International Council on Mining and Metals’ commitment to reducing Scope 1 and 2 emissions by 2050
Investors who had previously shunned the mining sector because of its negative impact on the environment now saw it as a force for good.
As the primary energy source for the first industrial revolution, mining was critical. Then coal was used. Rare minerals seem to be gaining importance as the fourth industrial revolution progresses. This year’s mining boom will be fueled by demand for lithium, cobalt, and other base metals due to the scramble to secure these metals for solar power and battery technologies.
During the previous six months, the price of cobalt has risen by 55%, while lithium has surged by 45%. Batteries that will power electric cars and store energy produced by solar panels and wind turbines rely heavily on both. While iron ore and coal may not seem like natural allies in the fight against global warming, wind turbines, which rely heavily on steel, actually consume a lot of both.
International Council on Mining and Metals
The International Monetary Fund has expressed concern that rising costs for earth’s minerals might jeopardize efforts to move toward cleaner forms of energy. “The combination of rising demand and sluggish supply” means that prices might reach “record levels for an unprecedented period of time—and those higher costs could potentially postpone the energy transition itself,” the International Monetary Fund (IMF) stated.
Lithium and rare earths are two resources that China now controls a large portion of the world’s supply. Over 80% of the rare earth minerals used in the United States were imported from China in 2019, while about 98% of the rare earth minerals used in Europe were imported from China in 2019. Climate change and raw material security are two-edged swords for the mining industry.
Many worldwide mining and metals firms have established carbon-reduction goals to guarantee that they responsibly produce raw materials while also complying with investor ESG requirements. Large mining corporations have pledged to decrease or eliminate Scope 1 and Scope 2 emissions by 2050.
When it comes to ESG rankings, mining usually falls way short of the norm. Since 2018, the metals and mining sector’s average ESG score has risen from 39 to 52, S&P Global has said. S&P Global 1200 scored 62 points total, so it’s a start in the right direction. Mining businesses that improved their ESG ratings during the period saw an increase in the number of loans and equity they could raise from investors. Both sides are benefiting from this arrangement. Investor returns were up 10% in the current epidemic, according to a recent PwC analysis on mining businesses.
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With Scope 3 emissions, it becomes more difficult for mines to reduce emissions. A company’s supply chain emissions are included in scope 3 since they are considered part of its overall emissions. A company’s emissions include those resulting from its goods and those from consumers. Most major mining corporations have signed agreements with the International Council on Mining and Metals, a trade organization dedicated to sustainable development, to reduce emissions of Scope 1 and Scope 2 by 2050. However, no concrete goal has been set for Scope 3 emissions reductions.
But the focus isn’t only on reducing emissions. It was a terrible disrespect for Rio Tinto’s commitment to ESG and corporate responsibility when it demolished two historic and holy rock shelters as part of an iron ore mine expansion in Western Australia in 2020. US mining expansion plans have sparked similar concerns. Financial research firm MSCI claims around 79% of the country’s lithium deposits are located within 35 miles of Native American reservations.
EY’s research says the epidemic has also brought social injustice to the forefront, putting more pressure on mining firms to “go beyond their regulatory requirements and take responsibility for advancing social equity in the communities where they operate. Because of worries about child labor, lithium and cobalt mining has been a contentious issue for many years. Child labor and unsafe working conditions have long been recognized as difficulties in the Democratic Republic of Congo, accounting for about 60 percent of world cobalt production. This raises serious questions about the human cost of making the global economy green, widely discussed.
Human rights group International Rights Advocates sued Apple, Google, Dell, Microsoft, and Tesla in the Democratic Republic of the Congo (DRC). Still, the case was rejected by a US judge in November. The judge threw out the lawsuit because of the broad chain of relationships between the corporations and the underage employees. It’s not that blue-chip companies want it, but they don’t. Despite this, the need for earth minerals remains strong. The global economy will be driven by mining in the following decades as the globe moves away from fossil fuels.
The IMF suggests that the present production rates of rare minerals such as cobalt, nickel, and other metals are insufficient. A 40-fold rise in lithium production is predicted, as is a 25-fold increase in cobalt and nickel production during the energy transition. To fulfill the anticipated demand, there are few reserves available. A new mine’s production cycle may take up to two decades.
The Future Minerals Summit in Riyadh, which opens on January 11th and is an essential event in this month’s calendar, is expected to address all of these challenges.
