Major miners need to collaborate with each other and with end-customers to be able to reduce Scope 3 (broader user and value-chain) carbon emissions, industry CEOs said Oct. 16.
"Decarbonization will require more mineral products: mining is essential to maintain continued economic development and improve living standards around the world," said Mike Henry, CEO of miner BHP, the world's biggest mining company, said during the Financial Times virtual Mining Summit. "No single company alone can solve the problem of Scope 3 emissions. We need to partner laterally with the industry and vertically with value chains to solve their emissions reductions ambitions."
BHP plans to achieve some "very tangible, outsize" advantages for consumers in shipping and steel in their decarbonization processes, Henry said.
Scope 3 emissions need to be reduced by: regulatory change with hard barriers to drive emissions reduction; advancing technologies and changing consumer habits, Henry said.
While BHP is divesting out of some more mature oil and gas assets with less upside, these commodities will remain on the radar for the company as "the world is going to need oil and gas for a long time yet," and there will still be attractive opportunities in this area, Henry said.
Reduction of Scope 1 and 2 emissions is also "challenging" for the company, which is "at the low end of the spectrum," among the majors, he said. Still, the company is targeting a reduction of a further 30% in its emissions over the next decade, on the path to reach carbon net zero by 2050, he said.
Portfolio changes in themselves may have zero impact on climate change and the emissions problem, he said.
COVID-19 accelerating ESG conversation: Anglo
Anglo American CEO Mark Cutifani said that companies now need to ask themselves what kind of partnerships they can set up with their customers including steelmakers to get Scope 3 emissions down. Anglo is responsibly divesting from coal and thermal coal this year represents just 1% of its EBITDA, he said.
As for other mining companies, "we need to get together and support each other on areas we don't compete in, for instance safety, social and climate issues," he said.
Cutifani claimed that mining drives 45% of the world's economic activity, but that the sector hasn't successfully conveyed its importance to the general public, and that single "bad" events can impact perceptions of the industry very negatively.
"The ESG (Environment, Social and Governance) conversations have been moving center-stage in the industry for the last 3-4 years, but there's no doubt that with COVID-19 that has accelerated, and the conversation in Australia with the caves has been a real flashpoint, obviously for Rio, but also for the whole industry," he said.
The industry needs to adopt B2C (business to consumer) rather than B2B (business to business) principles, Cutifani, Henry and Glencore CEO Ivan Glasenberg all said at the start of the event. More discussion is needed with consumers on products' provenance, Cutifani said, noting that the energy transition may come quicker than expected.
Anglo is targeting carbon neutrality by 2040, the CEO said.
Tom Butler, CEO of the International Council on Mining and Metals, said that the global mining industry's response to the Brumadinho tailings dam disaster in Brazil is an example of what collaboration can look like: this led to the introduction of the Global Standard on Tailings Management in August, which is being supported by ICMM members and non-members alike.
