JOHANNESBURG/TORONTO, Nov 23 (Reuters) - Investors are
putting pressure on gold miners, whose high greenhouse gas
emissions have been less scrutinized, to report transparently
and take concrete steps to curb them after a rally in prices
this year drew closer attention to the sector's footprint.
Gold miners are among the biggest emitters of greenhouse
gases in the mining sector, although critics generally point to
coal miners and iron ore miners.
Scope 1 and 2 emissions from gold are higher than those of
copper, nickel, iron ore and metallurgical coal, before
factoring in freight and downstream emissions, according to data
from ESG consultancy Skarn Associates.
Heavy haul trucks and power supplies are major sources of
emissions, while deteriorating gold ore grades have forced
miners to dig more rock to extract each ounce of gold in an
energy-intensive process.
The World Gold Council estimates the sector emitted 32,689
tonnes of CO2 equivalent per tonne of gold produced in 2018, up
12% from the 2017 total. They have not yet published estimates
for 2019.
For a graphic showing emissions compared across mining
activities, click here: https://graphics.reuters.com/MINING-GOLD/EMISSIONS/oakvexjjgpr/
George Cheveley, portfolio manager at Ninety One, which
holds more than a billion dollars in gold assets, said gold
miners' emissions data had influenced decisions to shift the
weight at which to hold certain companies in his funds.
"These numbers are increasingly important - carbon taxes
could come in, so you need to establish your exposure," he said.
In South Africa, the continent's No. 2 producer of gold, a
carbon tax on Scope 1 emissions is already in place, and is set
to expand to apply to Scope 2 emissions as well from the start
of 2023.
Gold miners may have escaped the more intense scrutiny faced
by coal or iron ore mining partly because investors use gold as
an "insurance asset" and portfolio risk hedge, said Sora
Utzinger, responsible investment analyst at Aviva Investors.
"However, we believe this may soon change as more
international mining companies chart their own net-zero roadmaps
and as governments implement stricter controls on emissions,"
she said.
Investors sank $47 billion into gold ETFs in the first 10
months of this year, up 203% from last year. For a graphic
click: https://graphics.reuters.com/MINING-GOLD/EMISSIONS/rlgvdaqelpo/
Renewed interest in gold mining stocks - with $3 billion
flowing into gold equity funds so far this year - has
intensified pressure, executives said.
"We have certainly seen conversations around ESG ramping up
pretty significantly," Newmont CEO Tom Palmer said last month.
The miner this month committed to a 30% reduction in
greenhouse gas emissions by 2030, and net zero emissions by
2050.
No. 2 gold miner Barrick has committed to reduce its
greenhouse gas emissions by at least 10% by 2030.
For Barrick and others, switching to renewable energy
sources to power mines can add to short-term costs. But it helps
satisfy investor demands for cleaner operations while
significantly reducing longer term energy costs at mines, which
tend to be in isolated, off-grid locations with diesel
generators the only option, industry consultants said.
Barrick said a solar power plant at its Loulo mine in Mali
delivered a saving of 540,190 litres of fuel and 1,593 tonnes of
CO2-equivalent during the third quarter of this year. The miner
is busy permitting a 100MW solar power farm in Nevada.
Being on the grid has downsides.
South Africa's Sibanye-Stillwater and Gold Fields blame
their high Scope 2 emissions in part on reliance on the national
grid's coal-fired electricity generated by state power firm
Eskom.
The South African miners say red tape has stymied their
efforts to install renewable energy capacity.
"There will obviously be increasing pressure to reduce
emissions from the mines," said a Sibanye-Stillwater spokesman.
"But consideration needs to be given to the role and impact of
Eskom and limited options available to the gold mines."
(Reporting by Helen Reid in Johannesburg, Jeff Lewis in
Toronto, Tanisha Heiberg in Johannesburg; Editing by David
Gregorio)