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With global decarbonization efforts set to trigger strong demand
for metals and minerals, miners must reduce emissions to play their
part in a low-carbon future, according to a senior industry
figure.
To limit global warming to 1.5 degrees Celsius above
pre-industrial levels and avoid climate disasters, the UN estimates global emissions need
to fall by half by 2030 and reach net zero before the
midcentury.
"As we look towards a cleaner, greener global economy…mining is
essential to that low-carbon future," Anglo American CEO Mark
Cutifani said in the Mine and Money London conference this week.
"The metals and minerals we produce are needed for the world to
decarbonize."
Copper, nickel, and steel produced from iron are essential in
manufacturing solar panels and wind turbines, while lithium,
nickel, cobalt, platinum, and manganese are vital in batteries and
fuel cells.
A May 2020 World Bank Group report said more than 3 billion
metric tons (mt) of minerals and metals would be required to make
renewable facilities by 2050 if the world is to steer clear of
climate catastrophes.
But Cutifani admitted the mining sector is facing the challenges
of cutting overall emissions while expanding operations.
"We must reduce carbon emissions and protect the ability of the
planet to absorb the carbon we will still emit," he said.
"Up until now, our industry has solved the supply challenge by
scaling everything up—bigger was better. That is clearly no
longer sustainable, nor is it acceptable."
Last year, consultancy McKinsey & Co. estimated miners were
responsible 4%-7% of global GHG emissions, equivalent to 1.9
billion-5.1 billion mt of CO2 equivalent (CO2e) annually. Of them,
1% were CO2 from mining operations, and the remaining were fugitive
methane during coal mining.
However, when Scope 3 indirect emissions were taken into
consideration, the mining sector accounted for 28% of global
emissions mainly due to the combustion of coal.
In Cutifani's view, miners should minimize their environmental
impact by precisely targeting the products in demand via
digitalization, automation, new separation techniques, and
artificial intelligence.
"The future of mining is about precision ... to target only the
metal or mineral, with radically less waste rock, less water and
energy and a smaller physical footprint, for every ounce, carat and
kilo," he said.
Aggressive emissions goals
Observers said mining is one of
the hard-to-abate sectors amid global decarbonization efforts, with
substantial amounts of fuel required to extract the ore and then
transport. The downstream operations typically involve smelting,
which is energy intensive.
Moreover, mines are often in remote locations where sourcing
significant amounts of renewable energy can be difficult and
expensive.
For its part, Anglo American—one of the largest mining
groups in the world—has adopted new blasting
technologies, improved bulk sorting techniques, and initiated
coarse particle recovery since 2018 in attempts to extract more
metal with less waste in water and energy.
The London-headquartered miner emitted 16.1 million mt of CO2e
from its operations last year, 34% below its projected
business-as-usual levels. This exceeded its target of a 22% cut
established in 2015.
Looking forward, Anglo American is targeting to reduce
operational GHG emissions by 30% before 2030, relative to the 2016
levels of 17.9 million mt of CO2-equivalent, in absolute terms. It
has aimed to achieve carbon neutrality in Scope 1 (direct) and 2
(from energy suppliers) emissions by 2040.
"We recognize our responsibility to support a transition to a
low-carbon economy and have clear pathways to reach carbon-neutral
operations," said Cutifani, who will retire next April.
Anglo American plans to replace its diesel-powered mine haul
truck fleet—which accounts for 10%-15% of its Scope 1
emissions—with newly developed, hybrid trucks that can run on
batteries and hydrogen fuel cells.
"Our hydrogen fuel-cell and battery hybrid pilot truck is being
assembled in South Africa as we speak, and it will generate more
power than its diesel predecessor," Cutifani said.
The 220-mt truck is due to be launched in the Mogalakwena
platinum mine next year before being rolled out to five to seven
sites by 2030, and for wider fleets by 2035.
Also, Cutifani said Anglo American aims to increase the
proportion of renewables in its electricity mix from a little more
than one-third last year to 56% in 2023.
The company wants all the electricity it uses in Chile and
Brazil to come from renewable sources within this year. In South Africa, where its largest
operations are based, Anglo American has teamed up with some energy
firms to help initiate energy transition and reduce power
outages.
"We are looking to enable a renewables grid in South Africa,
aiming to unlock the value of our existing sites as locations for a
geographically dispersed network of renewable energy sources across
the country. Thus, generating renewable energy at scale and
wheeling it through the grid to all different operational sites,"
Cutifani said.
Anglo American plans a combination of off-site wind farms,
on-site photovoltaic farms, potential pumped hydroelectric storage,
and green hydrogen production facilities in South Africa with an
aim of increasing the grid capacity of renewable energy by more
than 50%.
In October, the miner unveiled a target to halve
Scope 3 emissions by 2040. Anglo American said this will involve
decarbonizing steelmaking but has yet to provide much detail.
"We know we cannot get there alone, particularly for Scope 3, so
we are working with partners along our value chains and outside our
industry to find technical solutions to decarbonize entire
sectors," said Cutifani, without elaborating.
While emissions from maritime transportation are generally
categorized as Scope 3, Anglo American has set a separate target of
carbon-neutral shipping by
2040. The company said this could be achieved by adopting new
marine fuels like sustainable biofuel and green ammonia, among
other options.
Opportunities and challenges
With booming commodity prices and strong demand outlook, the
mining sector has garnered more interest from investors in recent
quarters.
Evy Hambro, team leader for the natural resources team of
BlackRock's Active Equity Group, said miners are at "a fascinating
point" in the cycle.
"This cycle has all the hallmarks of being much greater duration
relative to previous ones… When we think about the essential nature
of resources towards the carbon transition, we are going to see
decades of demand growth," Hambro said in the conference.
If the Paris Agreement's climate goal is to be reached, the
International Energy Agency expects mineral demand for
clean energy technologies to rise by at least four times by 2040
from 2020 levels, driven by high growth for electric
vehicle-related materials like graphite, copper, and nickel in
particular.
But Hambro said the end-users of mining products will
increasingly take into account the miner's carbon footprint and
social credentials, such as its relationship with local community,
when it comes to pricing.
"You're going to need to have a great level of Integrity
throughout the entire supply chain," he added. "Customers will pay
different prices."
With the pricing pressure in a global market, IHS Markit's
Director for Pricing and Purchasing Service John Mothersole said
miners will most likely need to decarbonize or accept discounts for
their products.
"I do not see how individual actors, whether large state-owned
enterprises or private firms, escape the drive to decarbonize,"
Mothersole told Net-Zero Business Daily.
Adam Matthews, chief responsible investment officer of Church of
England Pensions Board, suggested sector-wide decarbonization
standards still need to be established to help investors evaluate
each miner's performance.
Climate Action 100+, an initiative launched by over 615
investors with $60 trillion assets under management, has recently
started to discuss net-zero targets with major mining groups.
Those investors and Anglo American, BHP, Glencore, Rio Tinto,
and some others will seek to define "green revenues" and
Scope 3 emissions for miners and address issues like the alignment
with Paris Agreement.
While recognizing the importance of industry standards, Ayuna
Nechaeva, head of Europe's primary markets at the London Stock
Exchange, said governments should avoid overzealous regulations for
now.
In October, her company issued a reporting guidance for listed
companies that want to adopt the Taskforce for Climate Related
Financial Disclosures (TCFD) framework. UK authorities have only
required companies with a premium listing (usually blue-chip
trading or investment firms) to follow TCFD standards, but the
scope is expected to be widened from next year.
"I think it's important to not over-regulate," said Nechaeva,
adding that many companies have operations in countries where
emissions rules are not yet established. "For them, it will take a
little longer and a little bit more effort to get [things]
together."
Posted 03 December 2021 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability
RT @SPGlobal: Many nations have set #NetZero Emissions by 2050 as their climate goal. Will be enough minerals to meet the requirements? Joi…
Jul 11
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