Due to the wide geographic distribution of mining operations, climate change, including temperature and precipitation shifts as well as more frequent and severe extreme weather events, will have complex impacts on the sector. Climactic conditions will affect the stability and effectiveness of infrastructure and equipment, environmental protection and site closure practices, and the availability of transportation routes(1). Climate change may also impact the stability and cost of water and energy supplies, which in turn can affect the costs of extraction, which is often water- and energy-intensive(2). Heavy rain and increased erosion may affect slope stability near opencast mines, and rising sea level may make coastal facilities harder to access.
Rio Tinto Limited, the second largest Australian mining company with a US$99 billion market capitalization, has already suffered from the effects of climate change. In 2010 and 2011, approximately forty mines in Australia were affected by floods, including disruptions in transporting coal from mines to coastal ports for exports. Rio Tinto had to declare force majeure on supplies of aluminum from its Boyne smelting division in Australia’s Queensland state, which is Australia’s largest aluminum smelting operation capable of producing 558,000 tons annually(3). Additionally, the closure of the port of Brisbane prevented significant deliveries to some domestic and international customers, which caused Rio Tinto even more problems.
After these bad experiences, Rio Tinto has been adopting certain business practices across the entire value chain, from the design of a new project to the transportation of materials to the end consumer. As Rio Tinto’s latest Climate change report puts it: “climate change risks are also taken into account in the way we design and develop new projects. This is important, because the project stage offers opportunities to improve long-term climate resilience that are either impracticable or too expensive to retrofit once an asset is operational”(4). Companies are investing in better ways to manage energy supply, cost, and financial risks as well. They are also taking advantage of new revenue streams from carbon credits. Rio Tinto is investing in the development of carbon capture and storage technologies.
As part of Rio Tinto’s strategy to combat climate change, they have pursued projects to improve their haul truck efficiency. An example of one of these projects is Rio Tinto’s Coal Australia Dhanna Yurubaya project, in which simple software changes to haul trucks were developed in partnership with equipment manufacturer Komatsu, delivering fuel efficiency savings of approximately five per cent. These changes have been rolled out across the mine’s whole fleet of electric drive trucks, and the initiative is now being replicated at its iron ore operations in Western Australia(4).
Another example of strategies Rio Tinto is now implementing for its projects can be seen on Rio Tinto’s Kennecott copper operation in Salt Lake City, Utah, which produces about 15 per cent of US copper supply. To understand how climate change will affect the mine, Rio Tinto sponsored impact studies and modelling exercises at the University of Utah. The results pointed to future changes in the timing and volume of water run-off, with less precipitation likely to fall as snow and more as rainfall, and more frequent high-intensity storms. Kennecott is using this work to inform the way it uses water. Improvements to water planning, monitoring and infrastructure are under way and Kennecott is also looking to reduce the use of high-quality water, substituting with lower-quality sources where possible(4).
In my opinion, Rio Tinto and other mining companies should explore how investments in ecosystem services can improve local resilience. For example, investment in integrated watershed management programs, enhancement of local water supplies, and protection of existing sources can help secure the availability of sufficient clean water to meet company and community needs, even in light of increasing scarcity and competition. Through participatory and integrated resource management practices, companies can engage host communities as partners in resource management, monitoring, and enhancement.
In my mind, both the mining and the transformation of metals and coal have historically contributed significantly to the current climate change issues we are suffering. Can mining companies do something to significantly reduce their impact on the environment or are they going to continue to be part of the problem. Can they address some of the inherent risks to the supply chain of their current operations in a costly fashion, or will they have to focus on preventive actions for new projects only? Is Rio Tinto really acting against climate change, or is it a public relations game?
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(1) Julia Nelson, Ryan Schuchard, “Adapting to Climate Change: A Guide for the Mining Industry”, BSR
(2) Gledhill, R., D. Hamza-Goodacre, and L. Ping Low, “Business-not-as-usual: Tackling the impact of climate change on supply chain risk”, PWC – Resilience: A Journal of Strategy and Risk (2013)
(3) Reuters Staff, “UPDATE 2-Rio declares force majeure on Boyne aluminium” (2011)
(4) Rio Tinto Climate Change Report (2016)