi
The discovery of rare earth elements in Sweden and the toxic waste from extraction are likely to have negative impacts on the Indigenous People of Sámi. At least one Sámi group’s reindeer herding would be gravely affected by toxic waste-products and by reindeer grazing land being split in two. Reindeer herding is a cornerstone of the Sámi culture, and the mining industry has already greatly limited many Sámi communities' possibilities to practise their culture.
The Sámi Parliament of Sweden, which is the representative body for Sámi within Sweden, has stated that the mining industry as a whole is endangering their way of living. This raises the question: how should states prioritise between the environmental and economic potential, but also environmental risks of rare earth element extraction, and the rights of Indigenous Peoples to achieve sustainable development? The mining industry in Sweden has already had a big impact on the day-to-day lives of many Swedes living in the north. For example, the city of Kiruna is being moved because the neighbouring iron ore mining is causing the ground on which the city is situated to form cracks.
What is the European Union doing?
With the introduction of the European Union (EU) Corporate Sustainability Due Diligence Directive in June of 2024, companies with over 1000 employees or with a net worldwide turnover of EUR 450 million will be obligated to perform a due diligence whereby they identify, prevent and mitigate the adverse impacts of their activities on human rights and the environment. Luossavaara-Kiirunavaara Aktiebolag (LKAB), the Swedish mining company that will mine the rare earth minerals in Kiruna, is fully owned by the Swedish State. In 2023 their turnover was SEK 43 billion (around EUR 3,7 billion), and they employ around 5 200 people. LKAB, therefore, falls within the scope of the Corporate Sustainability Due Diligence Directive.
In short, the Corporate Sustainability Due Diligence Directive is a way for the EU to transform the UN Guiding Principles on Business and Human Rights and OECD Guidance regarding due diligence from soft law into hard law. The Directive obliges member states to ensure that companies perform due diligence regarding their human rights and environmental impacts. The main objectives of the Directive are to avoid fragmentation of due diligence requirements, improve corporate governance practices and increase corporate accountability for adverse impacts.
The Directive creates a responsibility for companies like LKAB to identify, prevent and mitigate their adverse impacts on the environment and on human rights. Thus, the Directive protects the rights of Indigenous Peoples, like the Sámi people, including the right to participate in cultural life, which is particularly threatened by mining activities. Indigenous People are also mentioned in the preamble of the Corporate Sustainability Due Diligence Directive where it is stated that Indigenous Peoples should be perceived as stakeholders and therefore should have a meaningful engagement with the companies. Meaningful engagement means that companies should consult with stakeholders when, among other things, identifying what potential adverse impacts the company may be causing and how the impacts may be mitigated.
A new way to exert influence for the Sámi community?
The Directive obligates companies to prevent and stop eventual harmful actions. In the case that the harm has already been done, the company needs to remedy it. This means that communities affected by harm need their situation restored to what it was before, or at least something similar.
Swedish domestic law has in practice not granted Sámi communities an adequate possibility to engage with LKAB regarding the exploitation of Sámi land. According to Swedish domestic law (source in Swedish only), LKAB has an obligation to speak with the affected communities, but Sámi's ability to object to exploitation is quite complex and difficult. With the introduction of the Corporate Sustainability Due Diligence Directive this may change. This is because the meaningful stakeholder engagement in the Directive may grant the Sámi greater influence and a bigger possibility to object to exploitation.
It seems that in Sweden, the land is no longer made for all, but that some have more claims to it than others. Can the Corporate Sustainability Due Diligence Directive change that? Can it ensure companies take sustainability due diligence seriously? How effective this will be regarding the conflict between LKAB and the Sámi community remains to be seen. Hopefully, LKAB and the Sámi people will, through meaningful engagement, be able to find a reasonable solution. That being said, the mere existence of a mine on Sámi land is an obstacle for Sámi people practising their culture. What can a reasonable solution look like when Sweden’s green transition objectives threaten Sámi Peoples’ rights to practice their culture?
