##{"id":92499,"date":"2021-03-24T10:01:10","date_gmt":"2021-03-23T23:01:10","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=92499"},"modified":"2021-03-24T10:01:11","modified_gmt":"2021-03-23T23:01:11","slug":"esg-focus-water-emissions-and-copper-mining","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/03\/24\/esg-focus-water-emissions-and-copper-mining\/","title":{"rendered":"ESG Focus: Water Emissions And Copper Mining"},"content":{"rendered":"

FNArena's dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future:<\/em> <\/strong>
https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/<\/a><\/p>\n

Sandfire, ICAA Target Water-Related Emissions<\/strong><\/u><\/p>\n

As the UN publishes its World Water Development Report 2021<\/em> titled ‘Valuing Water’ for World Water Day, Sandfire Resources and The International Copper Association Australia launch a project to deal with water emissions.<\/p>\n

-Valuing water on the cards
-Water accounts for 20% of emissions
-Water dependent copper industry rushes for solutions
-A case study in both additionality and circularity<\/strong><\/p>\n

By Sarah Mills<\/p>\n

World Water Day fell on March 22 this week, so it seemed fitting to give readers an update on what will soon become one of the most critical ESG issues.<\/p>\n

To commemorate World Water Day, the United Nations published the 2021 edition of its World Water Development Report<\/em>, entitled ‘Valuing Water’ – a harbinger of what is to come for corporations globally.<\/p>\n

“Recognising, measuring and expressing water’s worth, and incorporating it into decision-making are fundamental to achieving sustainable and equitable water resources management and the UN’s Sustainable Development Goals for 2030,” says the report.<\/p>\n

“Those who control how water is valued control how it is used. <\/span><\/p>\n

“Values are a central aspect of power and equity in water resources governance. The failure to fully value water in all its different uses is considered a root cause, or a symptom, of the political neglect of water and its mismanagement. <\/span><\/p>\n

“All too often, the value of water, or its full suite of multiple values, is not prominent in decision-making at all.”<\/span><\/p>\n

The report leaves little doubt that that is all about to change; and it is likely to start with water-related emissions.<\/span><\/p>\n

[Note: CO2 and other nasties are emitted not just into the air but also into soil and water.]<\/span><\/p>\n

The International Copper Association Australia (ICAA) also chose World Water Day to announce the industry’s efforts to improve its water management, offering an opportune case study on just this subject.<\/p>\n

<\/p>\n

Zero Emissions project addresses additionality and circularity<\/u><\/p>\n

Copper miners Sandfire Resources ((SFR)) and Anglo American have combined forces with the ICAA and the Global Copper Alliance to create the Zero Emissions project.<\/p>\n

The ICAA titled the press release a ‘Water Led Path to Zero Emission Mining<\/em>’.<\/p>\n

Water-related emissions is an area to which green investors are rapidly turning, given climate change is going to be the first cab off the ESG rank – well before water per se.<\/p>\n

Water accounts for 20% of industry emissions but is also critical to the copper industry’s operations, a major issue given the industry is vulnerable to a new user-pays model for water.<\/p>\n

The Zero Emissions project is focused on six processes: baseline water balance; dewatering of mine sites; desalination; tailings and recycling.<\/p>\n

The project is interesting from an ESG perspective because it speaks to material ESG concepts of additionality and circularity, while killing two birds with one stone (water and emissions) – the type of innovation that is considered likely to yield the coveted sustainability premium.<\/p>\n

The project is in the research stage, examining systemic problems, individual issues, global innovations and options, and expects to hand down a report in May.<\/p>\n

The report will isolate the industry’s 6-7 main technological challenges; which will be narrowed down to three critical challenges.<\/p>\n

The industry then plans to take the project to various Federal and State governments in the hope of engaging in a collaboration on an in-situ incubator project, possibly in NSW’s central west.<\/p>\n

Smaller producers take collaborative approach to compete<\/u><\/p>\n

It is interesting that Sandfire Resources and Anglo American have funded the project and not two of Australia’s biggest copper producers BHP and Rio Tinto. <\/p>\n

The majors are likely to keep any developments that will give them a competitive advantage in-house; but water is largely considered such an intractable, yet pressing problem that a collaborative approach is considered by many as the best solution.<\/p>\n

Emissions are also a major issue. For example, while electric cars boast far lower emissions over their lifetime, building a Tesla Model 3 generates more emissions to build than a Rav4, according to the Wall Street Journal, because of the metals needed for its lithium-ion battery. <\/p>\n

Even though copper is not the major component in a lithium-ion battery it is also used in other parts of an electric vehicle. It is estimated that the production emissions of copper have to fall by a factor of roughly five by 2050, if not more, if climate targets are to be reached. <\/p>\n

The Zero Emissions project is a good path for smaller producers with lower economies of scale given they will need to find innovative ways to remain competitive destinations for ESG capital in a world of user-pays and water pricing.<\/p>\n

Water is the critical issue for copper industry's Social Licence to Operate<\/u><\/p>\n

The copper industry’s water management, or lack thereof, has, in the past, been highly controversial and a source of reputational damage.<\/p>\n

Problems have ranged from highly contaminating tailings disasters such as BHP Group’s ((BHP)) Ok-Tedi, and more recently the Rio Tinto’s ((RIO)) Panguna mine in Bougainville in Papua New Guinea; and Grasberg mine in West Papua; to competition with communities for water resources in drought-prone areas, such as in Chile.<\/p>\n

In an ESG world, these past failures represent risks for investors. <\/p>\n

A 2020 report titled Cut and run: How Britain’s top two mining companies have wrecked ecosystems without being held to account <\/em>by the justice advocate London Mining Network singles out BHP and Rio Tinto’s activities in the global south as requiring restitution; and argues they should not be allowed to offload those responsibilities onto governments or via shelf companies.<\/p>\n

The network calls for much stricter regulation of transnational mining companies and supports international efforts to establish a United Nations Binding Treaty on corporations, arbitrated by an independent body; although how they will ensure independence defies explanation given the parlous records of many independent arbitrators in many industries in the past.<\/p>\n

Amnesty International has singled out BHP and Rio Tinto for human rights violations and environmental destruction, particularly those arising from tailings. <\/p>\n

Even were companies protected against restitution for past offences, regulations enforcing accountability for clean-ups of existing mines would come at a cost.<\/p>\n

Nor would it necessarily protect against future offences and clean-ups.<\/p>\n

Amnesty International notes that the Rio Tinto’s QIT Minerals Madagascar mine has breached the limits of an environmental buffer zone – sound familiar?<\/p>\n

Pushing boundaries at Juukan Gorge did not work out well for Rio Tinto in Australia; and it may be that investors can expect more pressure to bear on “pushy” miners in future.<\/p>\n

Copper has been designated a critical transition metal, so perhaps majors expect they can shelter behind that fact. <\/p>\n

That and the fact that, unlike steel, there is simply not enough recyclable copper in the West to meet demand, let alone Asia. <\/p>\n

But already BHP and Rio Tinto are encountering opposition; the US government recently rescinding US Forestry approval for their joint venture Resolute Copper’s Oak Flat mine on Apache land in Arizona.<\/p>\n

The US Government’s final decision on Oak Flat in about six months time will provide investors with a clearer view of the expectations for copper miners globally; as well as likely policy and the likely longevity of copper's influence in the transition.<\/p>\n

In the meantime, the industry will have to move fast to lift its ESG credentials and it will be interesting to see what future the Zero Emissions project yields.<\/p>\n

FNArena's dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future:<\/em> <\/strong>
https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/<\/a><\/p>\n

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