Decarbonization in mining still a long way off

The mining industry is a key focus for policymakers and investors because it provides the critical raw materials needed for electric vehicles and renewable energy infrastructure, but is also responsible for 4% to 7% of greenhouse-gas (GHG) global emissions.

Virginia Dundas, acting chief sustainability officer at Orsted, the world’s largest offshore wind farm developer, said she sees different levels of transparency from suppliers of the metals her company needs to build things like turbines.

“We try to engage in different ways to procure materials. We are putting in place some pilots to trace where they come from…but we are still seeing that for some (suppliers) it is very difficult to do that,” Dundas said, speaking at  the  Reuters IMPACT conference in London.

As metals are used across many different industries that serve customers across various geographies, it is difficult for mining companies to account for the whole supply chain.

The International Council on Mining and Metals , whose members include around 25 mining companies, on Thursday published guidance for all mining companies on how to account and report their Scope 3 – or indirect – emissions “to try and answer the problem of patchy data to make companies report consistently,” its CEO Rohitesh Dhawan said at the conference.

Scope 1 refers to a company’s direct emissions, Scope 2 to indirect emissions from purchased energy while Scope 3 refers to all other indirect emissions, for example from a company’s third-party suppliers.

Mining companies have set targets to decarbonize and mostly aim to reach net zero by 2040 and 2050, but some are struggling to keep up. The world’s second largest miner Rio Tinto said in July that it would miss its 2025 target unless it resorted to buying carbon offsets – credits to reduce emissions through projects such as tree planting.

“You can publish your data on Scope 3, but where investors have clear expectations is to see the companies’ targets aligned to net zero across Scope 1, 2 and 3…setting the targets short, medium and long term is absolutely critical to know that the company is walking down that path,” said Adam Matthews, chief responsible investment officer for the Church of England Pensions Board, which invests in mining companies.