Russian Arctic Mineral Resources Sustainable Development in the Context of Energy Transition, ESG Agenda and Geopolitical Tensions

Abstract

The Arctic region is well-known as a source of energy and mineral resources. Developing these resources by means of responsible practices could provide the world’s economy with strategically and critically important types of minerals. As a result, the role of the Arctic’s resource potential and the approaches used to develop it are gradually changing. In current conditions, it is crucial to strike a balance between existing needs and long-term demand for traditional energy sources or critical materials, such as rare and rare-earth minerals. Achieving this balance will result in sustainable growth, meeting ESG agenda targets while considering national security priorities, and devising novel approaches to sustainable project financing. However, there is controversy between existing strategies and plans based on low-carbon development and reality, which creates new macroeconomic and geopolitical obstacles that need to be overcome. The primary goal of this research is to substantiate the necessity of transforming the Russian Arctic’s mineral resource exploration in the context of global and national changes. The article presents a comprehensive analysis of the contemporary trends and tendencies influencing the exploration of the Arctic’s resources, as well as a general vision of the current situation in the energy sector. Research methods include content analysis and synthesis, generalization, decomposition, elements of strategic analysis, planning and forecasting, statistical methods, econometric modeling methods, and scenario planning. An upgraded concept of sustainable development based on six key components is proposed and discussed. Recommendations are provided on how to improve the existing system of long-term planning and forecasting to reduce the high level of macroeconomic and geopolitical uncertainty. The role of Russian Artic resources is determined in light of the shift in resource use.

1. Introduction

The Arctic is widely recognized as a source of natural and mineral resources [1,2]. Its global importance cannot be overstated [3] and it is the subject of considerable attention owing to its economic, political, and ecological significance [4]. Recently, concerns surrounding the Arctic in the context of climate issues have been on the rise [4,5,6]. As a result, national priorities in this region are becoming increasingly relevant.

Today, the development of the Arctic’s unique mineral reserves and the realization of its economic potential are seen as vital tools for effectively growing the national economy [7]. Hydrocarbon production in the Russian Arctic plays a crucial role in maintaining national energy mixes, given that it serves as a means of replacing the expected decline in production at existing oil and gas fields beyond 2035. In fact, the Arctic shelf may well emerge as the primary reserve of traditional hydrocarbons, not only for Russia but for the global energy market as a whole [8,9].

The Arctic’s industrial development in Russia encompasses a wide range of initiatives, from mineral exploration and extraction to the expansion of energy and transport infrastructure. It provides sustainable development (SD), with natural resources enhancing economic turnover and helping to solve social problems, including employment, poverty and migration outflow. However, implementing such projects may negatively affect local communities that have traditionally relied on the land [10,11].

According to the Strategy for the Development of the Mineral Resource Base of the Russian Federation until 2035, it is necessary to create conditions for the development of the mineral resource base of the Arctic region [12]. This thesis proceeds from the importance of the search for new directions of mineral prospecting, exploration, and development and is justified by the limitations and depletion of traditional mineral reserves.

Currently, the low rates of development of the mineral resource base in the Arctic are due to the specific features of northern territories: difficult mining and geological conditions, harsh climate, the vulnerability of Arctic ecosystems, underdevelopment of transport, logistics, and production infrastructure, and the remoteness of deposits from established industrial centers [13,14]. These features, combined with limited access to international technologies and financing, significantly increase the capital and operating costs of Arctic projects, which ultimately affects the profitability and investment attractiveness of activities in the region.

Today, the problems and difficulties identified are complemented by new challenges. The degree of uncertainty in the functioning of mineral markets is increasing; there is a gradual shift in focus from traditional to green energy sources; the needs for various types of minerals are changing; the level of environmental and social requirements is increasing; new approaches to project financing are emerging due to the current ESG agenda [7,15,16,17,18].

Arctic resources are developed in conditions of global market instability. The COVID-19 pandemic has changed trends in the global economy and prospects for the mineral resources sector. It was predicted that the decline in global demand for hydrocarbons and price volatility might prove to be long-term trends [19,20,21,22]. The structure of the global oil and gas market is changing significantly, and inter-fuel competition is increasing under the influence of decarbonization processes and the growth in the renewable energy sector [23]. The emergence of new players and production regions changes the proportions of the market and the price mechanisms in the resource sector, also making competition for traditional and promising markets more intense. The key factor in the effective development of the oil and gas industry is the introduction of advanced technological solutions and continuous upgrading [24]. The newest challenges connected with geopolitical and energy crises also change the nature of resource exploration in the Arctic [25,26].

All of the above creates a fundamentally new environment for industrial complexes, businesses, and investment projects. Continuing with pre-pandemic trajectories has become increasingly difficult, as global challenges and trends have a direct impact on the functioning of Russian industries. Therefore, it is essential to consider these factors when adapting strategies for the development of the mineral resource potential of the Arctic to ensure the sustainable growth and development of the region.

The necessity of transforming existing approaches to Arctic development and resource base exploration is substantiated by current conditions. The Strategy for the Development of the Arctic Zone of the Russian Federation and the Provision of National Security for the period up to 2035 identifies geological exploration, creating new and upgrading old industrial facilities, developing knowledge-intensive and high-tech industries, and the involvement of new oil and gas provinces along with deposits of solid minerals and hard-to-recover reserves as key tasks for economic development [12]. During the third stage of the strategy’s implementation (2031–2035), the capacity of mineral extraction and processing facilities is planned to progressively increase, with a focus on the development of onshore and offshore oil and gas fields. While plans also exist for the development of other types of minerals, including those of critical importance for the national economy, they are of a secondary priority compared to the effective development of the hydrocarbon potential [27,28]. However, in the context of the global energy transition, such a singular focus may not be justified.

Considering the importance of sustainable development, it is worth noting that the environmental component plays an increasingly prominent and crucial role in the development of the resource potential of the northern territories. In 2019, investments in fixed assets aimed at ensuring the rational use of mineral resources in the Arctic accounted for only 2.9% of total investments. However, this indicator is expected to increase to 6% by 2030 and to 10% by 2035 [12]. Target priorities also include striving for the comprehensive use of minerals, ensuring high reproduction rates, and mitigating potential environmental threats. Despite the existing prerequisites for sustainable development, it can be argued that the concept and specific mechanisms for the sustainable development of the Arctic resource potential are virtually absent. The measures taken so far are rather fragmented and do not contribute to the implementation of systematic management decisions. Hence, it is extremely important to study the key priorities of Russian Arctic development and substantiate its relevance in modern external and internal conditions.

The main goal of this research is to substantiate the need for the strategic transformation of the Arctic’s mineral resource base exploration in the context of global and national changes and trends.

The following research questions are to be answered:

• What are the key features and priorities of the development of the mineral resource base in the Arctic region in current conditions?
• Are the modern trends prerequisites the mineral resource base restructuring and what are the possible scenarios of the external environment following these trends?
• Do the existing strategies of the Arctic regions’ development support SD and allow an adaptation to the trends?

To achieve the goal and answer the RQs, the paper is structured as follows. First, we will analyze existing approaches and frameworks revealing issues associated with the sustainable development of the Arctic’s resource base. Then, we will discuss the research methodology, which includes five steps. After, we present the results. The first step revealed peculiarities of the current development of the Arctic mineral resources base. We tracked the impact of modern trends on the sustainable development of mineral resources in the Arctic by investigating their focus on traditional energy sources or critical materials. We provide a GAP analysis of Russia’s Artic strategies in order to evaluate their relevance and adaptiveness. We provide a conceptual framework for the sustainable development of Arctic mineral resources, and according to the general vision of the controversies in the development of Arctic mineral resources based on key trends, we suggest three key scenarios of further development.

2. Literature Review

In the context of new trends, the issues of SD and the problems of adaptation to emerging challenges are of particular importance and relevance to Arctic territories [29]. The Arctic’s SD is considered to be one of the most important national priorities according to the Fundamentals of the State Policy of the Russian Federation in the Arctic for the period up to 2035 (approved by the Decree of the President of the Russian Federation No. 164 of 5 March 2020) [30].

A similar position is held by international researchers. For example, the World Wildlife Fund (WWF) called sustainability one of the key priorities for the development of the resource potential of the Arctic [31].

The reason for this is that the consequences of the impacts made by any industrial activity on northern ecosystems are irreversible. The Arctic Biodiversity Assessment report [32] gives an interesting thesis that the development of the Arctic is, first of all, an opportunity for the practical implementation of the principles of sustainable development as it is where sustainability is a key priority rather than an additional parameter.

A large number of Russian studies have been devoted to sustainability issues, with some touching upon aspects related to the Arctic. Some works analyze problems and obstacles on the way to ensuring the development of the Arctic [33,34]. Specific recommendations have been developed to ensure the sustainable development of the northern territories [35,36].

In a number of sources, SD is directly linked to the climate agenda, as it is aimed at reducing the likelihood of climate risks and the volume of greenhouse gas emissions [37]. Some authors assess the sustainability of the development of Arctic territories from the standpoint of environmental parameters, such as rational resource use, ensuring a high level of energy and resource efficiency, limiting negative environmental impacts, and preserving northern ecosystems [38,39]. Gassiy et al., (2021) conclude that the sustainability of Arctic industrial systems is determined primarily by the balance of interests between key stakeholders—the state, business, science, and society [40]. The ambiguity of approaches to the sustainable development of the Arctic region leads to uncertainty in the context of the interpretation of SD in relation to the development of Arctic territories in general and the development of the resource potential of the northern region in particular.

The current import substitution trend goes against the principles of sustainable development. Ambitious plans may lead to a temporary neglect of sustainable development issues, which is unacceptable for the Arctic territories [41,42,43].

The world’s concerns regarding Arctic issues are becoming more pronounced nowadays [44]. The Arctic region is a driver of the development of the resource base to meet not only regional but also global energy needs taking into consideration novel trends focused on critical materials which contribute to achieving carbon neutrality (Figure 1).

Figure 1. Distribution of resources critical to achieving carbon neutrality. Source: compiled by the authors based on [45].

Resource extraction in the Arctic is associated with significant energy costs [4]. In addition to other environmental problems, the issue of greenhouse gas emissions, provoked by both the development of deposits and the melting of ice, is particularly acute [44].

It is worth noting that the focus of Arctic development tends to lean towards the exploitation of hydrocarbon resources. In recent years, there has been a noticeable increase in global interest in Arctic oil and gas projects, including those on the continental shelf, despite ongoing discussions regarding the changing role of traditional energy resources and new financing conditions for such projects (ESG agenda). Stipo et al., (2012) pointed out that the degree of sustainability of Arctic oil and gas projects is dependent on the preservation of the region’s environment [46]. Verhaag (2003) identified two “driving forces” for the sustainable development of offshore resources: (1) ensuring the rational use of natural resources, and (2) implementing a “precautionary approach” to concentrate efforts on preventing possible environmental consequences [47]. The report “Opportunities and Challenges for Arctic Oil and Gas Development” (2015) also examined the effectiveness and investment attractiveness of offshore projects from the perspective of their contribution to sustainable socio-economic development in the northern region. However, the report did not provide specific recommendations on how this contribution should be evaluated [48].

Some authors consider the sustainability of hydrocarbon projects through the prism of their potential impact on the development of the Arctic region [49]. In the work “Foresight Study of the Development of the Arctic Shelf Industry until 2030”, natural resource parameters, transport trends, and climatic aspects are highlighted as factors contributing to the sustainable development of the Arctic zone [50]. Additionally, The World Bank has presented a report to show not only the opportunities but also possible risks of the global energy transition in Russia [51].

The existing research on SD issues in relation to the Arctic is characterized by several shortcomings and omissions. These include the fragmentary nature of the study of various aspects of sustainable development, the lack of holistic conceptual models that consider progressive trends and challenges, and mechanisms for adaptation to them. Additionally, there is a strong focus on the energy sector, which is considered separately from the perspective of SD capabilities.

However, it is important to note that the concept of SD is evolving and expanding in scope, particularly with the emergence of the ESG agenda as a part (or continuation) of SD. ESG involves long-term, strategic thinking to meet not only organizational and market expectations but also ecological and social expectations [52].

Additionally, it is worth noting that ESG could be a key tool for the transformation of the strategy for the development of the mineral resource base in such a strategically important region as the Arctic. In Russian practice, the international interpretation of ESG is often used. For example, the Recommendations on the Implementation of the Principles of Responsible Investment of the Bank of Russia noted the following: “Responsible investing involves taking into account the significant risks associated with the factors of sustainable development when choosing investment objects and managing them” [53].

Russia is currently lagging behind in terms of developing and applying the ESG concept, positioning itself as a follower. However, with each passing year, the development of a legal framework for the ESG approach is becoming an increasingly pressing task. For instance, during the XI International Forum “The Arctic: Present and Future” held in St. Petersburg from 2–4 December 2021 [54], there were discussions regarding the issues of ESG and green financing of projects being implemented in the Arctic. Participants emphasized the need to create a holistic concept of ESG and incorporate it into development strategies at the regional and municipal levels. Additionally, the impact of the ESG agenda on the prospects for implementing oil and gas projects was discussed as a separate topic.

The sustainable development issues of the Arctic region in Russia along with the factors and principles of ESG have been studied in several works by Russian researchers [55,56], which indicates a growing interest in this topic. It is noteworthy that the “Strategy for the Development of the Mineral Resource Base of the Russian Federation until 2035” sets a strategic goal of creating conditions for the sustainable provision of mineral resources to support socio-economic development and maintain a sufficient level of economic and energy security for the country. However, upon analyzing the document, it was revealed that it does not reflect the principles of ESG, which contradicts the global agenda of sustainable development and highlights the need for further research in this area.

It can be concluded that the sustainable development of the resource potential of the Arctic region is a topic that is widely discussed not only within the scientific community but also at the state level. However, the existing scientific groundwork in this area is fragmented, and there is a lack of understanding of the specific mechanisms required for ensuring SD. This is particularly important given the need to adapt to the high degree of instability of macroeconomic parameters, trends in the global energy transition, and the provisions of the climate agenda. So, the paper is going to contribute the scientific literature in this aspect. Additionally, there are not enough conceptual and methodological approaches or specific recommendations for improving strategies for the development of the mineral resource base of the Arctic. Therefore, it is necessary to further develop research in this area to bridge the gap and ensure the sustainable development of the Arctic region.

3. Methodology

The study is based on an extensive literature review that covers sources discussing today’s trends in the oil and gas sector, minerals and metals markets, global trends [57] and challenges (macroeconomic, geopolitical, etc.), and the key features of developing the resource potential of the Russian Arctic. Content analysis was used to study domestic and international sources, articles, and reports. The theoretical framework of the study consists of the foundations and principles of the sustainable development concept that integrates three key components: environment, society, and economy.

Figure 2 shows the general framework of the study.

Figure 2. Framework of the study. Source: compiled by the authors.

At stage 1, we provide an investigation of current mineral resource potential development based on the actual and forecasted statistical data. We investigate future dynamics and compare them to the previous tendencies to identify the changes in plans and strategies.

Stage 2 focuses on identifying the impact of the current conditions on the sustainable development of the Arctic mineral resource base. For that, we apply the following methods: (1) systematization of the most important global tendencies and their characteristics, (2) a justification of the relevance of the trends presented, (3) an evaluation of the trends mentioned based on such indicators as a vector (increasing or in decline), a focus on materials (traditional sources or critical materials), and the impact on the world, Russia and the Russian Arctic (as an opportunity, threat or neutrality).

At stage 3, we apply one of the methods of strategic management, GAP analysis, to identify possible contradictions taking into consideration key goals and priorities, the actual position, existing GAP and its specific reasons.

A conceptual framework (stage 4) is developed based on the induction and systematization methods in order to compile all the results achieved at the previous stages. We focus on the methods of sustainable development. The revised approach to the SD of the Arctic mineral resource base is presented in the authors’ hexagon model presented in the research.

At stage 5, we apply the methods and tools of strategic planning and forecasting to create and justify the possible future scenarios—Scenario 1, “Green transformation”; Scenario 2, “Returning back to traditional energy sources”; Scenario 3, “Keeping balance”. To evaluate the scenarios offered and make reliable conclusions we use the following indicators (both qualitative and quantitative): alignment with the Paris Agreement goals, a temperature change by 2050, the share of oil, gas and coal in energy consumption, the annual volume of investments in the energy sector (in 2020 prices), the level of CO₂ emissions, the degree of energy intensity, the level of import dependence, and others.

The final stage is devoted to the description of the scenario chosen. At stage 6, we apply the methods of statistical analysis to recognize the correlation between the production of green technologies and the demand for rare-earth metals. We also systemize the promising objects to exploit to achieve the goals mentioned before and make conclusions.

4. Results and Discussion

4.1. Arctic Mineral Resources: Peculiarities of the Current Development

The development and exploration of mineral resources in the Artic are characterized by the following features [7,58,59,60]:

• Harsh climate conditions and a specific mode of operation (mining, refining, etc.);
• Complex and unique geological conditions;
• Poorly developed infrastructure (transport and communication); remoteness from the main industrial centers;
• Fragility of the northern ecosystems;
• A need for custom-made solutions (innovations) in production and technology.

It should be noted that over the past few years, there has been a mismatch between real production volumes and the oil and gas production forecasts presented in the Strategy for the Development of the Mineral Resource Base of the Russian Federation until 2035 (Table 1, Figure 3) [12].

Table 1. Comparison of forecast and actual oil production volumes.

Indicators	2018	2019	2020	2021	2022	2023	2024
Forecast (oil), mln barrels	549	557	562	562	560	558	557
Fact (oil), mln barrels	555.8	560.2	512.7	524.05	535	-	-
ABS	6.8	3.2	−49.3	−37.95	−25	-	-
REL	1.24%	0.57%	−8.77%	−6.75%	−4.46%	-	-
Forecast (gas), bln m3	691.6	708.7	710.2	724	730.1	740.3	743.9
Fact (gas), bln m3	725.4	737.59	692.33	762.3	672	-	-
ABS	33.8	28.89	−17.87	38.3	−58.1	-	-
REL	4.89%	4.08%	−2.52%	5.29%	−7.96%	-	-

Source: compiled by the authors based on [12].

Figure 3. Oil and natural gas production in Russia—forecast and actual values. Source: compiled by the authors based on [12].

According to the Strategy for the Development of the Mineral Resource Base of the Russian Federation until 2035, the production of oil is expected to decline compared to that in 2017. At the same time, coal production demonstrates an upward trend, which goes against the global plans for low-carbon development (Figure 4).

Figure 4. Changes in oil and coal production in Russia compared to that in 2017, %. Source: compiled by the authors based on [12].

One more interesting fact to consider is the expected expansion of critical material production, including that of rare and rare-earth metals, which are essential components of the global energy transition as they are widely used in wind turbines, electric vehicles, and other technologies (see Table 2) [61].

Table 2. Lists of critically and strategically important types of mineral resources.

The State	Lists of Mineral Resources
	Critically Important	Strategically Important
EU	Sb, As, baryte, bauxite, Be, Bi, boron, Co, coking coal, Cu, feldspar, fluorspar, Ga, Ge, Hf, He, HREE, LREE, Li, Mn, natural graphite, Mg, Ni, Nb, PGMs, Pt, phosphates, silicon metal, Sr, Ta, Ti, V, and W	N/A
Australia	REE, platinoids, Co, Ni, Cr, Zr, Cu, In, W, Nb, Mo, Sb, Li, Ta, Mn, Ti, C, Sn, Be, Bi, Th, and He	N/A
China	N/A	REE
USA	Sn, Sb, W, Ta, Bi, Ge, Ga, Be, Cr, Mn, REE (Er, Dy, Tb, Tm, Y, Sc) Nb, In, and PGMs	REE, Sb, Bi, Cd, Nb, Ta, Be, Ga, Ge, Hf, In, Li, Sr, Ta, Zr, Te, Se, Co, Cu, Pb, Mg, Hg, Mo, Ni, Sn, W, V, Zn, Ag, PGMs, Cr, Mn, fluorite, chromium ore, manganese, and beryllium
Japan	N/A	Mn, Cr, Ni, Mo, Co, V, Sb, In, PGE, REE, Ni, Ta, Li, Ti, and Se
South Korea	Ga, In, Li, Mn, Ni, PGE, REE, Si, Ti, W, Zr, Sb, Cr, Co, Mg, Mo, Nb, Se, Tl, V, Co, Al, Zn, and Pb	N/A
Russia	N/A	U, Mn, Cr, Ti, bauxites, Cu, Ni, Pb, Mo, W, Sn, Co, Sc, Be, Sb, Li, Ge, Y, Re, Au, Ar, platinoids, and diamonds

Source: compiled by the authors based on [62,63,64].

Critical materials such as copper, cobalt, nickel, lithium, rare-earth metals, and zinc are essential to modern low-carbon technologies [45], but their distribution in the Earth’s crust is uneven. Research by the US Department of Energy and the European Union confirms the notion that the world may soon face a shortage of necessary materials to implement planned environmental changes.

Based on the table, it is evident that Russia prioritizes meeting its own demands for strategically important mineral resources, including rare and rare-earth metals. Figure 4 shows that changes in the production rates of critical materials in Russia were studied and compared to those in 2017. The findings indicate that the country has been able to maintain high levels of production for these metals, as illustrated in Figure 5.

Figure 5. Changes in the production of critical materials in Russia compared to that in 2017, %. Source: compiled by the authors based on [12].

In light of this, the following significant features of Arctic mineral resource development are notable:

• A discrepancy between projected and actual regional production figures.
• A decline in production levels for traditional energy sources such as oil, gas, and coal, compared to the planned levels.
• A faster-than-anticipated growth in the production of strategic minerals such as copper, nickel, and rare metals.

4.2. The Impact of Modern Trends on the Sustainable Development of Mineral Resources in the Arctic: Traditional Energy Sources vs. Critical Materials

The study of current trends, challenges, and developments in economic growth, within the context of the global energy transition, the evolution of the climate agenda, and the transformation of ESG, constitutes a crucial aspect in laying the groundwork for formulating and making decisions at the local, regional, federal, and global levels—as illustrated in Figure 6. Transition point is a moment when a factor turns into a trend.

Figure 6. Changing trends.

Each year brings new trends and changes in the mining industry. In the past five years, there has been a high level of uncertainty, which has created a challenging environment for decision making and strategy development. Trends come and go quickly, and in 2019, the ESG agenda was not a significant topic, but by 2021, it had become one of the most essential trends to follow. The mining industry serves as an example of how trends and their focus have evolved in the last five years, with some complementary and contradictory directions. Figure 7 presents the main global trends that have been relevant for the world mining industry according to Deloitte [65].

Figure 7. Key trends in the mining industry. Source: compiled by the authors based on a summary of data by Deloitte [65].

It is crucial to monitor the effects of trends on the development of regions, companies, and the country as a whole. The concept of sustainable development is not new, but its focus varies depending on the direction of trends. Therefore, it is necessary to examine the relationship between the trend, its impact on sustainable development, its influence on the structure of consumption and production (imports), and its impact on the development of the mineral resource base within the framework of this study. This relationship is presented in Table 3.

Table 3. The role of modern trends and tendencies in the sustainable development concept.

Global Trend	Description
High level of competition and market volatility	Oil and gas are still the primary sources of energy, leading to intense competition for market dominance between nations and companies. In recent years, the number of oil producers has grown, and the quality and diversity of energy-related products and services have improved.
Climate agenda, low-carbon development, green trends and energy transition	Many countries are attempting to transition to a green economy, which involves reducing their dependence on traditional oil. This shift has become even more relevant after the signing of the Paris climate agreement, which highlights the need to move away from such resources. The global energy transition is considered the key result of sustainable development efforts.
Scientific and technological advances, and digital transformation and innovations	The need to develop innovative technologies is caused by the depletion of traditional reserves of hydrocarbon resources, deteriorating mining and geological conditions, and the need to develop unconventional oil reserves. The environmental component of the technologies and technical means used also plays a decisive role in this development.
Digital transformation and innovations	Transformation of management and production processes based on the introduction of fundamentally new systems for obtaining and processing data [66], digital tools and management mechanisms.
Social responsibility [67]	Implementation of a socially oriented approach; focus on human capital; focus on improving the quality of employees’ lives.
The growing role of social and ecological factors (ESG)	The development of the concept of sustainable development predetermined the importance of social and environmental factors. Increasing environmental requirements for the technologies used and products manufactured form new environmental standards. Social aspects are related to the implementation of open policies by oil and gas companies, the involvement of stakeholders in resolving issues, ensuring a high quality of life for the population in areas where oil and gas projects are being implemented, etc.
High geopolitical turbulence and the energy crisis of 2022	The pressure of sanctions necessitates a restructuring of the energy mix; as a result, green priorities may decrease in relevance in the face of energy supply and national security issues. However, many countries still reorient their energy mixes towards alternative sources.
Capital	High project requirements in terms of social and ecological aspects (as Arctic projects are not supposed to be sustainable); responsible funding; changing demand and investor expectations [68].
License to operate [69]	Brand and business reputation; social licenses.
Workforce	Working conditions; staff qualification; migration issues.

Source: compiled by the authors based on [65,67,68,69].

Current trends influence the resources we need and the ways we use them. The global energy sector is gradually transforming in favor of the use of alternative energy sources, which is reflected not only in the opinion of the scientific community, but also by statistics showing an increase in the share of renewable energy sources in the global primary energy mix [70]. However, new trends associated with the energy transition are also creating new challenges. At the level of the international scientific community, issues are actively discussed that are related to how to make this transition, what tools to use, how to create the necessary institutional conditions, and, most importantly, what resources and materials will be needed [71]. The results of these studies boil down to the fact that one of the integral components of the energy transition will be metals [72].

The low-carbon energy transition trend is now essential to achieve the UN’s 2030 Sustainable Development Goals (SDGs) [73]. However, it requires large-scale structural changes in resource consumption, causing dilemmas related to the supply of raw materials [73,74]. An energy system powered by clean energy technologies differs fundamentally from one fueled by traditional hydrocarbon resources [62]. Moreover, the management of critical resources requires special guidance [75]. Thus, organizational, technological, and structural preparations are needed, along with special resources.

Nowadays, despite the continuing urgency of the climate issues and the ESG agenda (promoted by Deloitte, BP, and EY), geopolitical trends are taking precedence. One of the examples of this is the so-called energy crisis. Later in the year 2022, some international media platforms made assumptions that European countries may shift back to coal [76]. According to the Energy International Agency (EIA), coal investment increased to USD 135 billion globally in 2022 and is expected to increase to USD 150 billion in 2023 due to the global energy crisis [77]. Obviously, these prerequisites do not meet the energy transition goals, but it allows an adaptation to the up-to-date conditions and emerging changes to be successfully met. According to EY (2022), the importance of climate change will decline in 2023, giving way to geopolitics and leading to supply chain disruptions [68]. This creates a need to revise the existing plans and strategies.

There are not only global trends, but also local conditions in which companies are functioning and restrictions (time, funding, etc.) that they have to deal with. ESG remains the top risk and opportunity, but geopolitics has soared to second place amid global conflicts and uncertainty [68]. Global trends used to have the same strength of influence on countries, regions, and companies. However, nowadays resource insurance is a factor determining the difference between resource needs and the reaction towards novel trends [45].

The Arctic region is a hub of mineral resources and can contribute to global resource security. Therefore, the relevant issue is how to manage the development of the mineral resource base not only following modern trends but also in a way that meets existing restrictions. The question is whether the Arctic is a source of traditional energy resources or a source of future critical commodities. Given the region’s specificities, such as fragile ecosystems, harsh climate and weather conditions, poor working conditions, and low investment attractiveness, the impact of global trends on it takes a different shape compared to that on the world in general and on Russia in particular.

The internal threats are related to the sanctions imposed, the high level of import dependence (technological aspects), investment attraction, and environmental challenges. Over several years, the Arctic was discussed in terms of its offshore oil and gas resources [78]. However, these issues were revised due to the climate agenda [22]. A number of international companies, banks, and investors refused to invest in Arctic offshore projects due to their unsustainability [79,80,81].

In such conditions, the focus might change, and new ways of attracting investment can be found.

Against the backdrop of the energy crisis that started in 2022, several measures can be taken:

-

To decrease the volumes of oil and gas exploration due to the dropping demand (sanctions imposed);

-

To increase the volumes of oil and gas production as well as to plan new offshore projects provided by novel spheres of co-operation;

-

To focus on new projects (critical materials; import substitution).

Table 4 presents a description of the relevant trends and an analysis of them from the position of resources needed and the influence on the world as a whole and on Russia and the Arctic region in particular. The assumptions are provided for the year 2023.

Table 4. Trends and sources; correlation (T—threat; N—neutrality; O—opportunity; ↑—growing relevance; ↓—declining relevance).

Trend	Key Issues	Vector 2023	Focus on		Influence
			Traditional Energy Sources	Critical Materials	World	Russia	Russian Arctic
Climate agenda, low-carbon development, green trends, and energy transition	Green technologies, global energy transition, and net-zero pathways	↓		●	O	T, O	T, O
Social responsibility	The role of society for future generations	↑		●	T, O	T, O	T, O
The growing role of social and ecological factors (ESG)	Ecology, social aspects and governance are in high demand; novel principles to follow; new indicators to evaluate efficiency	↓	●	●	O	T	T
Digital transformation and innovations	Automation, innovative technologies, safety, big data, and digital twins	↓	●	●	O, N	O, N	O, N
Scientific and technology advances	Breakthrough technologies; high growth rates of scientific-technical progress	↑		●	O	O	O
Capital	High project requirements in terms of social and ecological aspects (Arctic projects are not supposed to be sustainable); responsible funding; changing demand and investor expectations	↑		●	O	T, O	T, O
High geopolitical turbulence and the energy crisis of 2022	Sanctions; transforming existing supply chains	↑	●		T, O	O, T	O, T
High level of competitive contest and market volatility	High level of price volatility; uncertain market conditions	↑	●	●	T	T	T
License to operate	Brand and business reputation; social licenses	↓	●	●	O	N	N
Workforce	Working conditions; staff qualification; migration issues	↑	●	●	O, T	O, T	T

The key trends may be characterized as multidirectional. Some of them are coherent, but others are controversial. Their rates and relevance are also different. At the moment, geopolitical changes reveal complexities and trigger needs for restructuring. However, the focus on energy transition and low-carbon development remains urgent.

Moreover, these trends have a direct impact on the needs for resources and their consumption. We will provide an assessment of how they influence mineral consumption at global and regional levels.

In such highly turbulent conditions, the question remains open: is the Arctic a source of traditional energy resources or critical materials?

4.3. GAP Analysis of Russia’s Artic Strategies in Order to Evaluate Their Relevance and Adaptiveness

We conducted a GAP analysis of the development strategies for the Russian Arctic region to study how goals are presented in different documents and identify contradictions between goals and the current state (Table 5) [82,83,84,85,86].

Table 5. GAP analysis.

The Goal/Priority	Fact	Gap and Its Reasons
The Yamalo-Nenets Autonomous Okrug (YaNAO) has chosen the development of export activities and the consumer market as one of its main goals.	Economic activity, both in the market of enterprises engaged in the extraction and export of fuel and energy products and in the consumer market of the region, is expected to gradually stabilize and show moderate growth from 2024 to 2025. This comes after the recession in 2022 and the likely reduction in 2023, which were caused by macro and microeconomic shocks.	The decrease in activity in the consumer market can be attributed to several reasons, including a high inflation rate of 11.9%, which is higher than the Central Bank’s target of 4 percentage points, and high interest rates on loans in various segments. Additionally, the population’s savings model of behavior and the outflow of consumer funds into various instruments from deposits in domestic banks to transfers of funds abroad have contributed to this trend. The development of the export policy of the region, which is one of the main producers of oil and gas in the Russian Federation, also remains uncertain due to various factors. These include the possibility of a reduction in oil and gas production, the significant volatility of the prices of raw material products, restrictions on distribution channels, and the establishment of price ceilings and discounts that seriously limit cash flows to the regional budget.
The Yamalo-Nenets Autonomous Okrug sees more intensive production and supply of LNG to foreign markets as one of its promising goals in the future. It is planned to increase production from 18.6 million tons in 2020 up to 42 million tons in 2025.	In 2021, the production of LNG in Yamal reached 19.6 million tons, and it is expected to reach 21 million tons in 2022. The average growth rate of LNG production during this period was approximately 6.2%. Assuming that the production volume will increase annually by at least this rate, the projected LNG production in 2025 will be around 25 million tons, which is nearly 1.7 times lower than the planned target.	The achievement of liquefied natural gas production goals in the region may face several obstacles, including the uncertainty of plans for constructing the Obskoye LNG project, problems with implementing the Arctic LNG-2 project, and the decreasing demand for Russian gas in the world market. It is possible to achieve the required production indicators if the Arctic LNG-2 project with a capacity of 19.8 million tons is fully commissioned in 2025. However, forecasting should be more flexible at the moment, considering external and internal factors, including limitations on project financing with foreign capital. To facilitate the implementation of the Arctic LNG-2 project, the deadline for the simplified customs declaration procedure for equipment was extended until 2025 through a presidential decree in 2022.
The Chukotka Autonomous Okrug (ChAO) focuses its strategy on the stabilization of gold production and its growth in certain periods until 2030	The strategy aimed to produce 29.1 tons of gold in 2021. However, only 25.3 tons was mined. It was planned to start operating the Klen and Kekura deposits.	Taking into account the postponement of the commissioning of the Kekura and Klen deposits from 2021 to 2023–2025, a trend towards the non-fulfillment of gold mining plans can be noticed in the region.
The Nenets Autonomous Okrug (NAO) listed the growth of the main macroeconomic and demographic indicators in its strategy	GDP growth was supposed to be 24% from 2017 to 2021, but in the current situation there was a fall of more than 16%. The population in the region was supposed to increase by 1700 people. However, according to statistics (Rosstat), it decreased by 2566 people. The budget deficit was marked by annual growth instead of the planned growth of budget revenues.	The reasons for the gap were imperfect demographic, budgetary, and communication policies. However, for the current situation the main reason is the loss of the European market.
The main parameters of sectoral development of the economy of the Nenets Autonomous Okrug (NAO) have gone off the development trajectory into a phase of deep recession.	Mining, processing, construction, and other main parameters of the GDP structure of the NAO in 2020 decreased compared to those in 2017. The following items decreased the most: agriculture (−68%), mining (−18.5%), and construction (−54%).	The reasons for such a deep decline in the main items of the region’s GDP were the reduction in budget incentives and the transfer of budget funds to the budget of the Arkhangelsk region in the amount of 75% of tax revenues.

Source: compiled by the authors based on [82,83,84,85,86].

As mentioned earlier, global trends have an impact on the Arctic region and require adjustments to policies and principles. In this research, an analysis was conducted on current Arctic strategies to ensure compliance with the latest trends and tendencies discussed above (see Table A1). The analysis shows that the strategies of foreign countries focus on sustainable development, the climate agenda, and low-carbon development as essential parts of the future of northern territories. On the other hand, Russian plans and programs are mostly oriented towards workforce development, market volatility, and digital innovation.

It appears that the ESG agenda is not included in either current Russian or foreign Arctic strategies, suggesting a lack of progress in modern Arctic policies. The analysis highlights the need to revise existing strategies and plans to address this issue.

4.4. A Conceptual Framework for the Sustainable Development of Arctic Mineral Resources in Russia

Interestingly, while the concept of sustainable development is still relevant, it does not encompass all the factors and trends that need to be considered. The philosophy of SD is based on the principle of balance and equal coverage of the results in the three aforementioned areas. However, achieving equality is unrealistic in current conditions. The 33.3% allocation for each component is no longer applicable, and the range of components itself needs to be rethought.

Nowadays, there is a tension between the existing strategies and plans formed on the basis of low-carbon development principles and the reality, bringing new obstacles. In addition, as a result of the study, contradictions and gaps were identified in the existing legal documents governing the development of the Arctic region.

Such prerequisites form the need to transform existing approaches to the development of the mineral resource base of the Arctic region (Figure 8).

Figure 8. Controversies in development scenarios for Arctic mineral resources in Russia. Source: compiled by the authors.

The analysis indicates that current long-term strategies prioritize low-carbon development. However, the current macroeconomic and geopolitical environment reveals the unreliability of these plans and target indicators in changing conditions. Today’s priorities are centered around ESG-factors and the world’s energy transformation, which are widely accepted by many countries, states, and industrial companies. However, the emergence of new challenges, such as sanctions and the world’s reconstruction, raises a crucial question: what is more important, the sustainable development of the global energy sector and the intensification of the energy transition, or the maintenance of countries’ energy security?

The answer to this question determines the structural changes not only in the energy sector but in the resource sector in general, transforming the plans and strategies formed. Figure 9 shows that with regard to the Russian Arctic, this choice provides different ways of interpreting its role: as a source of novel critical materials (including RM and REM) or a source of oil and natural gas reserves (including offshore ones).

Figure 9. Hexagon of sustainable development of the Russian Arctic. Source: compiled by the authors.

4.5. Basic Scenarios

According to the general vision of the controversies in the development of Arctic mineral resources based on key trends, there are three key scenarios of further development: Scenario 1, “Green transformation”; Scenario 2, “Returning back to traditional energy sources”; Scenario 3, “Keeping balance”. The scenarios are based on data from companies (Nornikel, etc.), analytical agencies (BP, IEA), and terms of the Paris Agreement (Table 6).

Table 6. Scenarios for further development of the Russian Arctic.

№	Indicator	Units	Basic Scenarios
			Scenario 1, “Green Transformation”	Scenario 2, “Returning Back to Traditional Energy Sources”	Scenario 3, “Keeping Balance”
1	Climate regulation	qualitative	Strict	Insignificant	Moderate
2	Temperature change by 2050	°C	+1.7	+2.5	+2
3	Alignment with the Paris Agreement goals	+/−	+	−	+/−
4	Share of oil, gas and coal in energy consumption (2050)	%	54	88	67
5	The annual volume of investments in the energy sector (in 2020 prices)	%	44	56	37
6	CO2 emissions	qualitative	relatively low	high	moderate
7	Energy intensity	qualitative	low	high	moderate
8	Resource intensity (critical materials)	qualitative	high	low	moderate
9	Oil export to 2030	mln tons	less than 150	up to 300	200–250
10	Coal export to 2030	mln tons	less than 100–50	up to 250	200
11	Gas export to 2030	bln m3	more than 400	400	300–400
12	Rare-earth metal production (to 2030)	thou. tons TREO	14	1.5–2	8–12
13	Resource endowment
	-REMs -traditional energy sources		Low High	Moderate High	Low High
14	Investment directions	Qualitative	green assets, new low-carbon technologies, BAT (best available technologies), exploration of critical materials, and infrastructure	growth in oil and coal production, commissioning offshore fields to achieve energy security (unconventional resources), and implementing novel production facilities	maintaining current assets, gradual exploration of critical materials, sustainable development of regions and infrastructure and BAT
15	Import dependence	qualitative	high	low	moderate
16	Priority projects	qualitative	Tomtor deposit (Buranny site), Zashihinskoe deposit, Africanda deposit and Partomchorr field (Khibiny)	Shtokman and Prirazlomnoye deposits, Dolginoskoye, Rusanovskoye, Pomorskoye and ice deposits	A balanced combination between two directions; sustainable investment
17	Dominating trends	qualitative	ESG, climate agenda, low-carbon development, and social responsibility	Geopolitics, macroeconomic trends, and a focus on energy and resource safety	Moderate combination of the current trends; focus on the adaptation to and effective following of the trends

Source: compiled by the authors based on [87,88,89,90,91,92].

Each scenario outlines a set of structural changes in the politics and strategies for developing the Arctic’s resource potential. The first two scenarios represent conflicting views on industrial development, as they are based on different trends and priorities. The third scenario is a combination of trends that are typical of the current high-turbulence reality, including both green tendencies and the latest macroeconomic and geopolitical challenges.

The choice of a particular scenario will determine a specific path of transformation, including promising projects, investment directions, resource and energy intensity, methods for ensuring resource endowment and national economic security, and more. As such, modern strategies, programs, and policies must be revised to align with the chosen path.

4.6. Focus on Critical Materials

As an example of critical materials, rare-earth metals (REMs) are widely used in modern green technologies. Interestingly, not long ago, countries imposed sanctions related to the access of other states to energy resources. Now, one of the main threats seems to be the imposition of sanctions on the supply of REMs, which are critically important according to the data in the table, and there are already such examples in the world. The high risk of the REM chain explains the relevance of the problem of providing countries with these types of metals in the context of new trends. It is this technology that can potentially become a factor holding back the entire process of the energy transition, which requires the abandonment of traditional technologies in favor of energy-friendly ones.

It is believed that indicators of the volume of demand for rare-earth products are correlated with the release of green technologies. The study of this dependence was carried out on the example of data from China [93]. The indicators of demand for rare-earth metals in 2000–2015 and quantitative indicators of the release of certain technologies were taken: the production of electric vehicles, wind turbines, and technologies aimed at reducing CO₂ emissions. The data obtained indicate the existence of such a relationship. According to statistics, positive values of the correlation coefficient in the range of 0.7–0.9 indicate a high degree of correlation between the objects under study (Figure 10) [93].

Figure 10. Correlation between the production of green technologies and the demand for rare-earth metals in China in the period 2000–2015 (r_xy is the correlation coefficient). Source: compiled by the authors based on [93].

The availability of these sources in Russian is definitely low at the moment despite the fact that the country has significant balance reserves of REMs, amounting to about 27.7 million tons in terms of the amount of REE trioxides. These reserves are concentrated mainly in the Arctic region: Irkutsk Region, Komi Republic, and Sakha Republic (Yakutia) [94]. The change of the scenario might influence the rates and volumes of their exploration.

Table 7 presents data on the promising rare-earth metal deposits in Russia complemented by their main parameters (Scenario 2, “Keeping balance”).

Table 7. Promising REM objects.

Indicators	List of Objects
Name of deposit	Tomtor deposit (Buranny site)	Zashihinskoe deposit	Africanda deposit	Partomchorr field (Khibiny)
Location	Yakutia (Republic of Sakha)	Irkutsk Region	Murmansk Region	Murmansk Region
Geological type	weathered carbonites	plutonogenic alkali granite	perovskite and titanomagnetite ores	apatite and nepheline ores
REM reserves (categories A + B + C1)	2 640.4 thou. tons	300 thou. tons	860 thou. tons	1 505 thou. tons
REM content	12%	0.3%	0.67%	0.2%
Stage of implementation	Engineering	Engineering	Appraisal	Appraisal
Time frames (launch of the project)	2030 (previously planned for 2025)	2024	2024	2027
Infrastructure	Area with underdeveloped logistics	Area with developed logistics	Area with underdeveloped logistics	Area with underdeveloped logistics
Required investments	53 bln RUB	27.6 bln RUB	19.4 bln RUB	N/A

Source: compiled by the authors based on [92,95].

Thus, taking into consideration the amount of national reserves, Russia can become as competitive as China—the leader of the global market. However, to achieve this goal it is essential to determine the scenario to follow in the current conditions of uncertainty.

The increasing influence of climate issues, sustainable development issues and the ESG agenda necessitates the transformation of existing approaches to the formation of strategies for the development of industries, industrial complexes, and companies. The energy transition determines the search for a new place for the mineral resource sector in the global system. These changes are particularly relevant for the Arctic as this region is one of the main sources of oil and gas, coal, metals and mineral resources. However, the significant resource capacity might become not only opportunity, but a kind of threat. There is a critical view related to the resource course and possible consequences of Dutch disease syndrome and de-industrialization [96,97,98,99]. To overcome these difficulties, the main focus should be addressed to the sustainable exploration of Arctic mineral resources in the context of modern trends.

One of key issues determining the ways of future development is if the Arctic as a source of traditional energy sources or the critical materials contributed to the up-to-date climate agenda. In the conditions of today’s instability and chaoticity, the best option is balanced development founded on thought-out strategies and plans. However, as it was determined, there are no effective mechanisms for adapting existing strategies to new economic, climatic, and geopolitical problems. This thesis was proven via the deep review of the existing strategies, plans and programs, both Russian and foreign.

Currently, the global resource chains are being modified as the geopolitical and macroeconomic risks cover more and more states. These factors can change radically the REM supply chains in the whole world and the Arctic position in particular.

5. Conclusions

Efficient development of resource potential is one of the most important priorities for the whole world but for Russia it has critical significance. Arctic territories possess large-scale reserves of the following minerals: platinum and palladium (94.6%), cobalt (75%), nickel (70.5%), tin (50.2%), gold (11.7%) and silver (11.2%). The Arctic shelf is one of the main sources of hydrocarbons [92,100]. Such a quantity of reserves might form a sustainable competitive advantage for the national economy [101].

The main goal of the research was to substantiate the necessity of a long-term transformation of the Arctic’s mineral resource base exploration in the context of ESG and the climate agenda, geopolitical and macroeconomic challenges, novel trends and tendencies.

The results achieved are the following:

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Based on a deep trend analysis, the key features of the Arctic’s development and its directions are presented. The certain specifics are determined: a discrepancy between projected and actual regional production figures, a decline in production levels for traditional energy sources such as oil, gas, and coal, compared to planned levels and a faster-than-anticipated growth in the production of strategic minerals such as copper, nickel, and rare metals.

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The impact of modern trends on the sustainable development of mineral resources was identified at different levels—the world, Russia and the Russian Arctic. Novel tendencies might become not only opportunities, but threats as well. Some of them push for critical materials, while another one pushes for returning back to traditional energy sources. The trends might be both unidirectional or multidirectional and have different vectors—increasing or declining relevance. All these features might be taken into consideration in order to ensure sustainable growth.

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The conceptual controversies in development scenarios for Arctic mineral resources are shown. On the one hand, these include geopolitics, macroeconomics and scientific and technological advances, and on the other hand, these include environment, social aspects and governance. Therefore, there is an uncertainty in terms of what to adapt, how to keep balance and what to follow. Based on the controversies found, the hexagon of sustainable development of the Russian Arctic is formed based on six key pillars: governance, scientific advance, economics, social pillar, environment and geopolitics.

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Based on the general vision of the controversies in the development of Arctic mineral resources, three possible scenarios were determined: Scenario 1, “Green transformation”; Scenario 2 “Returning back to traditional energy sources”; Scenario 3, “Keeping balance”. Each scenario outlines a set of structural changes in the politics and strategies for developing the Arctic’s resource potential. The choice of a particular scenario will determine a specific path of transformation, including promising projects, investment directions, energy intensity, methods for ensuring resource endowment and national economic security and others.

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Scenario 3, “Keeping balance”, focusing on critical materials is chosen and justified as a priority as it is in the line with current trends and contributes to the actual climate agenda. It is determined that in the conditions of today’s instability, the best option is balanced development founded on thought-out strategies and plans.

The theoretical significance of this research lies in the development of methodological foundations and principles of sustainable development of the mineral resource base of the Arctic in the conditions of modern climatic, social, and post-pandemic challenges. The practical significance of the research lies in identifying the elements of the strategy for the sustainable development of Arctic mineral resources in the conditions of the energy transition and the climate agenda. Additionally, the study will be continued to develop practical recommendations for government at the state and regional levels and for companies in the mineral resource sector. The results of the study can be used by government authorities in the development of new and improvement of existing strategies for the development of the resource potential of the Russian Arctic. The results can also be used by companies in the mineral resource sector to develop and implement strategies for sustainable development and adaptation to ESG transformations.

The further research will focus on the evaluation of the scenarios offered in order to create a balanced system of the evaluation of SD of the Russian Arctic mineral resource base.