Climate change is a key challenge of our era. We recognise the need to take meaningful action towards addressing its causes, and to help protect our employees, assets, as well as the communities and environments linked to our operations, against its potential impacts.
An overview of Moranbah North Power Station, Queensland, Australia
Our strategy
As an energy-intensive company, a major producer of coal and neighbour of many underdeveloped communities, Anglo American has identified three main strands of climate change-related risk to which the Group is exposed.
An increase in the cost of doing business through rises in energy prices and carbon taxation. In South Africa, for example, we already face energy price escalations of 25% every year until 2013 and believe that energy prices will continue to rise significantly in all markets. Carbon taxation is already in place or being actively planned in many countries of significance to us. We estimate that these could have a material financial impact on our business.
The risk to our markets. Despite current levels of uncertainty related to climate change policy, we believe that by 2020 most supply chains will be actively involved in reducing their greenhouse gas (GHG) emissions. While this presents obvious, though not insurmountable, risks for coal businesses, opportunities in environmentally friendly technologies exist within other commodities such as platinum and copper.
The physical impacts that climate change might cause. As an investor in long term assets, it is important for us to understand where extreme weather events, increased temperatures or sea level rises may disrupt our operations, supply chains and transport infrastructure, or cause harm to employees and local communities in the future.
In response to these risks, our climate change strategy has three focus areas: operational excellence; technology development; and engagement and partnerships.
Operational excellence
With the energy we consume accounting for 70% of our GHG emissions, our primary response to climate change is to use energy more efficiently. Climate change considerations are now incorporated into our business planning, supply chain and project reviews.
As our business grows and mining conditions are becoming more challenging, our ECO2MAN programme – which has been implemented at every site – allows us to better understand our future energy consumption and carbon footprint, and identify and prioritise savings projects. Every site has set new energy and carbon targets and we are working with recognised experts on climate science to understand and prepare for the potential physical impacts of climate change.
As part of our strategy, all operations and projects are required to conduct climate change vulnerability assessments, and all identified high-risk sites undertake detailed risk assessments and prioritise appropriate response measures.
Technology development
We are investing in technologies that will enable us to run cost efficient, carbon-neutral mines in 20 years time. We have already invested over $180 million in low carbon technology and we are developing technology pathways to minimise the future carbon footprint of mining. We also have a number of investments in clean coal research and development projects.
Methane, which accounts for 17% of our carbon footprint and is our largest single source of GHG emissions, is highly concentrated at many of our metallurgical coal mines in Australia. Our coal business in Australia has invested more than $120 million over the past five years to abate eight million tonnes of emissions using all available commercial scale technologies. These include initiatives such as the Moranbah North and Capcoal power stations. By capturing methane, which would otherwise be vented, these power stations prevent 2.5 million tonnes of CO2-equivalent emissions from entering the atmosphere each year and they generate 75MW of electricity – equivalent to taking about 580,000 cars off the road.
Engagement and partnerships
We rely on governments and other stakeholders to develop and implement equitable, efficient and effective climate change policies which benefit society as a whole and allow business to continue to play a role.
We believe that the transition to a low-carbon economy cannot happen overnight and we fully endorse the International Council on Mining and Metals’ approach, which encourages governments to take a simple, effective and gradual approach to developing climate change policy. In particular we believe that policies should recognise the stage of a country’s development and reinforce its developmental priorities, in particular alleviating poverty, enabling economic progress and access to energy. In addition, with developing countries particularly exposed to the physical impacts of climate change it is important that such policies include measures to anticipate and mitigate such impacts.