Wednesday, January 19

Most miners fail to achieve the carbon cuts needed for the UN target


The mining industry is falling short of reducing greenhouse gas emissions enough to limit global warming, even after stepping up efforts to help combat climate change.

Only 11 of the 46 metallurgical and mining companies analyzed by Bloomberg Intelligence have carbon reduction targets that match the levels necessary for the United Nations goal of limiting global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above from pre-industrial levels, according to a Bloomberg Intelligence Report. The group includes global giants such as Anglo American Plc and Newmont Corp., the world’s largest gold producer.

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Fortescue Metals Group Ltd of Australia and Boliden AB of Sweden are the group leaders, indicating better readiness for a low carbon transition and suggesting the best mix of current and forecasted performance to reduce emissions, based on the rating ranking of Carbon from Bloomberg Intelligence. The top five companies, based on their overall carbon score, are:

company name Overall score
Fortescue Metals Group Ltd. 9.84
Boliden AB 9.75
Kumba Iron Ore Ltd. 9.73
Newmont Corp. 9.53
BHP Group Ltd. 8.84

The BI ranking measures companies in terms of reduction trends, current and future carbon dioxide intensity, planned cuts, and positioning through the end of the decade compared to a temperature-aligned benchmark, using data up to April 1st. Of the companies analyzed, only Fortescue has set a carbon neutral target for 2030. Fourteen companies aim to reduce emissions to zero with the target date of 2030-2050 as part of a long-term transition.

The mining industry faces increasing scrutiny from investors and regulators demanding a greater emphasis on environmental, social and governance issues. Large miners have been working to improve sustainability reports that show awareness of how hard their business can be affected if they ignore those calls, and several producers have set targets to reduce emissions or adopted more ambitious targets in the past two years.

Aluminum producers face the greatest risks due to carbon-intensive operations, according to the BI report. Those companies must reduce emissions by 49% by 2030, compared to the 20% cut needed by other diversified and precious metal miners.

“Having carbon reduction targets is important for aluminum companies because they are more carbon intensive than most other metals,” said Shaheen Contractor, an analyst at Bloomberg Intelligence. “That could be the reason why for other miners like precious metals companies, few have set carbon emission targets as of April 1.”

European aluminum companies could see costs of up to 1.5% of earnings before interest, taxes, depreciation and amortization until 2024, according to the report. A proposal to cut emissions in the European Union by 55% by the end of the decade “may mean more headwinds.”

© 2021 Bloomberg


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