Mining Sustainability 4: Climate Change and the Decarbonisation Challenge

This is the fourth report from RFC Ambrian in our series on sustainability in the mining industry. This report is about climate change. We take a closer look at the mining industry’s CO₂ footprint, what GHG emission targets mining companies are setting, and examine what they are doing to reduce their carbon footprints, particularly though the decarbonisation of energy. We also take a look at how climate change is affecting mining assets and how the industry is building resilience.

Managing Climate Change: In recent years, sustainability issues have moved beyond the original environmental, social and governance (ESG) categories to also encompass climate change. Some companies include climate change within environmental, others as a separate issue. Climate change sustainability is still at an early stage of analysis, understanding, and implementation by the industry, not just by the mid-size and junior market, but also by the majors as many are still working out their strategies.

Climate Change Disclosure: The first steps to reducing a company’s GHG emissions and CO₂e footprint are appropriate and effective governance, climate-related emission disclosures with future targets, and a pathway with sufficient investment to achieve those targets. Mining companies are slowly increasing their climate-related disclosures, setting targets, and are now starting to undertake energy decarbonisation. At the same time, governments and private-sector entities are now considering a range of options for putting more pressure on companies to reduce their global emissions.

Performance Still Needs to Improve: For the leading mining companies, GHG emission reporting to government and non-governmental schemes has become part of the overall business strategy. However, most mining companies’ published emission targets tend to be more modest than the Paris Agreement goals. Furthermore, in the August 2019 Progress Report from Climate Action 100+, it stated that despite some significant announcements, the mining & metals sector is underperforming against most key climate change assessment indicators. Many companies have to improve their governance and climate-related financial disclosures.

Decarbonising the CO₂ Footprint: Mining companies are now accelerating their actions to reduce their CO₂ and other GHG emissions. Mining assets are generally long-lived and energy intensive and so reducing emissions and ultimately moving to net-zero emissions requires long term planning and a thorough understanding of low emission improvements through efficiencies and technology. Mining assets connected to established electricity networks are increasingly procuring renewable electricity directly from utility companies. While isolated mining assets are considering a greater proportion of self-produced, lower carbon energy located at or close to their operations. This means building their own renewable energy sources, principally solar and wind generation, and sometimes energy storage.

Building Climate Change Resilience: The mining industry is familiar with harsh operating conditions, both in terms of the physical environment and the weather extremes. However, weather patterns appear to be changing, and are widely believed to be due to climate change. Extreme weather conditions have become more frequent and the outlook is for that trend to continue and intensify. Climate change has the potential to change existing risk profiles. Companies will need to respond dynamically to increase business resilience, integrating climate change considerations within existing risk management and planning procedures.

For the full 36page report please click here.