Reaching Sustainability Goals

Dr Niels Leemput, ENGIE Impact, Australia, outlines the four main strategies that mines can implement in order to set and attain achievable carbon goals.

The mining sector is under a lot of pressure from multiple driving forces to decarbonise and reduce emissions. As more organisations publicly announce sustainability eff orts, there is a growing interest from investors, employees, and customers to reach carbon targets quickly and gain a competitive advantage. There are also operational risks to consider, with increasing energy intensity at mining sites, and of course the potential impacts of more extreme and more frequent climate events. Even mining longevity can be a concern – in an industry that is oft en thought of as ‘outdated’, it can be challenging to recruit top talent, which will be critical in order for these organisations to transform and innovate. The lower mining organisations prioritise sustainability transformation and decarbonisation eff orts, the less resilient they will be to all these risks.

However, there are unique challenges to decarbonising an emission-heavy industry such as the mining sector, and duality on the stakeholder side has prevented companies within this sector from achieving net zero, as economical carbonisation solutions are limited. As a result, miners want to implement green initiatives within the industry, but struggle to unlock sustainability at an exceptional price point.

There has been progress within the sector – many organisations have already begun actively working with clients to find low-carbon alternatives. As mining organisations look to make strides towards reducing carbon footprints, here are four main strategies that could be implemented to help mines set and attain achievable carbon goals.

Build an achievable and fl exible net-zero roadmap

The main challenge when establishing a path to net-zero is developing a roadmap that aligns with the company’s unique situation and sustainability goals. There is no one-size-fits-all approach to net-zero – there are oft en infinite paths to reaching carbon targets, and certain paths are more complex than others.

The level of complexity when building a roadmap is determined by long-term goals. For example, does the company hope to be ‘true green’, with no interaction with fossil fuels? Once the long-term targets are identified, organisations can map out the diff erent paths and strategies that can be taken to reach carbon neutrality. It is key to conduct scenario analysis across a wide range of potential pathways, in order to identify the specific pathways that are the best fit for the mining company’s specific circumstances.

A good example of this approach is the zero-carbon roadmap ENGIE Impact developed for OZ Mineral’s new copper-nickel mining development at West Musgrave, Australia. The roadmap contains a set of pathways that factor in where ENGIE Impact thinks technologies will be in the future. The pathways come with a set of decision gates throughout time, at which the company needs to choose if they are to pursue that particular decarbonisation pathway.

In building a roadmap, it is important to ensure that all stakeholders are part of the process, in order to ensure alignment in priorities and resources. There are varying stakeholders with competing priorities to consider and address. With larger companies, for example, there are typically more resources and budget, but there is oft en a lot of shareholder pressure to maximise the return on investment. For smaller companies, there is less capital, but these companies can aff ord to be nimbler and pivot strategies quickly. In addition to internal stakeholders, there are external stakeholders as well. For instance, regulatory agencies set strict levels of Scope 1, 2, and 3 emissions that mines must strictly adhere to. It is important to have participation and buy-in from all stakeholders when building the roadmap, in order to ensure alignment from the beginning. This will help to prevent roadblocks in the future and streamline decision-making.

Finally, a successful roadmap must allow for flexibility. The path to net zero is not a straight line, and because it can take years, if not decades to achieve, there will inevitably be new challenges, as well as opportunities, to consider. Therefore, the roadmap should be a continuous process, reassessed yearly, and tracked with key performance indicators (KPIs) to account for changes within the sector. It is critical to work with a range of assumptions, high and low, when setting goals and building a roadmap, which helps to leave room to adjust for various external factors, such as: new and emerging technologies, new regulatory requirements, or shift s in market demand for the goods being supplied.

A successful roadmap drives operational eff iciency, bolsters productivity and captures new value streams for the organisation, all while reducing emissions and working toward a zero-carbon future.

Figure 1. Current vehicles that use diesel fuel should be replaced with electric or fuel cell hydrogen mining trucks.

Figure 2. Digital tools are increasingly supporting the mining workforce.

Identify short term goals and quick-win opportunities

Short-term wins should be baked into the decarbonisation roadmap. With a holistic view of the organisation, leadership can identify which mines have the most opportunity for decarbonisation in the short-term and take action to make progress immediately. From there, mines can continue to identify ways to reduce emissions that will have a high impact at a low cost, with quick implementation.

As mining companies typically have a global portfolio, a good first step is to identify where the mine is grid connected. From there, operators can look for ways to start incorporating green power, through leveraging available green power purchase agreements (PPAs) for a part of the electricity demand. Renewable energy is a scalable technology, so mining companies have the benefit of starting small with a hybrid approach and working their way up. Once the availability of renewable energy sources is determined, mines can strategise a safe and economical way to increase their use of renewables over an acceptable amount over time. By starting small, the mine can test reliability and can then scale up.

Mines located off -grid can begin reducing emissions by integrating a limited amount of renewable energy, such as solar PV, to lower field bills without overhauling the entire energy infrastructure. Over time, the amount of renewable energy can be increased, including the addition of energy storage for required supply-demand matching.

Even small steps towards sustainability have a significant impact, particularly when looking at the industry as a whole. Consider if all mines adopted 20 – 30% renewable energy: the global impact would be astronomical compared to one company committing to 100% renewable energy, solidifying the importance of starting at the top to examine the entire portfolio.

Identify and invest in technology

There is a lot of innovation happening in the sustainability space, and mining companies are in a prime position to take advantage of these emerging technologies to support carbon-zero initiatives. For instance, consider electric vehicles (EVs): by replacing current vehicles that use diesel fuel with

electric-powered mining trucks, mines can take a big step in reducing their emissions. In 2019, Anglo American developed a hydrogen-powered mine haul truck, which will help reduce its footprint significantly.1 However, the lack of market availability of hydrogen-powered solutions is still a barrier to entry for many organisations.

Another emerging technology is battery storage. Identifying a sustainable replacement for batteries is an important part of the technology mix as well, especially for off -grid mines looking to leverage more renewable energy sources. Most batteries are designed to be used for a few hours, but if mines need year-round green energy, long-term energy storage at scale is critical. Currently, the only mature technology used for long-duration storage at large scale is pumped hydro storage. For mining sites with substantial elevation diff erences and space to build water reservoirs, this can be an eff ective solution.

Technology is going to play a major role in the decarbonisation of the mining sector, and it is not a secret that it will be expensive to develop and implement new green solutions. It is worth noting that the influence of larger mines can create collective pressure to make technology more aff ordable and accessible. The mining industry has an enabling role to play in bringing the cost of technology down by creating demand, and bigger players have more power to trigger a ‘snowball eff ect’ to drive price premiums down for green products.

Measuring and tracking progress with targeted KPIs

To keep an organisation accountable and on-track with regards to its zero-carbon roadmap, measuring and reporting progress is key. The specific metrics and KPIs that mines should track may diff er depending on the targets, the type and number of mines, location, and so on. Some typical metrics include the energy or carbon intensity of diff erent products – if there is an increasing growth in activity, it is necessary to decrease carbon intensity to put the mine on a trajectory toward net zero. Another common metric is the total share of renewable energy and decarbonisation in the overall mix.

Other examples of economic KPIs that can be tracked to help prove the eff ectiveness of the investment in reducing carbon emissions include the cost of carbon abatement, and the levelised cost contribution of the sustainable solutions. Comparing these KPIs for the opportunities identified allows mines to rank and prioritise them, starting with the most cost-eff ective ones first.

There is an overarching responsibility on the part of the entire executive team to set, monitor and report on sustainability goals, and sometimes these eff orts are even reflected in executive compensation. Without cross-functional participation, it becomes too easy for sustainability to become a secondary priority.

Case study: Vale New Caledonia

In a decarbonised future, the world still needs raw materials like steel, lithium, and nickel to create the products that will enable a transition to zero-carbon. Vale New Caledonia produces nickel predominantly intended for the battery industry, and has recognised the need to produce an end-to-end carbon free product. When committing to sustainable development, studying a zero-carbon solution was the most logical first step to drive both Vale New Caledonia’s mission to care for the environment, and to also further establish competitive strength in the Asia Pacific region.

As a first step in developing its sustainable future, Vale New Caledonia partnered with ENGIE Impact to conduct a concept study to provide insight into the diff erent pathways to carbon neutrality.2 The purpose behind this was to identify the mine’s zero-carbon objective, weighing the possible trade-off s between energy and carbon savings, capital and operational expenditures, and return on investment. Aft er determining a clear strategy and roadmap, Vale New Caledonia identified a trajectory to transition to a zero-carbon nickel and cobalt mining operation within less than two decades, even considering the expected increase in energy consumption.

Conclusion

Mining companies serve every industry within the economy. Even in a decarbonised future, humans will need minerals and materials to reach zero-carbon. Oft en, a downstream process needs to be taken into consideration to achieve this, as the mining sector itself can be considered a Scope 3 industry. By encouraging the identification of renewable sources within the industry, and leveraging new emerging technologies, mines can begin exploring long-term energy options to achieve sustainability goals.

References

1. ‘ENGIE and Anglo American to co-develop renewable hydrogen solution to decarbonize the mining industry’, ENGIE, (2019), https://www.engie. com/en/journalists/press-releases/anglo-american-develop-renewablehydrogen-solution-decarbonize-mining-industry 2. ‘ENGIE Impact Provides Strategic And Actionable Support For Vale New

Caledonia To Reach Its Zero Carbon Target And Boost Competitiveness’,

ENGIE Impact, (2020), https://www.engieimpact.com/news-and-events/ vale-new-caledonia-zero-carbon

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