Climate-associated risks will make mining assets more vulnerable. The demand for water may exceed available supply, and natural disasters, along with the necessity to avoid emissions-intensive projects, will increasingly require mining operators to reconcile their asset evaluation with climate change.
The mining and metals industry is currently challenged by emission-reduction efforts and increasingly stricter legislation, and projects can be scuppered by carbon taxes, supply chain restructuring, and a lack of lending from financiers looking to minimise their own climate risk. However, this dynamic also creates potential opportunities, not least related to the mining industry’s essential role in providing the materials for renewable technologies — the material-intensive nature of renewables means the extractive industry will continue to play a foundational role in the global energy transition.
Companies can mitigate their climate risk by addressing environmental problems and transitioning to sustainable mining practices. To attain a competitive advantage, many mining corporations have already begun to set emissions targets. With a focus on environmental, social and governance transparency, sustainable supply chains can be developed and nurtured, and diversification into emerging markets can also bring benefits. Certain countries in Africa, Southern Asia, and South America are especially well positioned to develop their local extractive industry, either through nationalised mining operations or partnerships with the multinational mining corporations.
Ultimately, the transition to a low-carbon environment will result in winners and losers — based on the mining company’s preparedness and awareness of sustainability issues.
