Decarbonising the Mining Industry in Australia

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Amy Steel Senior Manager, Sustainability Solutions - APAC
Dr. Niels Leemput Senior Manager, Sustainability Solutions – APAC
Tomas Molina Senior Manager, Sustainability Solutions - APAC
Mining Industry
Decarbonisation
Australia

Mining in a Low-Emissions Economy” a 3-part report by Clean Energy Finance Corporation (CEFC) and the Minerals Research Institute of Western Australia (MRIWA), drawing on the expertise and insights of ENGIE Impact, is an essential guide for junior and mid-tier mining companies seeking to capture the economic and sustainability benefits of the low-emissions future.

This blog serves as a summary of the in-depth report.

Contributing more than 10% to the national Gross Domestic product (GDP), mining has long been a key source of income for Australia. But the environmental impact is also significant - in 2019, the mining industry represented 6.2% of Australia’s energy demand and 9.5% of greenhouse gas emissions, excluding emissions related to processing commodities offshore. Thus, an emissions-intensive industry such as mining has a critical role to play in decarbonisation and the transition to net zero by 2050. Furthermore, with Australia being amongst the top producers of the world’s key mineral commodities, many of which are crucial to the low-emissions economy, the sector also stands to gain from the transition. Global decarbonisation opens up higher demand for these minerals, making decarbonisation of the mining sector a compelling opportunity to align financial and sustainability goals for competitive advantage, both now and in the longer term.

Challenge of Decarbonising at Pace

The mining sector faces a large challenge of decarbonising at pace due to a multitude of factors - capital and cashflow constraints limit the ability to undertake the investment required. Emission-intensive operations and processes, volatile mine lives and production patterns, varied ownership and operating structures are other contributing factors. Thus, making a decarbonised future a significant transition from business-as-usual (BAU) for these organisations.

But along the entire value chain, momentum is building. There are already tangible solutions for immediate action and the commercial case is strong to help any mine site decarbonise part or all of their operations.

The Case for Immediate Action

Net Zero mining is becoming the expected goal as the business case continues to improve. And delaying action can lead to greater scrutiny from investors, customers, communities, and regulators.

Availability of abundant and cheap renewable energy provides favourable economics over traditional fossil fuel energy systems. Furthermore, despite additional capital requirements, the financial case to decarbonise is positive. Access to lower costs of capital, and the potential to charge higher premiums for low-carbon products, further reinforce the business case.

Technology also plays a significant role in decarbonising the mining sector. Understanding current and emerging technologies, and their applications, is an ongoing imperative, given the pace of change and the individual circumstances of each mining operation.

However, there are still some barriers to full adoption in the market. Emerging technology, such as battery-electric vehicles, are either more expensive or only available in pilot scale, while manufacturers of these technologies await the commercial scale and technology maturity required to make these technologies readily available.

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Accelerating Decarbonisation Through Collaboration

Collaboration can be an effective way to reduce these hurdles. A concerted and regular push by mining companies to adopt these technologies en-masse will provide the market signal both research communities and manufacturers need to mass produce these technologies and in turn lower costs.

We’ve already begun to see the seeds of collaboration on mine sites bear fruit. Rio Tinto, for example, has teamed up with Caterpillar to develop zero-emissions autonomous trucks; BHP has also been active, partnering both with Toyota on a light EV trial at its Nickel West operation in Western Australia, while its subsidiary BMA worked with EV charger manufacturer Tritium to install a charger for electric vehicles going underground at its Moranbah coal mine in Queensland.

Moving from Intent to Action Through Actionable Roadmaps

While the case for decarbonisation is clear to most in the mining industry, moving from intent to action is complex as it involves developing and executing a transformational strategy and managing risk. To meet decarbonisation goals, mining companies should develop asset-level decarbonisation roadmaps and implementation plans. Roadmaps provide a structured approach for decision-makers. An effective roadmap prioritises emission avoidance ahead of reduction or mitigation, is context-driven - budget, scope, and timeline can alter the types of emissions reduction activities a mine is willing to undertake, prioritises technologies that are low risk while being flexible and anticipating the rapidly evolving technology landscape and is analysis driven supported by engineering grade, techno-economic assessments.

Download the 3-part report on cefc.com.au.

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