BHP to switch from coal to renewables at two major mines
Mining and metals giant BHP has unveiled plans to switch to 100% renewable power at two of its largest copper facilities, as it strives to develop science-based emissions targets.
The company has this week signed a string of four clean energy power purchase agreements (PPAs) for its huge mining operations in Escondida and Spence, Chile, with utility Enel. Two of the contracts are 15-year agreements and the remaining two contracts last for 10 years.
BHP claims the deals will enable both facilities to switch to 100% renewable power across all operations by the first half of 2022, while also containing “flexibility” to meet any future increase in energy demand.
The company estimates that the switch will remove three million tonnes of power-related (Scope 2) emissions from its carbon footprint annually by 2022 – equivalent to taking 700,000 diesel cars off the road.
From a financial perspective, BHP believes the switch will reduce overall annual energy costs for the Escondida and Spence facilities by one-fifth. This means that, although the firm will have to spend $780m on cancelling its existing coal contracts ahead of time, it is anticipating the shift to generate a net positive result.
“This is an important step in our transition to sustainable energy use over the medium term in Chile,” BHP Minerals Americas’ president Daniel Machuk said.
“These new renewable energy contracts will increase flexibility for our power portfolio and will ensure security of supply for our operations, while also reducing costs and displacing CO2 emissions.
“Good business considers the financial and social value in making decisions in the long-term interests of shareholders.”
The news comes shortly after BHP revealed plans to set a science-based target for its Scope 1 (direct) and Scope 2 (energy-related) emissions within the next two years. The company is already targeting a short-term goal of capping its absolute carbon emissions at 2017 levels through to 2022, with the science-based target due to offer more long-term direction.
BHP will additionally begin linking emission reductions to executive pay from 2021and undertake 2C scenario analysis ahead of its inaugural climate portfolio analysis report, due to be published in 2020.
Building on this announcement, BHP’s chief executive Andrew Mackenzie has confirmed that the company will publish data on its Scope 3 (indirect) emissions for the first time next year.
Speaking at BHP’s annual meeting in London earlier this month, Mackenzie reiterated that “global warming is indisputable” and claimed that the firm is ahead of many rivals in the move to decarbonise.
These sentiments were not well-received by green protestors present at the event, who argued that action should now be taken to shrink the global mining sector in order to meet climate targets and preserve natural habitats.
In response, Mackenzie said that copper demand is currently growing due to the global transition to electric vehicles (EVs). “Mining is the locomotive of the green future - that is not greenwashing, that's reality,” he said.
In related news, BHP’s board recently voted against a shareholder resolution which would require the firm to cease membership of any trade bodies which have advocated in ways deemed to be “inconsistent” with the Paris Agreement. However, given that one in five members backed the amendment, green groups believe a tipping point in this space is on the horizon.