The low-hanging fruit will be picked over the coming decade
Miners are accelerating decarbonisation plans to reduce greenhouse gas (GHG) emissions, but challenges are just around the corner, according to speakers on a PDAC 2021 panel discussing ESG performance in mining.
Moderating the panel, Mark Fellows, co-founder and principal at London's Skarn Associates, looked past current Scope 2 emission reduction activity to looming challenges with Scope 1 emissions.
"There is a crunch period around 2030 as miners run out of easy options to reduce their GHG. The low-hanging fruit gains will be reducing Scope 2 emissions related to their energy matrix, but the challenge will be the Scope 1 emissions, reducing the diesel emissions of mobile equipment," said Fellows.
However, Teck Resource's Chris Adachi said things might well change more quickly than people expected.
"This is a quickly evolving space and we can see pathways within the next decade to get pretty meaningful changes in how we power material movement," he said.
"There is a collective dialogue within the industry and with equipment manufacturers that this is a real challenge that we need to deal with now. The ICMM [organisation which brings together 27 of the largest mining houses] reached out to large equipment manufacturers to get battery electric or hydrogen alternatives into our mines in the next five or 10 years, not 20 years down the road. This is going to evolve quicker than people expect and there will be commercial, proven technologies within this decade."
Alistair Finerty of Standard Chartered, a leading lender to the mining sector, said emissions factors were increasingly driving business decisions in the mining sector and would continue to grow as emissions and ESG data improved.
"We aim to achieve net zero in our financings by 2050 and we need ESG data to understand the impact our financings have on GHG emission," he said.
"Two-thirds of global investors say data is the biggest impediment to integrating ESG into their investment decisions. To make informed decisions we need accuracy, granularity and consistency. The plethora of rating agencies is frustrating for miners and the finance sector. Without proper auditing of emissions data we won't be able to make a full and dynamic determination of emissions of our investments as a bank."
Finerty said mining clients were actively looking at portfolio reshaping, whether including the reduction of high emission assets or the acquisition of low emission assets or battery minerals needed for the energy transition. "The sine qua non for acquisition opportunities will be for companies to position themselves better on GHG curves such as Skarn data. This is another lens business development personnel can use to evaluate the landscape of opportunities. Mine cost curves and GHG curves will eventually morph into one," he said.
Change will be facilitated by the development of a market for carbon offsets and premiums for the production of low-carbon metals, although "for carbon to be embedded in price it first has to be quantified", Finerty said.
"To enable the transition to a low carbon world we need to start with high quality data."
Panelists said reliable and consistent data was a key theme, for ESG to be more than just a box-ticking or marketing exercise, which Skarn's Fellows said was the operationalising of ESG, "to move away from committees to how to make this real and measure it in a consistent way and make it part of management feedback loop".
"It is becoming extremely important in the decision making of the industry," he said.
Dr Sarah Gordon, of the Satarla risk management consultancy, said companies should look at metrics that pertain to impact and action rather than management systems.
"What are you actually doing? Ask the right questions in a way that is understandable and have empathy for the person who needs to fill in the metrics. ESG is not just about how to stop threats as it is through ESG where we can identify huge shared value with net inputs to a local area," she said.
This article first appeared in Mining Journal on March 11