APRIL looks like it will become an important month for Anglo American as it marks out the northern hemisphere spring for publication of its sustainability report. This year, the focus is firmly on when it will sell its remaining South African thermal coal assets.
There’s also the question of how the group intends to roll out emissions controls, especially after CEO, Mark Cutifani, was critical of BHP’s attempts to lessen its own carbon footprint last year.
At the time, Cutifani said former BHP CEO, Andrew MacKenzie’s pledge to embark on Scope 3 measures “didn’t quite land right”. MacKenzie’s plan at the time was to extend on-mine emissions (Scope 1) and third party supplier emissions (Scope 2) to third party consumer emissions.
Cutifani acknowledged the good intentions but in an interview with Miningmx earlier this month, it’s clear his view hasn’t changed on how mining firms ought to be tackling questions such as climate control.
“From our point of view, we think that it’s important to understand the pathways we can create and understand where we can impact Scope 3 and when we can make a decision about, let’s say, being carbon neutral.
“I said I can be like everybody else and say we can be carbon neutral by 2050, and we can. We know that the pathway is like. But, to me, it feels hollow; it’s insincere, and it just doesn’t tell people and help people to understand what we’re doing.”
“That’s the work we’re doing today. It just feels disingenuous, almost as though you’re trying to get out there and say something without having a pathway. So, for me, that’s not who we are.”
The plan is more likely to be a short-term one which Cutifani believes to be more realistic than grandiose but ultimately unreachable goals. As a result, Cutifani says Anglo will stick to a short-term and more modest goal of cutting energy consumption 30% by 2030.
What Anglo might do in respect of its South African thermal coal mines is an even more urgent question. Last year, it promised “a just transition”, saying that it was probably better it continued to operate the mines responsibly whilst – at the time same – indicating new investment would not be forthcoming.
The zeitgeist, however, seems to have outpaced Anglo’s medium-term strategy in respect of the coal mines. Where it once alluded to five or more years of ownership, divestment by peer groups has heightened investor awareness and increased the pressure to take a decision.
Asked if the sustainability report will set a timeline in place for the sale of the assets, Cutifani said: “This year we will define a new pathway, but at the same time, it has to be done with our stakeholders.
“Our view this year is about clarity and how we go forward and we are taking the view of each of these stakeholders into account in defining that pathway. But we are in a transition process, there’s no doubt about that. We’ve been pretty clear on that.”
The South African mining industry has no option but make supportive noises regarding mines and energy minister, Gwede Mantashe’s proposal to open the door to private capital on an ‘independent’ energy company.
Afterall, there’s so little meat on the bones of the proposal, that it would be foolish to dismiss it outright.
The overriding sense, however, is that the mining sector would prefer the Department of Mineral Resources and Energy to focus on the low-hanging fruit: namely, make it possible to produce independent power on a scale that’s planned by, say, Vedanta Resources.
Deshnee Naidoo, CEO of Vedanta’s Zinc International division, told Finweek last week her company would “put its hand up” for the development of a hybrid model of energy generation that would make it possible to build the 200MW in power required for the firm’s smelter expansion in the Northern Cape.
“This is exactly what the government should be doing,” said Roger Baxter, CEO of the Minerals Council South Africa. “Build the independent power necessary and, at incremental cost, add another 50MW that can contribute to the national grid,” he said.
Government currently requires mining companies to apply for a licence should their independent energy demands exceed 1MW.
“Accelerate the unbundling is the answer for Eskom rather than creating a separate company, and deregulate entry to the grid,” said Mike Fraser, COO of South32. “Mining companies shouldn’t just generate for their own use because if they can generate at the right point of the cost curve, the market operator (Eskom) should be able to buy that.
“Build more than you need and sell it into the grid, at incremental cost”. In the meantime, Mantashe has promised to expand on his plans for an independent energy company.
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