NOLITHA FAKUDE: Mining is a key player in transition to low-carbon economy

Not long ago the mining industry’s participation in the UN COP climate conferences was unheard of. If anything, mining was seen as one of the many culprits for global warming. Thankfully, times are changing, and so is mining.

Our role as a key player in helping the world transition to a low-carbon economy is now more widely acknowledged. As the world rallies towards the urgent goal of net zero, mining must provide many of the feedstocks necessary for wholesale decarbonisation — and do so in the cleanest and most socially responsible way possible.

This role also calls for a deep commitment to this transition being just. The world has spent significant time teasing out the various definitions of a just transition — broader than the energy transition alone — at COP27 and beyond. There is value in doing this: it’s a complex subject. But, with time no longer on our side, resolute and ambitious action for sustainable positive affect must accompany all we do. We need a definitive shift from discussing climate change to advancing climate action.

For the mining industry the stance is clear: we will strive to satisfy the need for future enabling metals and minerals in a way that is in harmony with the needs of society and the natural environment, while creating and sharing enduring value inclusively for all stakeholders. Ultimately, this is what the just energy transition would look like. 

The industry is already taking great strides in this regard — seizing the opportunity presented by the African continent's wind and solar resource richness. In SA alone, 4.2GW of renewable energy projects have been initiated by the mining industry. These will undoubtedly help us reach net-zero  greenhouse gas emissions by 2050. But of course the other focus is how we ensure that we secure jobs and build a resilient economy that provides affordable access to renewable energy — particularly in a country like SA.

Anglo American recently announced a partnership with EDF Renewables to form a jointly owned company, Envusa Energy, to develop a regional renewable energy ecosystem of wind and solar resources in SA. The first phase includes a mature pipeline of 600MW of wind and solar projects, ready for construction next year. By 2030 Anglo expects to generate 3GW-5GW of renewable energy through this ecosystem, meeting all our projected operational power requirements in Southern Africa.

Trade risk

Ultimately, this ecosystem will help meet the growing demand for renewable energy in SA and the region, while also improving the affordability, availability, and reliability of energy supply. 

This kind of development momentum will be essential if we want green industries to flourish and build the foundation for a globally competitive economy that is resilient to trade risk from the transition to net zero. Not to mention the environmental benefit, as the deployment of renewable energy systems at scale in SA could reduce our national emissions by as much as 60%.

The shift to a cleaner energy mix can also help form the backbone of a future hydrogen economy. Earlier this year, Anglo American launched nuGen, our zero-emission haulage solution. It gave the world its first working hydrogen-powered ultraclass mine haul truck to operate in real mine conditions. In future we hope to see similar initiatives emanate from SA’s nascent hydrogen valley, creating new economic opportunities that support the creation of jobs safeguarded against the worst effects of climate change.

Livelihoods remain one area that requires our collective energies and focus. It is simply not enough for us to assume the displacement of current jobs — those dependent on fossil fuels — will naturally and easily be replaced with clean energy jobs. Those facing such a transition need assurance that labour, government and business will do more to apply themselves to find new pathways for economic opportunity.

We have begun this work at Anglo by reimagining the very nature of economic development regionally. Through collaborative regional development, which brings together partners in and outside the mining industry to catalyse economic activity outside mining, our aim is to support five jobs off-site for every job we have at our mine sites by 2030.

Tea leaves

Achieving the energy transition will be a costly undertaking. According to SA’s recently announced Just Energy Transition Investment Plan, the country alone would need $98bn over the next five years to achieve its targets. We know that access to finance for long-term socioeconomic and sustainable initiatives remains geographically unequal, especially for those at most risk of being left behind.

In this context the tea leaves are there for all to read. If we want to realise the transition, every sector of society will need to collaborate to overcome critical infrastructure constraints, address policy and regulatory complexity, and facilitate better co-ordination to make SA a premier destination for investments in renewables and thereby unlock the financing. There are few places on earth with a better endowment of untapped sun and wind resources.

We recently announced a $100m, 10-year loan agreement with the International Finance Corporation (IFC) linked to the delivery of Anglo’s sustainability goals, including supporting small businesses and the creation of alternative and sustainable livelihoods. As a global diversified miner we are leveraging our global position and expertise to support the financing of sustainable socioeconomic development in SA and beyond.

This loan is part of a broader engagement with the IFC to support local social development across our global operations. It displays the possibilities of partnership, which will be the critical ingredient to this transition

Through society-wide collaboration with government, the private sector, civil society and communities, more financing opportunities could be unlocked by leveraging our collective skills and resources. COP27 has not been just another talk shop; it is a clarion call for us to become more ambitious and committed to bringing substance to what a just energy transition could look like for the benefit of all. 

This is our opportunity as a country to build an inclusive, compelling sustainability pathway that will help enable the next phase of human progress — with mining very much at the heart of it all.

• Fakude chairs the Anglo American management board in SA and was part of the SA delegation at COP27 in Sharm El Sheikh, Egypt.