Albeit our serene blue and green globe has been witnessing climate change for millions of years, ever since the advent of industrialization, anthropogenic activities have expanded unscrupulously and that too, without an iota of reverence to Mother Earth.
We are sadly at the brink of the inevitable – witnessing the planet’s vulnerability to large scale natural devastation. And as these impending disasters become more severe, nature continues to remind us of the mindless perpetration of injustice by humans on its environment – drastic changes in weather patterns, recurrent cyclones, aggressive global warming, melting of glaciers, rise in sea levels, uncontrollable forest fires are only a few in mention, among the other unseen natural calamities.
Man has also begun to measure the social impact of natural disasters and the complexities ingrained therein, in monetary terms.The total monetary damage on account of Hurricane Ida (USA, 2021) was more than 75 billion USD, in terms and over Rs 1 Lakh Crore for Amphan, (India, 2020) (Blunden and Boyer 2022).
As the darkening clouds of climate change loom large, posing irreconcilable threats to humanity, every sector, irrespective of the nature of its business, is doing its utmost to meet climate change goals. For example, bankers and investors have decided to either fund or invest in companies with high Environmental, Social, and Governance (ESG) scores.
Some companies, as part of their investigative processes to classify material risks and growth opportunities, have started working toward improving their individual ESG scores. Policymakers are coining new policies on incentivising decarbonisation, as well as levying penalties on not doing enough with carbon tax, so as to minimise the risks caused by the uncertainties of unpredictable weather patterns.
The World Bank in its efforts, has authored a set of instructions for mining companies to turn Green, in order to help them attract investments.
Mining companies contribute to 2-3% of the global carbon-dioxide emission. Realising high cost of capital to the tune of 20-25% more with respect to low ESG scores, many mining companies have now started working on it and some have even made the net zero announcement public.
Stakeholders are also demanding steps for improving ESG performance and their initiatives to counter climate change are now bearing fruit under new names like Climate Smart Mining and Green Mining (Legge et al. 2021). With growing stakeholder concerns related to climate change, companies are now proactively embarking on actions needed to fructify the concept of Green Mining, especially on SDG 7 and SDG 13, for energy and climate change respectively.
Climate Smart Mining has started gaining momentum, with emphasis on reducing the footprint of carbon-dioxide and a green mineral supply chain, with a focus on innovation, optimising water usage, increasing energy efficiency, deploying clean energy trucks and mineral recycling(Hund et al. 2020).
The Green mining concept, however, is not new. Joshua Kirkey, Communication Advisor for Natural Resources Canada, defines Green Mining as “…technologies, best practices and mines, meant to minimise environmental impacts associated with extraction and processing of greenhouse gases, untreated water and minerals”.
In Finland, the Green Mining concept came into practice in 2011. It was primarily an extension of a sustainable mining model based on five pillars, with focus on resource stewardship, intergenerational equity, minimising adverse environment and social impact, improving work and organisational practices and sustainable land use, following mine closure. The Finnish Fund for innovation had launched the Green Mining R&D & I Programme in 2011, with a budget of Euro 115 Million for the period 2011-16 (Nurmi 2017).
India too, has started its own version of Green Mining concept through the star rating of mines. This is based on the sustainable development framework prescribed by the United Nations.
Similarly, Chinese coal mines have started using the Data Envelopment Analysis (DEA) model to assess green mining efficiency. A two-stage process was involved to assess the efficiency of green mining – mining efficiency in first stage and environmental governance efficiency in the second (Wang, Lei, and Wang 2020). Some Chinese companies have also started evaluating green mining efficiency on the Driver–Pressure-State-Impact-Response (DPSIR) model, one that emphasises on the need for energy management, circularity, digitalisation and automation, in order to reduce the impact (Chen et al. 2020).
The concept of Green Mining is being further evolved, by adding to it the dimension of zero carbon mine and experts believe that it is possible to achieve this by adopting EV and Hydrogen pathways.
Opting for Renewables is being thought of as a ‘no regret’ move by mining companies. China Shenhua Energy Co, China’s largest listed coal company, plans to shift nearly half of its capital expenditure to clean energy, by 2030.
Similarly, BHP and Vale have been targeting 30% reduction and Rio-Tinto, a 15% reduction in emissions from diesel and electricity generation by 2030 respectively. Newmont Goldcorp has set up the world’s first fully electric mine at Borden Gold Mine, Chapleau, Ontario, Canada. Boliden has set up a pantograph-charged hybrid at Aitik Mine, Sweden’s largest open-pit copper mine.
Investment in sustainability is most certainly rewarding. S&P Global began publishing a green aluminium pricing index which indicates that customers are willing to pay 10-15USD extra per tonne, for aluminium produced sustainably(Bendall 2022).
Given this background, mining is currently in a transitory phase. Typically, the four minerals in focus – Coal, Iron ore, Bauxite and Limestone will script their own stories between 2050 and 2070.
However, mining companies are working on this new dimension of zero carbon or climate smart mining, which will entail the mining of a new set of minerals required by solar, EV and wind projects. Their collective vision of decarbonisation will probably be achieved in the very near future.
Generation of energy from these clean sources will require more critical and different sets of minerals, as compared to convention minerals required in thermal power plants. Hence, a new framework for green mining will also be helpful for achieving intergenerational equity and climate goals.
Infrastructure of low carbon economies require consumption of more minerals (Herrington 2021). An IEA report (The Role of Critical Minerals in Clean Energy Transitions, 2021) suggests that mineral demand would rise by at least 4 times in 2040, in order to meet climate goals. A case in point being that an electric car would require six times the mineral inputs of a traditional car and an onshore wind plant nine times more than its gas-fired counterpart.
Policymakers may facilitate this transition with the following interventions in mind:
- New Age and critical minerals must no longer be treated like bulk minerals such as coal and iron ore and thus, the industry must find ways to increase the scale of mineral supply, whilst maintaining profit.
- Supply chain issues have cropped up due to geopolitical reasons and as the use of new age minerals become more dependent on effective end-use industries, management of supply chain also becomes a cause for concern.
- Capital required for converting existing technologies to green technology and clean energy, for the purpose of running a mine, is very high and therefore, the financing of such activities will become critical.
- Incentivising initiatives by miners for cleaner technologies and decarbonisation.
Mining companies could go forward by addressing issues that contribute to achieving green mining in the following ways, but not limited to:
- Adoption of mining processes and innovations in mining which are environment- friendly.
- Focused drive on exploration and mining of critical and new age minerals.
- Setting a higher benchmark to achieve enhanced environmental performance of a mine.
- Adoption of new technologies which supports higher beneficiation and recovery of mineral and more efficient machineries.
- Explore opportunity for better supply chain management and working with original equipment manufacturers (OEMs) to make supply chains greener.
- Closing of illegal and unregulated mines.
- Reworking closed mines to recover minerals from subgrade mineral dumps and ensuring proper closure and reclamation of mines at the same time, to improve the condition of land.
- Recycling water and energy at mines and usage of clean energy.
- Financing research and development of Green Mining Technology.
- Utilising capital and cash flow tactically, in order to facilitate a seamless transition to net zero.
- Building trust with partners and stakeholders and boosting social authority, by increasing Environmental, Social and Governance (ESG) compliance.
As each sector within their respective processes marches towards the milestone of net zero emissions, mining begins to play several indispensable roles – some of these being, critical support in the transition of existing minerals, the supplying of crucial minerals and working towards decarbonisation in existing processes. Industry and policymakers should hereon, aim to create new and fortified sustainable development frameworks, or revisit existing ones, helping the mining industry set sail in its dedicated drive towards sustenance of the environment and humanity at large.
The author is Co-Chair, Mining Committee and Managing Director, Tata Steel Mining Ltd.