Features, Gold, Opinion

Reducing the carbon footprint of gold operations

Gold mining is an energy-intensive and greenhouse gas (GHG) emissions-intensive industry. With climate change risks identified as financial risks and the Paris Agreement’s adoption in 2015, far greater scrutiny is being placed on companies’ GHG emissions and actions to mitigate them to become more environmentally sustainable.

Presently, investment funds (e.g., BlackRock) and sovereign wealth funds (e.g. Norway) are reducing their carbon footprints by minimising their exposure to fossil fuels (e.g. thermal coal).

Funds are pressuring lenders they invest in to have greater transparency of their carbon footprints. Additionally, these funds require the companies they invest in to improve their disclosure of climate risks and their mitigation measures.

It is anticipated that the financial community will broaden its lower emissions emphasis from fossil fuels to other energy-intensive industries in the future, such as the gold industry.

Understanding GHG emissions in gold mining

The reporting of GHG emissions is subdivided into three scopes:

Scope 1 – Direct emissions from sources a company owns or controls (e.g. emissions from on-site electricity generation, mining, processing and smelting to produce gold/dore bars).

Scope 2 – Indirect emissions from the consumption of purchased energy at an operation owned or controlled by a company (e.g. purchase of grid electricity generated by burning coal or natural gas).

Scope 3 – Indirect emissions that occur in the broader economy due to a company’s activities. However, are from sources not owned or controlled by the company, (e.g. emissions from the production of purchased materials and fuels, transportation of goods to the site, flying on commercial planes, and the refining and subsequent use of the gold).

Emissions are reported as a carbon dioxide equivalent (CO2-e), which includes the following greenhouse gases; carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs).

Most large and mid-size gold mining companies report total Scopes 1 and 2 emissions of their company, with the majority also providing a breakdown for their individual mining operations. Presently very few companies report Scope 3 emissions. Gold mining is different from commodities like iron ore or coal, as most Scope 3 emissions occur upstream from the mine, i.e. emissions from suppliers of goods and services to the mine.

Scope 3 emissions for coal and iron ore are mostly downstream, from combustion and reduction to produce steel, respectively.

Also, generally, a GHG emissions intensity is reported to measure performance year on year. There are two commonly used emissions intensities in gold mining: the GHG emissions per tonne of ore processed; and the GHG emissions per gold ounce produced.

The emissions intensity per ounce of gold produced is best for comparing companies or mines in the form of a GHG emissions intensity curve. The key drivers of the emissions intensity per gold ounce produced are the mines energy source, the type of mine whether open pit or underground, the gold grade of the ore and depth of mine.

The emissions intensity per tonne of ore processed is useful for assessing absolute changes in GHG emissions at a mine with steady-state production. However, it is not useful for comparisons between mines unless they have the same nameplate processing capacity.

Relationships between GHG emissions and physical gold mining parameters

A recent study investigated the relationships between GHG emissions, gold grade, energy source, mine type and production costs (AISC – all-in sustaining costs) in Australian gold mines (Ulrich et al. 2020).

There is a strong relationship between the gold grade of the ore processed and GHG emissions intensity per ounce of gold produced. The higher the gold grade, the lower the GHG emissions intensity (and vice-versa) and the lower the AISC.

The data also broadly grouped based on the type of mine whether open pit, underground or was an operation that sourced ore from both open pit and underground. They had reasonably distinct footprints.

On average, open pit mines have the highest GHG emissions intensity and lowest AISC. Mines that source ore from both open pit and underground sources had the highest costs, but lower GHG emissions intensity.

Underground mines have the lowest GHG emissions intensity and costs lower than mines that source ore from both open pit and underground but higher than open pit mines.

On average underground mines in Australia have an emissions intensity 40 per cent lower than open pit mines. Further research has shown that underground and open pit mines in other countries have these same systematic differences in GHG emissions intensity and production costs.

A challenge within the gold industry is that of declining gold grades. In Australia, gold grades have declined 25 per cent from 2.44 grams a tonne (g/t) gold in 2006 to 1.83 g/t gold in 2017 (Schodde, 2017).

They are predicted to fall a further 44 per cent to 1.02 g/t gold by 2029. A 44 per cent decline in gold grade means a 32-50 per cent increase in GHG emissions intensity, depending on whether a mine is an open pit or underground operation or a combination of the two.

Energy source competitive advantage

Some gold producing countries have a distinct competitive advantage over others due to the energy sources available in that country. For example, most of Canada’s gold mines are located in provinces with predominantly low emission energy sources (e.g., hydroelectricity and nuclear).

However, Australia’s gold mines are reliant on energy from fossil fuels. In Australia, gold mines are either connected to grid electricity predominantly generated from coal and natural gas or are remote mines generating electricity on site from diesel and gas.

To put this into perspective, Canada’s gold mining industry’s weighted average GHG emissions intensity is 244kg CO2-e/ounce (oz), whereas Australia’s is 637kg CO2-e/oz.

At the upper end is South Africa’s gold industry with a weighted average GHG emissions intensity of 2754kg CO2-e/oz, whose electricity is generated from low-quality coal. Additionally, many of the South African mines are more than two kilometres in depth with considerable energy required to ventilate and cool them.

Gold miners are starting to address society’s concerns over climate change and investors’ concerns of financial risk by increasing disclosure of their climate risks and carbon footprints, while undertaking activities to abate GHG emissions.

Current abatement measures involve either energy substitution or undertaking energy efficiencies. Energy substitution either involves replacing one fossil fuel with less carbon-intensive fossil fuel (e.g. diesel to gas) or replacing it with renewables (e.g. solar and wind).

Recent Australian examples of mines that have undertaken energy substitution include the Agnew, Tanami and Granny Smith mines.

Energy efficiencies can include strategies to minimise fuel use or installing ventilation on-demand in underground mines. The introduction of electric vehicles and mining fleet in underground mines reduces both fossil fuel use and the energy required for ventilation.

Only a few mines in Canada have embarked down this path due to the early technology stage of electrified mining fleet.

We can expect to see more mines in coming years embrace this form of technology to combat climate change and reduce their greenhouse gas emissions successfully.

Previous ArticleNext Article

Leave a Reply

Send this to a friend