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Meeting global net-zero goals will require an approach that starts at the mine.

Questions around which metals and minerals will be crucial for the global push towards electrification and how the mining sector can adopt robust decarbonization strategies were two of the major themes at the Prospectors and Developers Association of Canada (PDAC) convention earlier this month.

The three day event, which was rescheduled from its usual early March date, returned in person along with a later online component after the 2021 conference was held entirely online.

Marking its 90th anniversary, the conference boasted more than 17,000 attendees, many of whom were investors looking to learn about the mining sector's environmental, social and governance (ESG) efforts. One of the most prevalent topics was decarbonization, which was the focus of several presentations and panel discussions.

During his presentation "Creating the Zero-Carbon Mine," Clemens Muller-Falcke, partner at McKinsey & Company, offered sobering statistics regarding current global emissions levels.

According to Muller-Falcke, 510 billion metric tons of CO2 emissions remain in the cumulative carbon budget, and they will be expended by 2030 at the current rate. Once the budget has been exhausted, the world's ability to stay within the 1.5 degrees Celsius target rate will end as well.

“We believe that we are not going to be able to stick to 1.5 degrees Celsius,” he said, noting that a temperature increase of 0.9 degrees Celsius would be enough to cause widespread environmental instability.

“The problem is that that 0.9 degrees Celsius is going to trigger climate feedback loops,” said the partner. “Vicious circuits, natural processes (that are) going to release more greenhouse gases.”

Robust emissions targeting needed

For the mining sector to keep in line with the 1.5 degrees Celsius goal, the industry will need to decrease its annual emissions by two-thirds before 2030 and a further 90 percent before 2050. That might sound daunting, but Muller-Falcke laid out three ways the mining sector can benefit from decarbonization.

The first point he mentioned was the potential to improve financial performance by implementing economic decarbonization initiatives that will bring down overhead costs. The second was the possibility of capitalizing off rising demand for green materials and commodities needed for decarbonization. The third way was the opportunity to build new green businesses around the energy transition and decarbonization.

As he explained, adopting strategies that address these issues will not only aid in reducing global emissions, but also make good economic sense.

“When we put them together into a really aggressive decarbonization strategy, (we could see) around 40 percent emissions reduction by 2025,” he told the audience at his PDAC talk. “That means implementing energy efficiency measures in mining feed processing plants; it means switching to renewable electricity and energy storage, and also electrifying as much of the equipment as possible.”

If successful, eradicating all emissions by 2035 is possible, and will also allow for the electrification of all transport inside and outside of mines. The partner at McKinsey & Company went on to say that from there the mining sector can begin to look across its supply pipeline for ways to optimize value.

“Then also partnering with other companies around the value chain, especially downstream processing, who have also eliminated emissions,” he said.

He also suggested that companies aim to scale technologies crucial for decarbonization. “If you are a mining company that wants to accelerate implementation of these technologies for your own sake, you can partner up with the companies that are developing these technologies to make sure that those technologies get piloted at your mine site, (and also) have a stake in that and participate in the broader rollout of the technology," he added.

In terms of in-demand materials, he pointed to electric vehicle metals (cobalt, lithium and nickel), but noted that he expects to see the most demand growth for copper and aluminum.

Mining innovation the first step to net zero

The PDAC panel discussion "What Does Decarbonization Mean for Junior Mining?" also focused on ways to leverage existing technology to increase mining efficiency.

Like Muller-Falcke, panelist Rohitesh Dhawan, president and CEO of ICMM, emphasized the need to broadly reduce emissions across the mining sector.

“Just as the world is looking to us to provide the critical minerals to enable every other sector to decarbonize, it puts on us an ever greater strategic and moral responsibility to make sure our own emissions are as low as possible,” he said. “And we're making that happen through a range of measures.”

Dhawan wants to see more synergistic partnerships between the mining sector and other industries.

“(Especially) a collaboration between the manufacturers of original equipment (OEMs) and the mining companies, because we know that at a mine site, of course, diesel emissions from the use of mobile equipment account for between 30 and 80 percent of greenhouse gas (GHG) emissions,” he said.

As part of this effort, ICMM — which connects a third of the mining sector to key ESG partners — has brought together 19 OEMs and 28 mining companies to “accelerate the deployment of zero-emission vehicles.”

“It's given rise to initiatives like Charge On, which is accelerating the deployment of zero-emission — both electric, as well as hydrogen and hybrid — vehicles to enable the entire industry to decarbonize as quickly as possible,” Dhawan said. The global urgency of emissions reduction has also allowed for quicker adoption of these vehicles.

“The timeframe for deploying these vehicles when we started was 2040; that was three years ago, we were talking about 2040,” he said. “Today we know they're already available. And they will be available at scale now by 2027.”

Mining smarter, not harder

In terms of production, panelist Mark Selby, CEO of Canada Nickel Company (TSXV:CNC,OTCQX:CNIKF), told PDAC attendees that his company was founded with a focus on being a net-zero operation.

“We're very fortunate that the class of nickel deposits that we pursue have this great property that the tailings and waste rock, which make up 90 percent of what we mine, spontaneously absorb CO2 when exposed to air,” Selby said. “So in the actual mining process, we'll be generating carbon credits.”

The push to electrification was also top of mind for panelist Chris Tucker, corporate innovations manager at Skeena Resources (TSXV:SKE,NYSE:SKE), a precious metals explorer with projects in BC.

Ensuring the mining jurisdiction can facilitate clean electricity was a factor Tucker and the other panelists emphasized. "We now (have) clean hydropower right up our access road, so the opportunity for us to electrify as much of our operations as possible is really imminent,” Tucker said. “And it’s driven by wanting to do the right thing, it's driven by the interests of our First Nation partners, but it's also driven by economics.”

From a junior perspective, developing net-zero strategies and implementing electrification make a company more appealing to majors, Tucker explained, referencing Gold Fields' (NYSE:GFI) acquisition of Yamana Gold (TSX:YRI,NYSE:AU), announced at the end of May for US$6.7 billion.

"You're seeing a little bit more language and thought around carbon intensity in mergers and acquisitions in the Gold Fields/Yamana (deal). The low GHG emissions of Yamana’s operations were very appealing to Gold Fields.”

Ultimately, as Dan Myerson, executive chairman of Foran Mining (TSXV:FOM,OTCQX:FMCXF) — a diversified Saskatchewan-focused explorer — pointed out, the mining sector is more vital right now than ever before.

“To be frank, decarbonization cannot happen without electrification, and electrification cannot happen without mining,” Myerson said. “We've got to sort of change the way mining actually operates so that we can provide these critical minerals to enable this transition to an electrified and decarbonized world.”

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Canada Nickel Company is a client of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.


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