CDP: Top mining firms risking $16bn in climate costs

A study of 12 global mining firms worth almost $300bn shows that the group’s collective value chains contain up to 30 times more carbon than their own operations, with scope 3 emissions estimated to be 2.36 gigatonnes of CO2 last year – the equivalent to India’s annual CO2 output.

The industry spends more than a quarter of its capital expenditure on fossil fuels, according to the report, despite spending almost half on low-carbon materials such as copper and nickel. The report’s warning to the sector is stark, with estimates indicating that a quarter of mining production will be exposed to climate-related threats such as drought and water shortages by 2030.

“The mining sector must take stock and not risk being left behind in the global transition towards a low-carbon economy,” CDP chief executive Paul Simpson said. “Miners depend on continuing demand for the commodities they supply and the countries consuming the most commodities are making drastic changes in addressing climate change.”

Changing grounds

The report cites events such as China’s move to put a price on carbon and the recent recommendations of the FSB’s Taskforce on Climate-related Financial Disclosure (TCFD) as factors of increasing investor pressure for mining companies to accelerate their decarbonisation shifts.

Sections of the industry have in fact moved to improve their low-carbon resilience in recent years through reduced operational emissions and scaled down thermal coal exposure, the report found. But this is offset by twice as much oil and gas production over the past six years.

Of the 12 companies benchmarked on climate issues within the report, only one has a commitment to fully decarbonise by 2050. Freeport-McMoRan, First Quantam Minerals and Vedanta Resources were singled out as the worst performing firms in the sector, all scoring poorly in areas such as managing physical risks and climate governance and strategy.

CDP senior analyst, investor research Tarek Soliman said: “As a sector with a significant carbon footprint and that supplies the wider economy, mining is faced with the reality that a low-carbon transition will impact many of the industries that currently demand its commodities.

“Accordingly, the companies we featured in our research will need to adjust their long-term strategies to reflect the changing grounds in carbon regulation and commodity consumption trends in light of events such as China’s proposed carbon pricing scheme.”

Mining innovation

Responding to the report’s findings, Vedanta’s chief executive Tom Albanese told edie that carbon emissions are high on the company’s agenda. He pointed out that Vedanta is currently in an expansion phase, ramping up aluminium smelters and power plants built in 2012.

“We have been leading efforts in building new technology and innovation for improving emissions efficiency,” he said. “It is important to recognise that renewable technology, more distributed power systems and a move towards electric vehicles (EVs) will have a huge positive demand effect on copper, aluminium, cobalt and other metals.”

Mining companies are increasingly looking towards innovation to reduce the industry’s carbon footprint. Anglo American’s diamond unit De Beers recently confirmed it will lead an energy storage project to deliver carbon-neutral mining in as little as five years. De Beers has said the work being undertaken by its project team could have significant applications for the wider mining sector, as the ideal carbon storage characteristics of kimberlite rock are also found in rocks mined for other commodities, such as nickel and platinum.

George Ogleby