In Chile, 80 percent of copper production is already located in extremely high water-stressed and arid areas by 2040, it will be 100 percent. Water-stress hot spots are expected to worsen in the coming decades. We then overlaid data from McKinsey’s MineSpans database on the location, production, and type of more than 3,000 mines worldwide for four major extracted commodities: copper, gold, iron ore, and zinc. 3 We looked at current and projected water stress, defined as the ratio of the amount of water used over the total quantity of water available locally, from the World Resources Institute’s Aqueduct Water Risk Atlas. We recently ran and analyzed a water-stress and flooding scenario using McKinsey’s MineSpans database on copper, gold, iron ore, and zinc.
Water stressĬlimate change is expected to cause more frequent droughts and floods, altering the supply of water to mining sites and disrupting operations. We evaluated the impact of water stress and flooding in detail and suggest how operators might mitigate these risks. Vulnerable mining assetsĭespite changing climate conditions, options exist to improve the resiliency of mining assets to certain physical effects. To address climate risk for miners, we examine three questions in this article: Which mining assets are most at risk from physical climate change? How could decarbonization shift demand for key minerals? And how can mining companies decarbonize their own operations? We then lay out the operational, investment, and portfolio options that mining executives can use to create an actionable climate strategy and set ambitious targets. Capital investments are required to achieve most of the decarbonization potential, but certain measures, such as the adoption of renewables, electrification, and operational efficiency, are economical today for many mines. Mines theoretically can fully decarbonize (excluding fugitive methane) through operational efficiency, electrification, and renewable-energy use. This industry target range does not include Scope 3 emissions. 2 Limiting climate change will require a significant reduction in greenhouse-gas emissions between 20: a 41 to 72 percent decrease for a 2.0☌ scenario and a 78 to 89 percent decrease for a 1.5☌ scenario, according to data from the Intergovernmental Panel on Climate Change (IPCC). Current targets published by mining companies range from 0 to 30 percent by 2030, far below the Paris Agreement goals. The mining industry has only just begun to set emission-reduction goals. To address climate risk, mining companies can focus on three areas: which assets are most at risk from physical climate change how decarbonization could shift demand for key minerals and how miners can decarbonize their own operations.
A significant share of global emissions-28 percent-would be considered Scope 3 (indirect) emissions, including the combustion of coal. The lower number refers to global-warming potential on a 100-year time frame (GWP100), and the higher number refers to global-warming potential on a 20-year time frame (GWP20).
The range of fugitive-methane emissions is a function of the time horizon at which the warming impact of methane is calculated. 1 Emission estimates are based on research by McKinsey’s Basic Materials Institute. Scope 1 and Scope 2 CO 2 emissions from the sector (those incurred through mining operations and power consumption, respectively) amount to 1 percent, and fugitive-methane emissions from coal mining are estimated at 3 toĦ percent. Mining is currently responsible for 4 to 7 percent of greenhouse-gas (GHG) emissions globally. The mining sector itself will also face pressure from governments, investors, and society to reduce emissions. Mining-portfolio evaluation must now account for potential decarbonization of other sectors. That target, if pursued, would manifest in decarbonization across industries, creating major shifts in commodity demand for the mining industry and likely resulting in declining global mining revenue pools. Under the 2015 Paris Agreement, 195 countries pledged to limit global warming to well below 2.0☌, and ideally not more than 1.5☌ above preindustrial levels. But forecasts of hazards such as heavy precipitation, drought, and heat indicate these effects will get more frequent and intense, increasing the physical challenges to mining operations. Mining is no stranger to harsh climates much of the industry already operates in inhospitable conditions. In the mining industry, the impact of climate change and how the industry can respond to it has increasingly been a topic of discussion over the past decade.
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