Adapting to Climate Change: a Guide for the Mining Industry

Adapting to Climate Change: A Guide for the Mining Industry Julia Nelson, Manager, Advisory Services Ryan Schuchard, Manager, Climate and Energy This guide is part of a BSR This primer on climate change adaptation summarizes how companies in the industry series. For additional mining industry are reporting on climate change risks and opportunities, and highlights current and emerging best practices and guidance for E&U companies climate adaptation briefs, please visit www.bsr.org/adaptation. on how to develop a proactive approach to climate change adaptation. In this brief, mining refers to companies involved in the extraction of a broad range of metals and minerals, including precious metals, base metals, industrial Contents and Methodology minerals, coal, and uranium. This brief covers: Introduction Reporting on Risks and Opportunities: A synopsis Due to the wide geographic distribution of mining operations, climate change, including temperature and precipitation shifts as well as more frequent and based on reporting of climate severe extreme weather events, will have complex impacts on the sector. risk in 2009 by 41 mining Climactic conditions will affect the stability and effectiveness of infrastructure and companies to the Carbon equipment, environmental protection and site closure practices, and the Disclosure Project (CDP). availability of transportation routes. Climate change may also impact the stability and cost of water and energy supplies. Current Practices: An outline of actions related to climate Some examples: Warming temperatures will increase water scarcity in some change adaptation based on locations, inhibiting water-dependent operations, complicating site rehabilitation reporting from the CDP, and bringing companies into direct conflict with communities for water resources. interviews, and other In arctic and subarctic regions, however, warmer temperatures will open new publications. mineral-rich areas for exploration and will reduce heating costs. The sector’s high rate of energy consumption and international trade of products will increase Emerging Practices: mining’s potential for greenhouse gas emission and energy regulation. Synthesis of company disclosures, literature, reviews, Mining companies often operate in some of the most politically and socially and input from climate change challenging parts of the world, where the industry remains an important driver of professionals through economic growth. Therefore, threats to the sector’s profitability and viability, such interviews. as climate change, may have significant consequences for development in host countries. The extent to which mining avoids undermining host communities’ resilience to climate change, and even fortifies that resilience, will directly impact the industry’s reputation, social license to operate, and access to project financing. The mining industry should take a proactive approach to climate adaptation for the following reasons: » The supply of critical inputs to mining processes, such as water and energy, is likely to face greater constraints. » Employee health and safety will be put at risk by increases in communicable diseases, exposure to heat-related illnesses and the likelihood of accidents related to rising temperatures. » Obtaining and maintaining a social license to operate will become more difficult in communities in which climate change exacerbates existing BSR | Adapting to Climate Change: A Guide for the Mining Industry 1 Carbon Disclosure Project vulnerabilities and increases direct competition between the company and Highlight: Of 41 company the community for resources. disclosures in 2009, 76 Increased physical and nonphysical risks will make project financing more percent responded that difficult to secure. climate change represents physical risk to the This brief examines how climate change is affecting the mining industry and how company, and 46 percent companies are responding. While mining companies have primarily focused on responded that physical climate change mitigation, they are starting to take significant steps to adapt to impacts of climate change the consequences of climate change. Leading companies are developing present opportunity. sophisticated and integrated climate adaptation strategies that take a comprehensive approach to helping their organizations manage risk and seize Source: BSR Analysis opportunity. However, there is still considerable opportunity to embed management of climate change impacts across the industry, and to collaborate with stakeholders to do so in an efficient and effective manner. Of all of the 2009 public CDP respondents, South Reporting on Risks and Opportunities African companies are particularly active in The following is an analysis of the 2009 mining company disclosures of climate discussing climate change change risks and opportunities to the Carbon Disclosure Project (CDP), one of risks and opportunities, the largest repositories of company reporting on climate change.1 Our review of because many have started company responses revealed common themes in reported risks and to feel the consequences of opportunities, which are grouped and summarized in the six areas below, and climate-change-related accompanied by examples of companies that provided those responses. The legislation, as well as energy companies that publicly reported on climate change risks and opportunities and water scarcity. included a mix of major multinational and mid-tier mining companies, though it should be noted that some significant actors have yet to participate publicly. “Mining (and other) Note that company names provided as examples do not constitute a companies need to openly comprehensive list of all companies that gave similar responses. discuss, share information, and communicate about 1. DISTURBANCE TO MINE INFRASTRUCTURE AND OPERATIONS adaptation regularly. Natural disasters, changes to precipitation patterns, and rising sea levels may damage Companies should share infrastructure, requiring additional measures to ensure its stability. Existing assets may costs and otherwise support no longer be able to meet original design parameters, and resource scarcity may climate modeling and other constrain operations or increase costs. scientific and technical studies necessary to Impacts Companies develop adaptation More frequent and intense natural disasters may damage mine, Alumina, Anglo strategies when they are transportation, and energy infrastructure and equipment, which American, Barrick, operating in the same in turn will disrupt construction and operations. Heavy rain and China Steel, Kumba region.” increased erosion may affect slope stability near opencast Iron Ore, Mitsubishi mines, and rising sea level may make coastal facilities harder Materials Corp., Rio to access. Tinto Group, Teck, Vivian MacKnight, Xstrata, Yamana Gold Sustainable Development Hotter and drier conditions may increase wildfires that threaten Anglo Platinum, Analyst, Vale S.A. facilities. Cameco, Gold Fields Flooding from increased rainfall in some areas can interrupt AngloGold Ashanti, production, and may necessitate additional controls to enhance Exxaro, Harmony water treatment capacity. Gold Mining, Limerick Key: Alumina Refining, Risks Newmont Mining Opportunities Reduced amounts of water may be available for mining, Barrick, China Steel, processing, and refining activities. Costs will increase for pre- Teck, Xstrata, Anglo use and post-use water treatment. Platinum 1 For more information on the Carbon Disclosure Project, see www.cdproject.net. BSR | Adapting to Climate Change: A Guide for the Mining Industry 2 Rising temperatures will increase energy demand to cool Anglo Platinum, underground mines and surface facilities. Greater demand and Mitsubishi Materials Corp., Northam rising prices (driven by limited supply of natural gas, the Platinum, Outokumpu, imposition of carbon taxes, and expensive alternative energy Mining Simms sources) will add to costs. Temperature fluctuations that increase energy demand and Aquarius Platinum, strain the capacity of transmission and distribution facilities can Barrick, China Steel, disrupt supply to operations. Energy rationing may lead to Gold Fields, Harmony permanent decreases in production, affecting profits and Gold Mining, Implats, commodity prices. Kinross Warming ambient temperatures in the Arctic and other cold Agnico-Eagle Mines, Spotlight on Arctic climates will make it easier to operate and reduce heating Cameco, Kinross, Operations: costs. Teck For mine operations in the arctic, such as the diamond 2. CHANGING ACCESS TO SUPPLY CHAINS AND DISTRIBUTION mines in Canada’s ROUTES Northwest Territories, the Increasing temperatures, greater precipitation, shifting storm patterns, and rising sea seasonal ice road network is level will enable or inhibit transportation services that supply goods and services, carry critical for stockpiling personnel, and move ore to facilities for processing and to ports for export. materials necessary for operations. Warming Impacts Companies temperatures and Natural disasters and heavy rainfall are likely to disrupt land subsequent thaw of Exxaro, Gold Fields, transportation routes and degrade roads. Disruption in delivery Goldcorp, Kumba Iron permafrost threaten the of input materials such as steel, timber, cement, hydrochloric Ore, Sesa Goa, seasonal availability and acid, and cyanide, or consumables such as diesel, tires, and Implats, Xstrata, Vale safety of ice roads and the reagents, will curtail production or limit its

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