Mining has a fundamental role to play in the world's transition to low-carbon
The world is transitioning to a low-carbon economy, and it is clear mining has a fundamental role to play. Mined materials and minerals including bauxite, iron ore, copper, lithium, and borates are essential commodities for the wind turbines, solar photovoltaics, electric vehicles and energy storage technology required for a future low-carbon society.
At the same time, the extraction, processing, transportation and use of these commodities is emissions intensive. These scope 1, 2 and 3 emissions require miners to assess a range of carbon reduction measures, combining investment, extensive capital reallocation, innovative technologies, and partnerships at all stages of the value chain.
Alongside the growing sense of urgency on climate, concerns about the adverse impacts of mining on the environment and on those living in proximity to prospective and operating mines, continue to challenge the sector.
So, what does net zero look like for miners and what will it take to get there? And how can this essential industry contribute to the pursuit of global sustainability?
Scope 1: direct emissions from mining operations.
Scope 2: indirect emissions incurred from the purchase of power to run mine operations.
Scope 3: all indirect emissions that occur in the value chain, for example shipping, the use of coal or gas for electricity as a heat source in production processes, or where a kiln is used in the processing of the product i.e. limestone is heated to produce cement, or spodumene is heated to produce lithium.
Net zero ambition
Mining is estimated to be responsible for four to seven percent of greenhouse gas (GHG) emissions globally. To become carbon neutral, mining companies must calculate their carbon footprint, reduce their current emissions to the point where it reaches a balance, and neutralise what they cannot lessen with carbon removal projects, including reforestation and other nature-based solutions. A final option is purchase of carbon credits.
With pressure growing, several mining houses including BHP, Rio Tinto, and Vale have announced commitments to reach net zero for scope 1 and 2 emissions across operations by 2050. Others, including Fortescue Metals Group (FMG) and Anglo American, have set commitments for 2030 and 2040 respectively. For the leading diversified miners, these ambitions have meant a significant shift in strategy in what they extract, as well as actively engaging in partnerships to explore ways to improve environmental performance across the full value chain. For some, this has included divestment of coal assets, as well as exploring low-carbon technologies in the value chain, including green steel. FMG’s subsidiary renewable energy business, Fortescue Future Industries (FFI) has made hydrogen, produced from renewable energy, the centrepiece of its plan to become a clean energy producer. With emissions varying across commodities, miners are reviewing each asset. Solutions vary based on each mine’s location and the maturity of technology, with the key challenge focusing on the availability of a commercially viable solution.
For greenfield developments, our experience would suggest miners are actively investigating the integration of captive grid solutions. Using electricity produced from renewables will enable eradication of most scope 1 and 2 emissions, albeit the storage technology to manage intermittency remains a challenge. The task for those looking to retrofit existing mines however, is far greater, requiring installation of new infrastructure alongside the physical interfaces to tie into an existing operation. The challenging resource-driven nature of the economy as well as the impact of the pandemic will mean for some, the capital to invest may not be readily available. However, the opportunity to harness renewable energy at the mine must be weighed up against the added benefits of reducing logistics costs, as well as risk associated with remote site fuel availability.
Increased pace to decarbonise has seen miners pilot diesel fuel replacement in mobile fleets and rail networks. Several mines around the world now have operational battery driven trucks and trolley assists. These are the next frontier with benefits not only in reduced carbon emissions, but in cost savings and improved health also. The introduction of low-carbon fuels for shipping with options including liquefied natural gas (LNG), methanol, biofuel, ammonia and hydrogen is also promising.
Exploring technology to reduce emissions
Reducing carbon dioxide emissions is at the heart of the energy transition. Carbon capture, utilisation and storage (CCUS) is a group of technologies that can capture up to 95 percent of the CO2 emissions produced by using fossil fuels in electricity generation and industrial processes. This is enabled through underground storage. Both Glencore and BHP are exploring this option to support the offsetting of thermal coal from their portfolios. CCUS is not new, with several examples of the technology in operation including the Chevron-operated Gorgon LNG in Australia, and Shell-operated Quest in Canada. Yet, commercialisation remains the challenge. Intense focus is currently directed on analysing the main cost drivers and developing cost estimates for concepts that support the reduction of costs associated with capture, use or disposal.
Presenting commercially viable options with a clear implementation programme will be key to investment in these innovative technologies.
The societal case for miners to decarbonise
As focus on decarbonisation gains pace, it is crucial the mining of the critical metals needed for green technologies is done in a way that maximises benefits to society as a whole and minimising impacts on the environment. Lenders and investors are approaching the issue of climate change and energy transition with concern, requiring proof of what miners are doing in the environmental, social and governance (ESG) space. Moving beyond compliance, miners can demonstrate commitments to local communities in developing broader social development opportunities such as local content and supplier support schemes or skills training programmes. Embedding sustainable procurement practices not only provide increased opportunities for sustainable prosperity, but also the potential to accelerate the transition to a low-carbon economy. We are seeing considerable opportunities to reduce the amount of embodied carbon on major infrastructure projects through choice or raw materials, monitoring how far materials are shipped and how much cargo is carried at one time.
A shared global challenge
It is clear climate change is a global challenge, requiring collaboration and action across nations, industries, and society at large. Reaching net-zero will require substantial investment, but increasingly miners are seeing opportunities to create new industries and operating models. New technologies, partnerships and effective government policies are key to achieving this goal, as is an understanding of how the mine can shape opportunities within the local community.
Right now, there is an urgent need to develop asset-by-asset decarbonisation roadmaps, with robust scope, cost and schedule baselines. Transitioning these into asset planning strategies will also be critical both at portfolio and mine site level. In doing so, miners will drive the development of decarbonisation projects that are both economically viable and implementable, and the mining industry as a whole will gain pace on its journey to reach net zero.
About Turner & Townsend
Turner & Townsend is an independent professional services company specialising in programme management, project management, cost management and advisory across the real estate, infrastructure and natural resources sectors.
With 111 offices in 45 countries, we draw on our extensive global and industry experience to manage risk while maximising value and performance during the construction and operation of our clients’ assets.
For more information please contact
Managing Director of Mining
t: +27 (0)21 421 7001
For further information on any of our services visit our website
© Turner & Townsend (Proprietary) Limited. This content is for general information purposes only and does not purport to constitute professional advice. We do not make any representation or give any warranty, express or implied, and shall not be liable for any losses or damages whatsoever, arising from reliance on information contained in this document.
It must not be made available or copied or otherwise quoted or referred to in whole or in part in any way, including orally, to any other party without our express written permission and we accept no liability of whatsoever nature for any use by any other party.