Anglo American to halve indirect emissions by 2040

Anglo American (LSE: AAL) aims to halve its indirect greenhouse gases, known as Scope 3 emissions, by 2040 while it continues to boost the use of renewable energy across its operations, particularly in South America.

The company vowed two years ago to meet power requirements of its copper operations in Chile with renewables by 2021. It also said it expected to have its iron ore and nickel operations in Brazil, as well as its copper mine in Peru, relying solely on green power by 2022.

In its Climate Change Report 2021, published ahead of the United Nations climate summit COP26, Anglo American broadened its green ambitions. It now expects to draw 56% of grid electricity supply from renewables by 2023. That compares to 2020 levels, when just over a third of the electricity the company used globally was from renewable sources.

Anglo American warned that progress towards cutting Scope 3 emissions depends mainly on the steel sector cutting its own carbon gasses and supportive global policies. The highly polluting process of making steel involves adding coking coal to iron ore to make the alloy, and is estimated to be responsible for up to 9% of global greenhouse emissions.

“Through innovative technologies and practices, we can be more targeted in accessing those metals and minerals, use less water and energy and, crucially, generate fewer GHG emissions,” CEO Mark Cutifani said in a statement.

Anglo American has also begun replacing its diesel-powered mine trucks with hydrogen fuel-cell and battery trucks. Haul trucks contribute up to 80% of diesel emissions at the company’s mines, it said.

Exiting coal

Mounting pressure from investors, regulators and environmental organizations has pushed miners to either sell coal assets or to limit their exposure to the fossil fuel in recent years and Anglo American has not escaped that pressure.

In April, it spined off its South African coal operations into a new company — Thungela Resources (LSE: TGA; JSE: TGA). It also made the decision to sell Cerrejón, its thermal coal subsidiary in Colombia, selling a 33.3% interest in the asset to Glencore (LSE: GLEN) in June.

The move, part of a gradual offloading of its coal mines that began in 2014, aims at giving investors the choice to whether or not support the coal industry, Cutifani has said.

While Anglo American is moving away from the most polluting kind of coal, metallurgical or coking coal appears to be one of its key commodities moving forward.

The miner recently increased its medium-term guidance for the steelmaking ingredient to an estimated 26-28 million tonnes by 2022.

Its main customers are all in Asia, including India, all of whom rely on coal-fired power, Cutifani has said. “You can’t just walk away from billions of people across the globe,” he has noted.

Gloom and doom

Greenhouse gas emissions are on a path to increase 16% by the end of the decade compared with 2010, setting the world on a threatening course of continued warming, the United Nations said in a report this week.

A separate study released on October 25 from Canadian Environment Minister Jonathan Wilkinson and Jochen Flasbarth, his German counterpart, said rich countries would “probably” meet their goal of providing US$100 billion annually to developing nations, but in 2023 — three years behind schedule.

The pair was tasked by COP26 President Alok Sharma with coming up with a plan to deliver the funds, as many developing nations have said their climate pledges are conditional on receiving outside support.

The reports echo an Intergovernmental Panel on Climate Change (IPCC) updated published in August, showing that temperatures on Earth are on track to rise by about 1.5 degrees Celsius in two decades.

The updated report, the first major review of its kind since 2013, added that a near-2 metre rise in sea levels by the end of this century could not be ruled out and described the finding as “a code red” for humanity.

The UN weather agency also published an eye-opening report this week, warning that concentrations of greenhouse gases in the atmosphere reached records in 2020, despite the economic slowdown caused by the coronavirus pandemic.