Webinar: Decarbonization in Mining 2024

Anna Kadova: Good morning, everyone. I'm Anna Kadova, handling business development at K-MINE. A quick reminder before we get into today's content - don't forget to follow our LinkedIn page where we post all of our latest news and future streams. A massive thank you to all of you tuning in today, we deeply appreciate your support. Please welcome the author of today's webinar, mining engineer at K-MINE - Vladyslav Shevchenko.

Vladyslav Shevchenko: Hi all. Glad to see you on our stream. I hope you will find it interesting. We will answer your questions at the end of the webinar.

We started our journey over 30 years ago in Ukraine. Since then it's been quite an adventure - we spread our wings in Europe and Asia, made it to the United States and Canada, and teamed up with partners in Chile, Brazil, Australia, and other countries. Our team includes developers, surveyors, geologists, mining engineers, and experts in producing NI 43-101 and JORC-compliant reports.

As for who we work with, it's a pretty long list. We serve corporations with established mining operations, early exploration companies, and private consulting firms. Think of our company as the Swiss army knife for the mining industry - your go-to companion guiding you through every phase of your mining project, from exploration right through to full production.

We cover both software and consulting perspectives. The software bundles everything into 12 versatile modules, equally effective for open-pit and underground mining. You can mix and match modules to suit your workflow - whether you need just one module or all 12. Our software makes it simple because everything is in one interface.

These modules handle everything from crunching geological data and carrying out surveys to crafting optimized mining plans. You can also hook our software to IoT devices or dispatch systems, allowing you to see processes unfold in real time and make swift, well-informed decisions.

If you need 3D modeling, strategic insight, NI 43-101 or JORC-compliant reports, or any assistance with resource and reserves analysis, we can provide expertise from the early stages of exploration through to full-scale production.

Today we focus on the critical theme of decarbonization within the mining sector. We will cover:

• An overview of decarbonization relevance and application in mining
• Technological innovations driving current decarbonization efforts
• Fiscal and economic dimensions - the financial implications and economic considerations of adopting greener practices
• The importance of leadership in driving transformational change alongside the need for targeted workforce training
• Existing decarbonization initiatives within the mining sector

Mining plays a pivotal role in guiding us towards a greener future. It provides the critical minerals we need to make the shift towards sustainable energy solutions, all with the goal of reaching net-zero emissions. From copper essential in wind turbines, to the lithium that powers electric vehicles, and the aluminum that's a key component of solar panels - these critical elements originate from the mining sector.

With the expected increase in demand for critical materials, miners are now under pressure to innovate their practices and minimize their environmental impact. Known for its cautious and incremental development, the mining industry is now confronted with an urgent need to evolve. We must adopt new technologies and strategies that align with decarbonization efforts, marking a key shift towards more sustainable and responsible mining operations.

The relationship between climate change and mining was established back in the 1990s. A critical juncture was reached in 1997 with the signing of the Kyoto Protocol. This agreement called for developed nations to reduce greenhouse emissions by 5.2% below 1990 levels by 2012, signaling a significant step for the mining industry towards lowering its carbon footprint.

Leaping into the 2000s, the movement against climate change accelerated. The European Union was at the forefront in 2005, launching its Emissions Trading System, which motivated mining companies to work towards reducing their emissions. By 2010, the industry reported a significant 18% decrease in greenhouse emissions.

The intensity of decarbonization initiatives surged even more in the 2010s. The signing of the Paris Agreement in 2015 was a defining moment - it urged countries around the globe to commit to ambitious targets for cutting emissions to mitigate global warming. This collective effort resulted in countries enacting laws to cut emissions and encourage the use of renewable energy, leading to the mining sector marking an additional 12% decrease in emissions from 2010 to 2020.

As CO2 emission standards evolved, certain technologies like pyrogenic coal enrichment and flotation technologies were phased out. These methods were deemed too harmful due to their high CO2 emissions, prompting their gradual abandonment. Similarly, outdated practices like magnetic and heavy medium separation, which demanded significant energy and chemical inputs, contributed to increased CO2 emissions and worsened environmental impacts. In response, the industry shifted towards developing and adopting more modern, environmentally friendly enrichment technologies.

By 2024, the push towards decarbonization has led to significant transformations. Countries around the world are gradually moving away from certain technologies and materials to align with their environmental goals. Germany, for example, committed to phase out coal by 2038, and there are various bans on certain mining methods and the use of hazardous chemicals like cyanide in gold processing.

As we gaze into the future, the mining sector is gearing up for more rigorous decarbonization policies. Predictions indicate the possible tightening of carbon emission standards by 10 to 20%, ushering in a new wave of accountability. This means a significant push towards adopting more energy-efficient technologies and renewable energy sources. Additionally, we see a growing focus on carbon capture and storage (CCS) technologies, along with more regular reporting on carbon footprints and strategies for reducing emissions.

Today the mining sector is actively adopting a range of advanced technologies and practices to significantly cut down CO2 emissions. This shift is not just contributing to the sustainability movement but also enhancing operational efficiency and leading to cost savings.

Mining operations are increasingly incorporating solar and wind power into their energy strategies. The International Renewable Energy Agency highlighted a surge in the mining industry's solar energy capacity - an increase of more than 40% between 2016 and 2020. This trend is particularly notable in mineral-rich areas like Australia, Chile, and South Africa. By transitioning from conventional energy sources like coal and diesel to renewables, mining companies are making considerable progress in minimizing their environmental footprint. Moreover, these renewable energy solutions provide long-term cost reductions and enhanced energy self-reliance.

The mining industry is moving towards more energy-efficient technologies and methods. LED lighting and sophisticated ore processing techniques are making a big impact. Research featured in the Journal of Cleaner Production revealed that by enhancing ore enrichment processes, energy usage could be slashed by as much as 20%.

Nuclear energy plays an important role in the decarbonization of mining enterprises. It doesn't produce CO2 and other greenhouse gases during electricity generation, which reduces overall emissions. Nuclear power plants provide stable and reliable electricity supply, which is important for mining companies. Furthermore, nuclear energy is highly energy-efficient and can be economically viable in the long term, helping reduce operating expenses and ensure stable electricity tariffs. The use of nuclear energy helps reduce dependence on fossil fuels such as coal or oil, reducing the mining industry's impact on the environment.

Cogeneration - simultaneously producing electricity and heat - allows mining operations to greatly enhance energy efficiency and cut emissions. Efficiency rates of cogeneration systems can soar as high as 90%, starkly outperforming traditional power generation methods. The International Energy Agency has highlighted instances where cogeneration led to a substantial 25% decrease in CO2 emissions from mining activities.

Hydrogen fuel cells are emerging as a greener alternative to conventional diesel engines. Studies published in the International Journal of Hydrogen Energy indicate that transitioning to hydrogen-powered vehicles in mining operations could potentially halve greenhouse gas emissions, making a substantial leap forward in environmental sustainability.

Methane produced during coal and oil extraction poses a significant threat to greenhouse gas levels if left uncontrolled. Implementing innovative methane capture technologies is essential. Strategies to minimize venting and flaring are proving highly effective. The Environmental Protection Agency has highlighted the impact of these technologies in substantially reducing emissions from mining activities.

By harnessing AI and IoT sensors, mines are becoming more energy-efficient. These intelligent technologies enable precise identification of inefficiencies, allowing for targeted interventions that effectively lower CO2 emissions. Studies indicate that embracing digital investment could yield energy savings of up to 15%.

Adopting new technologies often requires substantial investment, which can impact the cost structure of the final product and overall profitability. In this case, companies turn to government support.

Governments worldwide are stepping up to offer financial aid to mining firms committed to decarbonization. Subsidies and support mechanisms alleviate the financial burden of implementing cleaner technologies. Carbon markets allow companies to trade carbon credits, incentivizing everyone to keep emissions as low as possible. There is also robust support for carbon capture and storage projects.

Norway offers substantial subsidies for carbon capture and storage technology development and provides tax breaks for renewable energy adoption.

Germany is allocating funds to assist mining companies in upgrading technology and implementing energy-efficient practices as part of its coal phase-out by 2038.

In the United States, the approach varies by state, with some offering subsidies for renewable energy development.

Canada is channeling funds into carbon capture and storage projects and doubling down on research and development.

It's essential to recognize that government subsidies typically don't cover the entire cost of transitioning. They offset a portion of expenses or make investing in eco-friendly technologies more financially attractive. Ultimately, companies invest their own resources because embracing sustainability can streamline production, enhance reputation, and fulfill environmental goals.

While alternative energy sources may initially entail higher production costs, looking ahead they may offer greater economic benefits in the long run. This could be attributed to potential decreases in fuel and maintenance costs, the expected rise in fossil fuel prices, and enforcement of taxes and regulations on greenhouse gas emissions.

For mining companies committed to decarbonization, the journey begins with garnering support from all stakeholders - workforce, investors, and local communities. This demands ongoing communication, transparent visibility of actions, and collaboration for the greater good.

A comprehensive evaluation of current operations is necessary - a meticulous examination of operational intricacies, assessment of the carbon footprint, and appraisal of existing technologies. The aim is to pinpoint areas ripe for improvement and uncover opportunities for transitioning into more sustainable practices.

Developing a well-crafted decarbonization road map is imperative. It must outline the what, when, and who - with enough flexibility to adapt to a dynamic environment.

Preparing the team to embrace new technologies and meet decarbonization standards is pivotal for lasting change. It starts with laying out new processes, technologies, and standards. This could mean training programs, seminars, workshops - everyone needs to understand why decarbonization matters and how each role plays a part.

Notable training centers and organizations include:

• International Institute of Sustainable Development (Canada) - comprehensive training programs on sustainable practices including decarbonization and energy conservation
• Carbon Trust (UK) - expertise in reducing carbon footprints, training on implementing green practices and carbon management strategies
• World Resources Institute (Washington, US) - training programs focused on sustainable development, decarbonization, and climate management
• United Nations Framework Convention on Climate Change (Bonn, Germany) - training events and practical decarbonization guidelines for governments and businesses
• The Energy and Resources Institute (India) - training programs and consultancy services on decarbonization and sustainable development

Last year, Vale achieved a significant milestone at the Vargem Grande mine in Nova Lima. They conducted a test replacing anthracite (a standard raw material) with bio-oil during the pelletizing process - a landmark moment for sustainability in mining.

In 2022, Vale struck a deal to transition the pelletizing plant in Sao Luis to natural gas. By the end of 2024, they anticipate completing this transition with all pelletizing plants running on gas instead of fuel oil - a substantial shift towards cleaner production practices.

Also in 2022, Vale commenced testing two 72-ton high-mobility battery trucks. These trucks operate with zero CO2 emissions and produce less noise, contributing to improved quality of life for nearby communities. Considering that off-road diesel trucks account for about 80% of the company's total emissions, this initiative is significant.

Glencore's CCS project in Canada, specifically at their Sudbury integrated nickel operations, achieved a remarkable 32% reduction in CO2 emissions. This involves capturing CO2 from the ore processing stage and safely storing it deep underground. The process also helps mitigate other harmful emissions like sulfur and nitrogen oxides.

Anglo American's renewable energy integration project in Chile integrated solar and wind power installations, slashing CO2 emissions by an impressive 45%. They also prioritized staff training and implemented energy-efficient practices, resulting in reduced reliance on conventional energy sources and substantial cost savings.

A significant development from last September: the International Council on Mining and Metals (ICMM) introduced a new playbook aimed at helping the mining industry improve the reporting of scope three emissions. This effort focuses on providing more accurate measurements of emissions, especially those occurring further down the supply chain, covering all 15 categories outlined in the GHG Protocol.

J. Stausholm of Rio Tinto, who also chairs ICMM's Climate Change Advisory Group, highlighted the importance: "Tackling climate change is a critical challenge, and the ICMM's new guidelines on scope 3 emissions accounting and reporting will enhance our understanding of emissions profiles for mining. It will also help accelerate efforts to reduce emissions."

Q: If we're talking about a global green shift, why is coal still the top source of revenue in 2023 for the first time since 2010, and the mining industry is set to grow this year as well?

Vladyslav Shevchenko: This is a complex set of factors. Coal remains one of the cheapest and most accessible sources of energy in many countries, making it more attractive especially in countries with high energy needs. In such countries there is already coal infrastructure, which means transitioning to green technologies requires significant investment, resources, and time.

There is also a political dimension. Some governments continue to support the coal industry because of its importance for national energy security. Some countries find it easier to decarbonize coal operations than to stop mining coal altogether.

Anna Kadova: It might also be a sign of developing areas that haven't developed before. The West has been prioritizing coal and fossil fuels for a long time, and it's not really fair to ask areas that haven't gone through this progress yet to decarbonize immediately - they want to benefit from cheap and fast solutions.

Q: How can we talk about decarbonizing the mining industry when the world's largest CO2 emitters have not fully committed to a green future?

Vladyslav Shevchenko: This is a very polarizing topic. There are generally two camps. One says there is no point in committing to a green future if the biggest emitters are not setting and following the same targets. The other says the West is a leader in technology and has to lead the way for other countries, to show how you can actually transition to greener technologies and decarbonize mining activities.

It's important to note that all major emitting nations are participants in the Paris Agreement. The question is how these agreements are being implemented and enforced. Some countries are demonstrating positive dynamics in decarbonization through implementation of renewable energy sources like solar panels and nuclear technology.

A lot of companies like Glencore, Vale, and Anglo American have both the resources and ability to implement green technologies. If they see the long-run value in cutting costs, besides just the goal of achieving a green future, they will implement it across their operations regardless of local government subsidies.

I believe global trends towards reducing CO2 emissions will show results in the nearest future. Once there is a clear economic advantage of implementing certain technologies, it will be picked up rather quickly. That's the hope - that the West would lead the way and demonstrate economically viable approaches.

The urgency for decarbonization is undeniable. The mining industry finds itself at a critical juncture where the opportunity to lead innovation and drive emission reduction is significant. Investments in new technologies continue to unfold, presenting new avenues for the sector to contribute to global climate objectives.

K-MINE offers specialized consulting services to support decarbonization efforts in mining operations. With our expertise in the field, we can provide valuable insights to help companies reduce their carbon footprint. We welcome the opportunity to collaborate on projects focused on CO2 emission reduction.