The three most important sustainability issues in the mining industry

The three most important sustainability issues in the mining industry

The shift from fossil fuels towards green alternativeswill require more mining and processing of non-renewable mineral resources, as approximately three billion tons of minerals – whether raw materials or pure materials – will be needed to expand reliance on renewable energy sources, such as: wind energy, solar energy, and geothermal energy, as well as the need for giant facilities to store that energy, all in an effort to achieve the goal of the Paris Agreement, which is to limit global warming below Two degrees.

Given the consequential impact of green transformation policies on the mining industry – through the increasing demand for many elements – it is of utmost importance that we transform this industry towards sustainability. Below are three sustainability issues that mining companies must consider, in response to increasing environmental and climate challenges.

SustainabilityAs a data problem

We are in an era that can be called the era of “slogans”, of policies, pledges, promotional campaigns and honorary ceremonies, in which every company is proud of what it has achieved in sustainability files, without testing the reality and extent of the impact of these results, and the companies’ classification institutions may differ among themselves regarding the classification of companies in the same sector.

Just as financial accounting has developed a set of protocols and guidelines to determine what and how financial information is reported, we are witnessing the development of data protocols related to sustainability, including – for example – protocols for actually accounting for Greenhouse Gases (GHGs), with advanced measurement techniques that measure carbon emissions.

Carbon tracking will certainly remain important, but the demand for data on the environment and climate will increase to include broader circles of influence, in an attempt to understand climate change as a health issue in the biosphere that affects its components of water, air, biodiversity, and waste.

Just as large financial data systems have ways of collecting, classifying and reporting information to meet reporting requirements, there is a need to build similar standards of systems; To ensure standardized approaches to data collection and reporting on environmental standards in the mining industry.

Carbon certificatesAnd their dual effect

The climate summit in Sharm El Sheikh«COP27» witnessed a number of commitments that made the carbon certificate market a major mechanism for reducing emissions and a way to transfer money from developed countries to Developing countries: Although large inflows of capital associated with a voluntary carbon market will occur under this policy, mining companies that enter this market will have to undergo greater scrutiny and examination. To understand the nature and quality of any carbon certificates purchased; According to many investigations, figures indicate that only 10-15% of carbon certificates represent a real reduction in emissions. Therefore, poor quality carbon certificates will be a significant risk to companies’ reputation.

In addition to being a risk, recent developments – as well as understanding “carbon mineralization” in tailings – have highlighted the potential for carbon reduction through this waste. By “carbon mineralization” we mean the conversion of carbon dioxide into stones, and this is done through a revolutionary technology that works to liquefy the gas, then mix it with other minerals such as magnesium, calcium, or iron in basalt rocks. The carbon dioxide then begins the solidification process.

The development of this revolutionary technology, where carbon dioxide is rapidly mineralized, may open the opportunity for many mining companies to generate revenue by capturing carbon produced during their operations.

A greater role for blended finance

By this we mean the use of public or private funds, to remove risks that may affect the achievement of sustainability results, and this is through a combination of concessional financing and commercial financing. It is a mechanism that is increasingly likely to be used to spread more cash flows. This possibility is evident from the calls for activating Article 6 of the Paris Agreement, to stimulate blended finance in the developing world to meet institutions’ obligations, with the support of international banking institutions.

The mining industry has an opportunity to maximize the value of new financial instruments that meet pre-defined sustainability goals, but implementation will require rigorous impact measurement and a greater deepening of the partnership between the mining sector and the sustainability-focused finance sector. Mine operators will also be responsible for building partnerships that create space to accurately estimate, monitor and evaluate the impact of their actions.

As technology continues to catch up with industry needs, it will be essential for mining companies to find the right way to accurately quantify their impacts, whether on the job site, in surrounding communities, and even the entire planet; To give a true picture of the extent of this sector’s impact on the environment, and the extent of progress in reducing this impact.