In order to remain competitive in an evolving market and maintain their social license into the future, mining companies need to find ways to operate efficiently and sustainably. By 2030, at least 25% of mining production will be vulnerable to climate-related risks.
Mining companies see climate change as an operational risk predominantly due to water stress and floods that endanger their assets. In parallel, GHG emissions continue to accumulate, with emissions from the mining sector accounting for nearly 30% of the global total.
Recognizing growing climate-related risks and the profound impact on global emissions, investors are moving away from high-carbon assets as companies continue to invest in resilience zero-carbon solutions.
Increasing concerns for sustainability, accompanied by pressures from key stakeholders, call for accelerated sustainability transformation and greater transparency from the mining industry.
What sustainability challenges is the Mining Industry facing today?
First movers in the industry are targeting zero-carbon operations by 2030. However, many companies lack the expertise, technologies, and capital to transform at the necessary speed and scale to drive operational excellence and resilience in the global marketplace. According to ENGIE Impact's analysis of CDP reporting data, only 19% of mining companies reporting to CDP are on track to meet their sustainability goals. These companies face several challenges:
- Operational resilience: To optimize mining operations, companies must increase productivity while managing costs. However, high and volatile commodities, fuel, and electricity prices in the global marketplace pose significant barriers. Energy accounts for roughly 15% of a mine's total cost of production. Companies must strategically invest in core assets that enhance operational efficiency.
- Bringing digital to life: In an era of rapid technological progress, including autonomous vehicles, drones, IoT real-time data capture, and blockchain implementation, companies must strategize their investments' scale and timing. While automation acts as an enabler for supporting remote workforces, cybersecurity becomes a critical concern in the absence of on-site monitoring.
- Stakeholder demand for sustainability: An inadequate response to climate-related risks is met with reputational and financial risks. Many mining markets, including those that cater to the renewables industry, such as nickel, cobalt, lithium, rare earths, and minerals sands, face rising pressure from governments, customers, and shareholders. Mining companies must go beyond a myopic focus on profit and productivity and drive sustainability transformation that captures new value streams in the long term.
- Social licensing and reputation: Securing social license has become increasingly dependent on positive externalities to communities near mine sites. As reputational aspects become increasingly tangible, companies must take a socially responsible stance to compete with tech-heavy industrials for the best talent.
What should the Mining Industry be thinking about?
Accelerated sustainability transformation is crucial for mining companies to remain competitive in the future. Operating in a dynamic market, these companies must leverage digital tools and technologies to optimize operations, clean energy supply, and extend decarbonization.
- Transition towards decarbonized operations: Decarbonization is a critical element of a mining companies' long-term strategy to maximize shareholder value. Strategic decarbonization driven by modern tools and technology is necessary to reduce emissions while fostering productivity. Companies must adopt suitable, innovative solutions, such as green mobility, which accelerates the transition to low-carbon mobility while optimizing fleets for the lowest total cost of ownership.
- Financing and implementing renewable power: Strategic capital allocation plays a vital role in driving efficient global implementation. Companies are tasked with finding the most appropriate financing model for accelerated sustainability transformation. Success and reduced emissions rest on the seamless implementation of reliable power sources, including thermal solutions, on-site generation, storage, PPAs, VPPAs, offsets, and more.
- Leveraging big data for operational resilience: Today, due to the declining cost and proliferation of technologies, companies can generate big data using advanced analytics and simulation tools that were not economically viable in the past. The resulting big data, when analyzed appropriately, enhances predictive maintenance, ultimately positioning companies to bolster productivity and secure long-term resilience.
- Accelerating technology transformation: Automation and digitalization drive targeted and efficient mining, facilitated by technological breakthroughs in areas such as in-situ leaching/block caving or biomining. Complimenting enhanced efficiency, companies reduce long-term operational costs by investing in technologies and R&D.