Major miners shift away from fossil fuel assets as researchers call for more ‘carbon accounting’

Carbon accounting mining climate change environment green minerals coal
While decarbonising is a challenge for miners, the impact of climate change could also come with a high cost due to higher incidences of severe weather events that can disrupt operations and cause damage.

As the mining sector feels the mounting push to shift away from fossil fuel assets, University of Queensland (UQ) researchers claim carbon accounting in the sector is “more urgent” than ever with exploitation of “green minerals” expected to grow to feed the renewable energy revolution.

This year’s African Mining Indaba conference in South Africa has presented another platform urging miners to decarbonise and shift towards sustainable operations that are more efficient with water and energy consumption, as well as waste management.

Anglo American’s chief executive officer Mark Cutifani used this week’s conference as an opportunity to speak about major industry challenges including climate change.

“Climate change is one of the defining challenges of our time. We cannot ignore or underestimate its global impact,” he told conference attendees.

He pointed out mining has changed over the last three decades with many operations facing declining grades – particularly in the copper sector. This alone requires more energy and water to produce the same amount of ore that was generated 30 years previous – adding even more pressure to precious limited resources such as water.

Mr Cutifani added the industry needs to transition to safer, more sustainable and cost-effective way to supply essential minerals to the world.

He said Anglo American’s strategy is to use new technologies to assist with its own targets including reducing greenhouse gas emissions and a 30% increase in energy efficiency by 2030.

Thermal coal sell-off

As part of Anglo American’s emission reduction strategy, Mr Cutifani said the company would evaluate selling its South African thermal coal assets this year.

Other major global miners including BHP Group (ASX: BHP), Rio Tinto (ASX: RIO) and South32 (ASX: S32) have all publicly stated they were attempting to reduce their respective carbon footprints and have implemented various measures to meet decarbonisation targets.

Rio was first of the mark – offloading its coal assets in 2018, and currently has a fossil-fuel free portfolio.

BHP committed US$400 million to reduce scope one, two and three missions last year and is rumoured to be looking into selling its own thermal coal assets.

Similarly, South32 is in the process of selling its South Africa Energy Coal assets to a subsidiary of Seriti Resources.

Big investors begin to move away from coal

The climate change debate has picked up pace in recent months – shored up by the recent disastrous fires across Australia.

Despite miners making some effort to reduce emissions, investors, climate activists and experts have publicly stated more change is needed.

One such investment vehicle to come out publicly is the world’s largest fund manager BlackRock, which controls about $10 trillion of global funds.

Last month, BlackRock chief executive officer Larry Fink informed investee company boards that BlackRock was factoring climate change into its long-term investment strategy.

He stated this would also include BlackRock boosting the amount of sustainable investments in its portfolio.

The new direction will include paring back investments in businesses that generate more than a quarter of their revenue from thermal coal.

UQ researchers may have answer for miners

As climate change pressure mounts for miners, UQ released a framework this week that may make the carbon emission reduction process easier.

According to the university’s Sustainable Minerals Institute researcher and lead author Dr Mehdi Azadi, primary mineral and metal production generated 10% of the world’s energy-related greenhouse gas emissions in 2018.

However, Dr Azadi said the university’s framework will help address the amount of emissions by identifying major mitigation pathways and examining sources of emissions throughout the entire supply chain.

Dr Azadi pointed out that while the industry contributes to greenhouse gas emissions, it was also increasingly affected by climate change.

The sector faces drought, and other extreme weather events such as flooding that disrupt operations, increase risk and destroy infrastructure – driving up operational costs.

“Using this framework, we hope to collaborate with governments, the mining industry and research institutions to create guidelines or toolboxes for certain commodities, climates, countries and operations,” Dr Azadi explained.

“Our framework will help the industry reduce its carbon footprint and provide financial benefits by lowering energy consumption across the supply chain, while also decreasing the adverse environmental impacts caused by mining operations.”

He said the framework was able to be tailored to a specific commodity, mining operation, climate or country.

“This isn’t just about reducing mining’s effect on climate change, it is also about reducing climate change’s effect on mining; the industry needs accurate data to reduce its carbon footprint and improve risk management.”

Carbon accounting in mining

Meanwhile, University of Delaware Prof Saleem Ali said carbon accounting in mining was “increasingly important”.

He said this was because exploitation of minerals for clean energy infrastructure was growing.

“Understanding the full carbon budget of extraction is important in considering a range of potential supply sources and processing technologies,” he added.

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