Gold
Feature Articles
Gold's Green Promises
June 2021
Gold miners are strengthening their sustainability goals amid intensifying pressure from governments, investors and the general public to act on climate change. Sharpening focus on the mining industry's ecological footprint has been building since the 2015 Paris Agreement, which aims to limit global warming by well below 2°C compared with pre-industrial levels.

The economic risks of inaction are also accelerating, with exports facing the prospect of carbon border adjustments. Meanwhile, climate risk assessments for listed companies are looking increasingly likely to become mandatory over the medium-term. The EU, the UK, the US and China have all recently indicated their support for standardised climate disclosure measures. AME expects significant rate of growth in these kind of measures going forward.

But addressing climate change has provided opportunities for some companies to shine. Indeed, precious metals producers are seemingly lining up to announce new and improved ESG credentials in an effort to sway investors and help revamp the mining industry's often dubious image. These include new targets to lower carbon emissions, pledges to reduce water usage, and overall efforts to minimize their impact on the ecosystem in which they operate. Many companies are attempting to be more transparent about their ecological impact, reporting their own direct and indirect emissions.

Banks are also coming under heightened investor pressure to bolster sustainability targets, meaning it will become increasingly challenging to gain financing for carbon-intensive gold operations. Deutsche Bank chief executive Christian Sewing has warned that lenders “risk losing their licence to operate” if they fail to make sustainable finance a priority. Germany's biggest bank unveiled plans in May to boost financing of sustainable projects by about EUR220bn by 2023, two years earlier and 10% higher than existing targets.

Countries are also rushing to declare ambitious new climate pledges, The US, Canada Japan and South Korea all upgraded emissions goals at the US-hosted two-day summit in April. “These next 10 years are the critical years,” said US climate envoy Kerry at the close of the summit. November’s international climate summit in Glasgow, known as COP26, may see further promises.

 

Newmont

Newmont Corporation has committed to a 30% reduction in GHG emissions by 2030 and aims to achieve 'net-zero' carbon emissions by 2050. Over the next decade, the Colorado-based plans to replace 10% of fossil fuel-based electricity generation with renewables-based sources.

 

Barrick Gold

Canadian miner Barrick Gold Corp in April raised its GHG reduction target to 30% from 10% by 2030, against a 2018 baseline across its legacy and newly acquired assets. The miner has pledged to be carbon neutral by 2050. Barrick said it plans to have more solar power in Mali and Nevada and expects to convert a power station in Nevada from coal to natural gas.

It also said that Scope 1 and Scope 2 emissions of 7,351.5kt of CO2 eq. fell 2.5% in 2020 when compared to 2018 baseline.

 

 

Polyus

Polyus, Russia's biggest gold producer, signed an agreement this year with hydropower producer RusHydro to supply its Olimpiada and Blagodatnoye mines, which are currently powered by coal. It said the move would mean 90% of its gold production would be powered by renewable energy and would reduce its GHG emissions by a third.

The decision follows a five-year deal announced in October to supply renewable energy to Polyus’ Natalka mine "Climate change is a global challenge, and it is important that as a responsible business we support the decarbonisation of the global economy," said Pavel Grachev, Polyus’ chief executive.

 

 

Russia is the world’s seventh-largest producer of hydropower, with many dams that were built during the Soviet Union. Hydropower provides about 20% of the country’s electricity.

President Vladimir Putin has endorsed the Paris Agreement, with the understanding that a pledge to ensure 2030 emissions are 33% lower than 1990 levels needs no additional actions given the huge drop in emissions following the collapse of the USSR in 1991.

Polyus has a target to cut Scope 1 and 2 emissions by increasing the share of low-carbon sources in its energy mix. The world's fourth largest miner said it reduced carbon intensity in 2020 by 28% compared to 2018 (15% reduction compared to 2015).

 

Grupo Mexico

Southern Copper Corp's parent, Grupo Mexico, said it identifies climate change as a challenge and is "taking significant action" to reduce its emissions. The firm said it has invested US$264m in water management, energy efficiency, mitigation of GHG emissions and technological improvements.

 

Agnico Eagle Mines

Agnico Eagle Mines said it is minimizing its environmental footprint by reducing GHG emissions at all of its sites and reducing waste. The company said pathways to achieve net zero, more specific reduction targets and other key climate-related targets will be evaluated in the coming years. Total CO2 equivalent emissions rose 11% to 578k in 2020, from 521k in 2019. The company completed a first estimate of its Scope 3 GHG emissions, which totalled 1.3Mt of CO2e. Total water recycled was 67% in 2020, up from 62% in 2019.

 

Newcrest

Australia's biggest gold miner Newcrest Mining has committed to a GHG intensity target of reducing emissions per tonne of ore treated by 30% by 2030, against a 2018 baseline. It plans to be a net-zero emissions company by 2005. Newcrest's Scope 3 emissions were calculated at 602kt CO2e for 2020, compared with operational (Scope 1 &2) emissions of 2.27Mt.

 

 

Kirkland Lake

Kirkland Lake Gold Ltd. has said it is "actively working' to reduce its environmental and carbon footprint and currently tracks emissions at all operations. The Canadian miner said it was the first to introduce battery electric vehicles in its operations and last year commissioned the world’s first 50t battery electric truck for use underground. Kirkland Lake reported direct emissions (Scope 1) of 279kt of CO2e for 2020. Kirkland's Macassa mine has a GHG intensity of 60kg of CO2e/oz of gold produced, which is amongst the lowest in the industry.

 

Kinross Gold

Canadian miner Kinross Gold Corp. said it has an ultimate objective of being a net-zero GHG emissions company by 2050. It says it has one of the lowest GHG emissions intensities per tonne of ore processed compared to peers in the gold sector. Its five-year GHG emissions average of 11.6kg of CO2e/t, compared to the sector average of 49.8kg of CO2e/t. The TSE-listed company also continued to improve water efficiency, lowering consumption to 419L/t in 2019, compared to 428L/t in 2018.

 

AngloGold Ashanti

Johannesburg-headquartered AngloGold Ashanti Ltd. said it is developing a comprehensive new climate change strategy, citing "external pressure around ESG issues, especially climate change". The ASX-listed firm recorded a GHG intensity of 31.8kg of CO2 eq./t for 2019, which was down 1% on-year.

 

Gold Fields

Gold Fields Ltd.'s goals include switching from diesel-generated to cleaner gas-generated electricity, increasing the use of renewables at its operations and eliminate waste. Total Scope 1–3 CO2 emissions during 2020 amounted to 1,96kt, versus 1,94kt in 2019.

South Deep’s 40MW solar plant was approved in February this year, which should generate 20% of the South African operation's electricity needs by mid-2022. A 13MW solar farm at Gruyere in Western Australia is also expected to come online in 2022. Johannesburg-based Gold Fields said it recycled 71% of its water in 2020, compared to 68% in 2019, and has a 68% target in 2021.

 

Polymetal

Anglo-Russian precious metals miner Polymetal International PLC aims to cut GHG emissions intensity (per oz of gold eq.) by 30% by 2030, from a 2019 baseline. This includes an intermediate target of 15% reduction by 2025. The LON-listed company aims to cut absolute GHG emissions by 35% by 2030. To achieve these goals, Polymetal estimates that nearly US$850m in capex will be required in 2021-2030. It said it aims to set Scope 3 targets and develop a carbon neutrality plan by the end of 2022.

 

Agronaut Gold

Nevada-headquartered Argonaut Gold Inc said in its 2020 sustainability report that it reduced water consumption by 8% by switching to drip irrigation at operations, and reduced GHG emissions by ~84tpa by installing solar panels.

 

Royalty/Streaming

Vancouver-based Wheaton Precious Metals Corp, a royalty and streaming company, said its operations are already climate neutral. Franco-Nevada Corp, as a royalty and streaming company, said a net-zero target was not appropriate. However, the Toronto-based firm said it reports emissions for its relatively small workforce and office and will keep trying to reduce emissions.

 

ESG Connection

When it comes to ESG issues, they were hardly spared a thought a few decades ago. But today it's a key metric investors pay attention to, and miners have no choice but to pay attention. In line with further government regulation and to appease increasingly environmentally conscious stakeholders, gold miners will gradually decarbonise power sources, improve overall sustainability and substantially reduce production from high emission mines. The continued cost improvements and technological advancements of clean energy technologies will support the sector’s ongoing transition to a lower carbon environment.