Mining companies need to invest an eyewatering $1.7 trillion over the next 15 years to stick to Paris Agreement commitments, according to consultancy Wood Mackenzie.
The decarbonisation investment figure comes as UK mining group Weir released a report today which found that the mining industry uses around 3.5 per cent of global energy.
“Mining needs to become more sustainable and efficient if it is to provide essential resources the world needs for decarbonisation while reducing its own environmental impact,” chief executive of Weir, Jon Stanton, said.
The report, which analysed mine energy data from over 40 published studies, showed that comminution, the process of crushing and grinding minerals, is the biggest user of energy at mine sites.
The process typically accounts for 25 per cent of mining’s final energy consumption – and is the equivalent to the power used by 221m average UK homes – or around one per cent of total energy consumption globally.
The end of April saw the UK, the US, Japan, Canada and other countries inch their carbon-cutting targets higher, at a summit hosted by US President Joe Biden.
Wood Mackenzie analyst Julian Kettle calculated that miners needed to invest around $1.7 trillion to “deliver a two-degree pathway, where the rise in global temperatures since pre-industrial times is limited to two degrees Celsius.”
The investment would aid the industry in redesigning its legacy processes, like comminution.
The Weir report found that a five per cent incremental improvement in energy efficiency across comminution could result in an at least 30m cut to greenhouse gas emissions.
“If zero-emissions energy sources are deployed for mining equipment – e.g., renewable energy, energy storage and alternative fuels – then the industry may well be able to achieve zero emissions,” the report added.
However, investment remains a barrier to decarbonisation in the industry, despite environmental, social and governance (ESG) issues creeping higher on the shareholder agenda.
“At an industry level, there seems to be reticence around investing sufficient capital to develop future supply at the pace and scale demanded by the energy transition (ET),” Kettle continued.
Mining firms need to please investors, who are unlikely to want to see dividends diverted to capital spending, but consumers and campaigners are increasingly likely to call on shareholders to act.
“Given the need to meet tough decarbonisation and ESG targets, Western governments, lenders, investors and consumers will need to get comfortable operating in jurisdictions where ESG issues are more complex,” Kettle said.