GLOBAL mining companies have done a lot of work in the last few years to measure and plan reductions in their scope 1 and 2 greenhouse gas emissions.
Doing the same exercise for scope 3 emissions is difficult, representatives of Anglo American and Rio Tinto admitted on Wednesday.
In a panel discussion on climate change and sustainability, Froydis Cameron-Johannson, Anglo’s group head of international and government relations, said the group’s target was a 30% reduction in absolute emissions by 2030 from 2016 levels.
In general, the group was making progress, although it was hard for the operations in South Africa to reduce scope 1 and 2 emissions (direct emissions from own activities and indirect from emission of purchased energy) because of the electricity grid’s dependence on coal-fired power.
She said mineral resources and energy minister Gwede Mantashe’s recent commitments to put more renewable energy into the grid will assist Anglo to meet these targets.
But scope 3 emissions are not a simple matter, she said. Anglo American does not set a target without knowing how it can meet it. Cutting scope 3 emissions (which arise from the company’s value chain, both upstream and downstream) means working with customers and understanding where emissions arise along the value chain.
The effect of this analysis is that the mining sector is moving more towards partnerships than simply selling a product to its customers, she said. For mining, scope 3 is mainly related to steel and energy, and lowering emissions can be achieved by using technologies such as carbon capture and storage.
Simone Niven, group corporate relations executive at Rio Tinto, said the group has been refining its approach to climate change for two decades and released its first climate change report last year. But it continues to grapple with performance metrics.
Niven said the aluminium value chain was different from the steel value chain. Rio Tinto controls its own value chain in aluminium, from mining to processing and shipping, which gives it considerable control over emissions. It boasts one of the “greenest” aluminium products in the world and is a founding member of the Aluminium Stewardship Initiative.
Although Rio Tinto’s iron ore business has fairly low emissions, the process of shipping it is emissions-intensive, Niven said. Last year Rio Tinto partnered with a Chinese steel mill to share technology, not only relating to emissions reduction but also environmental performance, and it will have similar discussions with its Japanese steel mill customers.
Shirley Webber, head of natural resources coverage at Absa CIB, said the focus of the bank’s credit committee discussions are changing. There are three important loan criteria: whether a project is commercially viable, the quality of management and the project’s impact on the economy, environment and society, including whether there better ways to extract natural resources.
Asked whether Absa CIB will continue to finance fossil fuel projects, Webber said the credit committee was in the process of re-examining what it will not finance. The current position was that Absa CIB will continue to support its clients. However, if a client’s exposure was 80% in fossil fuels, they would be advised to increase diversification, for example by adding battery minerals.