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Climate-change targets are placing a heavier load on mining output; the challenge is for mining to meet new demands, while becoming greener and more responsible. A good indicator of the task ahead is the sharp rise in the mineral “content” of power generation.
The International Energy Agency (IEA) has estimated that the average amount of minerals needed for a new unit of power-generation capacity has increased by 50% in just over a decade. This is a function of the growing share of renewables in new-energy investments globally.
The IEA has noted that our future energy systems, which will be powered by clean-energy technologies, will be profoundly different in terms of mineral demand. In a recent report, it highlights that solar photovoltaic (PV) plants, wind farms and electric vehicles (EVs) generally require more minerals to build than their fossil-fuel-based counterparts.
For instance, a typical electric car requires six times the mineral inputs of a conventional car; similarly, an onshore wind plant requires nine times more mineral resources than a gas-fired plant.
The report notes that EVs and battery storage have already displaced consumer electronics as the largest consumer of lithium. These applications are likely to replace stainless steel as the largest end-user of nickel by 2040. This puts a demand focus squarely on the mining industry, at a time when the sector is also being expected to develop and apply stringent environmental, social & governance (ESG) principles.
[Mines need] to optimise both the physical output tonnage of mining operations to meet rising demand, and lower carbon emissions to meet climate-change targets.
Perhaps the first concern is about the mineral potential, even before questions are asked about how responsibly it will be mined. Exploration levels undoubtedly need to be stepped up — especially for battery minerals like lithium, rare earths, copper, cobalt, nickel, manganese and graphite. This will need to be underpinned by a general increase in geophysical surveys, geo-mapping and other aspects of mineral exploration.
This may create interesting opportunities for regions of Africa where deposits of these minerals are mined, are known or are likely to occur. The pressure is also on those countries to create a conducive foundation for such exploration and extraction to occur responsibly.
The International Council on Mining & Metals (ICMM) has committed the sector to responsible mining standards, but has acknowledged that this effort will require extensive collaboration “among buyers, miners, investors, civil society and standard-setters”. It has emphasised that even with new extraction methods and circularity, current mining practices will remain dominant methods of producing metals and minerals.
There is also a role for mines’ service providers to support on-mine efforts to make mining more productive and efficient. This needs to optimise both the physical output tonnage of mining operations to meet rising demand, and lower carbon emissions to meet climate-change targets.
There is also intense focus on the ESG compliance of mining supply chains, with organisations such as the EU paving the way for member countries to source battery minerals only from responsible supply partners.
End-customers in the battery-minerals supply chain are choosing to work with responsible partners, who in turn rely on their host countries for transparent licensing, permitting and mineral extraction frameworks.
Our mining customers are all working within complex operational and regulatory ecosystems. They cannot meet their respective sustainability targets alone and must rely heavily on their service providers to achieve these.
Mines and their suppliers must demonstrate not just compliance, but best international practice. Not all countries with battery-mineral potential have the necessary structures in place yet to facilitate ESG compliance and transparency. This complicates the process further, and often the primary responsibility for navigating this terrain falls on the mining company and its service providers.
This requires close collaboration within the mining supply chain, where service partners align their ESG objectives with mining customers. The pressure is certainly on, with the world’s top miners committing last year to a goal of net-zero direct and indirect carbon emissions by 2050 or sooner. Companies such as BME are taking similar steps.
At its main production facilities situated in Sasolburg, for instance, BME holding-company Omnia generates about 40% of its electricity requirements from its own cogeneration systems. BME itself is installing renewable energy at its own manufacturing plants, including Dryden and Losberg. The aim is to have even its remote emulsion manufacturing plants — many on customers’ mining operations — powered by renewables. Similar initiatives are being applied to reduce potable-water usage at the company’s production facilities.
Mines also want to know the sustainability targets that we place on our own subcontractors and suppliers. This is leading to programmes that will more effectively measure ESG achievements down the supply chain.
As if the scenarios were not demanding enough, the global disruption wrought by the Covid-19 pandemic has forced mines to refocus on another key aspect of their supply chains: security. Mining is a continuous operation and demands an uninterrupted stream of services and products if it is to remain competitive.
Supply security, while always important, has been a growing priority due to the global logistical uncertainties that the pandemic has unleashed. For some operations this might limit procurement options in the short term. However, there may be scope for ESG priorities to be served, as mines promote efforts to develop localised supply lines.
Many countries are taking steps to regulate the localisation of mining supply chains, aiming to retain more of the mine-generated value within local economies. It is hoped that these efforts could also affect the carbon footprint of products consumed on mines.
Once again, the mining sector — including all its stakeholders — will need a broad view of its supply chain to identify the impact of ESG issues as the new energy outlook demands more of us.
• Hennecke is MD of blasting and explosives company BME, which is part of the JSE-listed Omnia Group.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.