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Mining & Metals Decarbonisation Pathway

By 15 November 2021ESG, Mining Sustainability, Reports

Financial institutions, insurance firms, shareholders and other stakeholders are grappling with their exposure to the mining and metals sector in light of climate risks, societal pressure and regulatory headwinds.

In response, effectively all major mining companies have a stated target, or ambition to achieve net zero emissions by 2050 (or earlier) and have outlined strategies to achieve these ambitions.

Net zero claims for the mining industry are bold – and will require billions of dollars to achieve. Establishing credible decarbonisation strategies and pathways are essential to the industry’s success in a carbon constrained future and gaining continued support from stakeholders.

A framework to critically evaluate decarbonisation pathways of major miners, and a review of BHP, Rio Tinto, Vale and Anglo American.

This report had its genesis in a recent conversation with a CEO from a major global insurance company, who outlined a remarkable viewpoint. The insurance company in question has significant exposure to major mining companies and were re evaluating their support for the entire mining industry – to the point of withdrawal of insurance underwriting. Soundings with other material stakeholders echoed a similar viewpoint to varying degrees.

This viewpoint arises from the perception of mining as an inherently unsustainable industry, and one which presents significant transition risks. Stakeholders are not sure if their mining and metals clients are doing enough to decarbonise, or if clients are simply providing lip service to placate stakeholders whilst continuing business as usual (the dreaded perception of ‘greenwashing’). Whilst those in the mining industry are looking to increase the production of raw materials critical to decarbonising the global energy supply, institutions which enable the industry are struggling to evaluate the credibility of the industry’s ability to do so whilst decreasing emissions in a sustainable manner. Such an outcome presents a significant challenge for society.

It is in this context that RFC Ambrian developed a framework specific to the mining industry to guide the evaluation of mining and metals decarbonisation efforts and probe the credibility of stated decarbonisation targets.

This report sets out why credible decarbonisation strategies matter, the risks of getting it wrong and the methodology behind the RFC Ambrian decarbonisation framework. The framework is applied to some of the largest diversified miners – BHP, Rio Tinto, Vale and Anglo American – to critically evaluate their proposed strategies and pathways and, alongside identification of some pitfalls, presents the outcomes and conclusions of the analysis.
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Stefan Skorut
+61 2 9250 0004
stefan.skorut@rfcambrian.com

David Bird
+44 (0)20 3440 6800
david.bird@rfcambrian.com

Corporate Broking
Charlie Cryer
+44 (0)20 3440 6834
charlie.cryer@rfcambrian.com