NOT SHOVEL READY

Failing to plan for climate change could cost mining companies $10 billion

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Energy Shocks
Obsession
Energy Shocks

Mining companies already know their business is vulnerable to climate change legislation. But the extent to which they’re ready for possible changes differs widely, according to new research which focuses on 11 companies and finds that $10 billion of their earnings is at risk if a carbon price is introduced.

CDP, a non-profit organization that encourages companies and cities to disclose carbon use (and was formerly called the Carbon Disclosure Project), said the companies accounted for about 85% of the emissions of large listed miners. Mining, meanwhile, is one of the highest-emitting sectors of the global economy.

The question of readiness is salient because climate change negotiations, due to start in Paris at the end of this month, may result in more legislation, or a timetable for the introduction of further curbs on emissions, for example an international carbon price. A carbon price of $50 per tonne emitted is already accounted for by some companies, CDP said.

If it were to be introduced, it could cost the eleven firms up to $10 billion, according to the research.

Glencore, a Switzerland-based commodity trader and miner which has been hard-hit by falling commodity prices, was described as the “clear laggard on carbon regulation readiness,” due to its opposition of a system for pricing carbon, and its dismissal of the concept of “stranded assets”—the idea that some owned assets, like coal fields, could become uneconomical to mine in a future with tighter environmental legislation and more alternative sources of energy.

Vale, a Brazilian company with most of its exposure in iron ore and steel, was ranked the best of the companies studied due to a higher level of readiness for cost of carbon and water resilience, and because it is “mildly supportive of low carbon regulation.” One other company, the UK’s Antofagasta, was found to show support for policies to avert climate change. The other nine were found to be “obstructive.”

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