What the World Bank’s indicators reveal about governing critical minerals
Critical minerals like lithium are central to clean energy transitions, but governance gaps undermine sustainability.
Lessons from the World Bank’s governance indicators show that strong institutions matter as much as mineral reserves.
Country experiences highlight how transparency, participation, and accountability shape community benefits and investor confidence.
Authors suggest that India sits in a transitional position, with scope to strengthen governance in its approach to lithium sourcing.
Policy coherence, subnational capacity, and meaningful ESG enforcement are key to fair and stable mineral value chains.
In the global rush for minerals deemed critical for clean energy transitions, the story is not only about reserves and production. The role of institutions that govern these resources is equally important, both in terms of how they affect communities and whether the benefits of the mineral value chain truly reach those on the ground.
Demand for critical raw materials such as lithium has been rising steadily, driven by their integration into everyday applications and their central role in clean energy technologies like electric vehicles.
The World Bank’s 2023 Worldwide Governance Indicators (WGI) cover six dimensions: Voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. At first glance, these may appear to be just another set of statistics, but the scores tell a deeper story about how well — or poorly — resources are governed across countries.
We looked at what these indicators reveal for building a coherent policy framework around critical minerals development and clean-energy value chains. Here’s what we have found:
Governance is local: Regional and subnational dynamics often shape project outcomes more than national frameworks.
Legal recognition of rights is necessary but insufficient: Procedural integrity, access to remedy, and meaningful participation determine whether rights are realised in practice.
Governance is influenced by multiple forces: National interests, international partnerships, corporate conduct, and geopolitical priorities all play a role.
Supply-chain credibility reflects governance quality: Distribution of authority, legal recourse, and how conflicts are resolved shape investor confidence and community trust.
Country snapshots
Let us look closely at the countries.
High-scoring democracies such as Australia, Canada and the United States continue to demonstrate strong participatory rights, accessible legal recourse and multi-level oversight. Their institutional capacity supports policy stability, effective regulation and predictable legal systems. Transparency and environmental, social and governance (ESG) requirements are embedded in law and backed by independent oversight.
The upper-middle-income producer countries Chile, Argentina, Namibia, Brazil and China present a mixed picture. Chile has formal rights and high revenue transparency but falls short on community outreach. Namibia has a credible mining policy and benefits from international technical support, though enforcement and rural capacity remain weak. Argentina’s decentralised regulatory structure enables provincial innovation in lithium governance but also leads to uneven federal coordination and weak ESG enforcement.
China’s high administrative capacity ensures rapid policy delivery, but decision-making is centralised, civic participation is limited and regulatory changes can be abrupt and politically driven. Brazil has ambitious industrial initiatives, but fluctuating environmental enforcement and politicised decision-making undermine policy predictability.
Lower-middle-income and emerging producers face more fundamental challenges Bolivia, Nigeria and Zimbabwe. Bolivia’s state monopoly over lithium is marked by opaque contracting, limited technical capacity and political instability. Nigeria has updated mining laws but struggles with enforcement, exclusion of artisanal miners and instability in resource-rich regions. Zimbabwe’s governance is highly centralised, opaque and politicised.
Indicators in detail
We also looked closely at the indicators.
Voice and Accountability: High-income democracies uphold community rights through law. In many middle-income countries, rights exist on paper but are inconsistently implemented. In China and Zimbabwe, restricted civic space limits public influence over extractive decisions.
Political Stability: Stable democracies can absorb dissent without systemic instability, whereas unrest in middle-income countries undermines stability. Fragile economies such as Nigeria, Zimbabwe and Bolivia face frequent instability, with repression creating high risk for investors and communities.
Government Effectiveness: Strongest in Australia and Canada, where institutions and long-term planning ensure consistent delivery. China’s centralised structure guarantees speed but sidelines autonomy. In weaker countries, ambition often outpaces capacity.
Regulatory Quality: Top performers maintain clear, updated legal frameworks and enforceable ESG requirements. China offers certainty but frequent policy shifts to serve domestic industrial priorities create unpredictability.
Rule of Law: Strongest where contracts are reliably enforced and communities can access justice. Elsewhere, delays, interference and weak judicial systems erode trust.
Control of Corruption: In high-performing countries, transparency laws are paired with effective enforcement. Elsewhere, disclosure frameworks exist but are undermined by political influence, while entrenched corruption deters investment and fuels social conflict.
Several cross-cutting risks run through the global mineral governance landscape. Local governance gaps are widespread; strong national policies are often undermined by under-resourced provincial or municipal institutions. Procedural fragility is another key risk: without meaningful consultation, benefit-sharing and grievance mechanisms, trust erodes quickly.
Opaque contracting is common, particularly in bilateral or joint-venture agreements that evade scrutiny. Regulatory unpredictability, whether due to political turnover or shifting industrial strategy, destabilises both investor planning and community expectations.
How can we strengthen governance
We found six steps to address this.
Make governance part of supply-chain decisions, linking trade incentives and financing to measurable governance.
Build subnational governance capacity to improve licensing, monitoring and consultation in resource-rich areas.
Make ESG meaningful: legalise consent mechanisms, audits, benefit-sharing, monitoring and grievance redress.
Ensure downstream actors (including battery manufacturers and EV producers) share governance responsibility across supply chains.
Institutionalise transparency with mandatory public disclosure of contracts, licences and revenue terms.
Invest in independent, interoperable data systems to enhance accountability across supply chains.
Where does India stand?
Our assessment of India’s lithium demand positions the mineral as a strategic priority for the transition to clean transport. While India has yet to establish a firm foothold in the lithium value chain, a comparative assessment using the WGI suggests a transitional position. It sits in the mid-level governance bracket among lithium-relevant countries, highlighting scope for strengthening institutions.
It benefits from progressive legal frameworks, political stability, a cohesive vision, growing institutional capacity and regulatory quality at the subnational level. Looking ahead, progressive policies, greater transparency, faster execution and effective benefit-sharing mechanisms could enable India not only to participate but also to shape the evolving global minerals landscape.
In the end, the governance of critical minerals is not just about securing supplies; it is also about ensuring fairness and equity through institutions, rules and relationships. Strong endowments mean little if laws are not enforced, if decision-making remains opaque, or if community participation is tokenistic.
The lesson from the governance indicators is clear: Stable, participatory and transparent governance is the most reliable safeguard for both investor confidence and community well-being in the global race for critical minerals.
Shivani is a Research Associate with the India ZEV Research team at Global South Centre Institute of Transportation Studies, University of California, Davis; Anannya Das Banerjee is associate director for India & South East Asia at Global South Centre Institute of Transportation Studies, University of California, Davis
Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth