The future of the mining industry will be shaped by a range of disruptive themes, with ESG being one of the themes that will have a significant impact on mining companies. A detailed analysis of the theme, insights into the leading companies, and their thematic and valuation scorecards are included in GlobalData’s thematic research report,ESG (Environmental, Social and Governance) in Mining – Thematic Research. Buy the report here.
Extraction and primary processing of metals and minerals are responsible for 26% of global carbon emissions. By nature, mining depletes natural resources and has a significant impact on surrounding ecosystems. However, metals and minerals will play an important role in the global transition to a greener future. Companies must work to reduce their greenhouse gas (GHG) emissions, reduce their environmental impact, and mitigate risks. Comprehensive strategies for positive environmental management target energy consumed, equipment used, and the systems in place for impact mitigation.
Mining is also extremely dangerous, and though death and injury rates have declined, further improvements can come from reminding workers of the basics and augmenting operations with technology that improves safety. Companies must also use projects to bring social value to communities.
However, not all companies are equal when it comes to their capabilities and investments in the key themes that matter most to their industry. Understanding how companies are positioned and ranked in the most important themes can be a key leading indicator of their future earnings potential and relative competitive position.
Insight from top ranked company
Fortescue Metals Group
Fortescue Metals Group is an environmental leader in the sector due to its ambitious climate targets. The company brought forward its carbon neutrality target from 2040 to 2030. To achieve this target, the company’s subsidiary Fortescue Future Industries (FFI) is advancing projects across Australia to build large-scale renewable energy and green hydrogen production capacity. This will advance the substitution of carbon-based fuel with green electricity, green hydrogen, and green ammonia.
Fortescue has invested $800m in energy infrastructure projects. This includes a $700m investment in the Pilbara Energy Connect (PEC) project. The project includes the construction of 275km of high voltage transmission lines connecting its mine sites, 150MW of gas-fired generation together with 150MW of solar photovoltaic (PV) generation, and large-scale battery storage. The project will cut emissions by up to 285,000 tonnes of CO2 per year as compared to generating electricity solely from gas. The project will allow Fortescue to meet up to 30% of its stationary energy requirements from solar power. The company is conducting trials to use renewable energy in the Pilbara to convert iron ore to green iron at low temperatures without coal.
Almost half of the company’s operational emissions are generated by its mining fleet. These vehicles currently use diesel as a fuel source and consume around 400 million to 450 million liters of diesel per year. Decarbonising the mining fleet is one of the biggest challenges facing the mining industry, as there are currently no economic or technologically viable, large-scale vehicles available. To meet its targets of becoming diesel-free by 2030, the company is developing large battery technology, trialing hydrogen fuel cell power for its drill rigs, and trialing transportation methods run on green ammonia.
FFI is a global green energy company producing zero-emission green hydrogen using 100% renewable sources. It aims to produce 15 million tonnes of green hydrogen by 2030. In August 2021, FFI signed a collaboration agreement with Murihiku Hapu of Ngāi Tahu to develop a large-scale, renewable green hydrogen production project in Southland, New Zealand, with first production in early 2025.
To further understand the key themes and technologies disrupting the mining industry, access GlobalData’s latest thematic research report on ESG in Mining.The mining companies featured in our thematic scorecard are listed below.
- Kirkland Lake Gold
- Rio Tinto
- Barrick Gold
- Kinross Gold
- Anglo American
- Zijin Mining
- Impala Platinum
- China Molybdenum
- Sumitomo Metal Mining
- Agnico-Eagle Mines
- Shandong Gold Mining
- Tata Steel
- Saudi Arabian Mining
- Jiangxi Copper
- Nippon Steel
- First Quantum Minerals
- Hindalco Industries