sustainable gold mining – the impact of ghg emissions...relationships –ghg emissions intensity,...
TRANSCRIPT
Sustainable Gold Mining – The Impact Of GHG Emissions
BY: Sam UlrichPrincipal Geologist16 September 2020
Environment
• Environmental stewardship
• Biodiversity, land use and mine closure
• Water, energy and climate change
Social
• Safety and health
• Human rights and conflict
• Labour rights
• Working with communities
Governance
• Ethical conduct
• Understanding our impacts
• Supply chain
Responsible Gold Mining Across the Mine Life CycleWorld Gold Council 2019
What is Sustainable Gold Mining?
Source: OceanaGold 2
Key climate risks to gold mining are water scarcity and extreme weather
33
Metrics Used – GHG Emissions Intensity
Type of Mine
GH
G E
mis
sio
ns
Inte
nsi
ty
Type of Mine
GH
G E
mis
sio
ns
Inte
nsi
ty
Reported by gold ounces produced Reported by ore tonnes processed
UG
OP/UG
OP
UG
OP/UG
OP kg CO2-e/t orekg CO2-e/oz Au
• Not affected by gold grade
• Not related to saleable product
• Affected by gold grade
• Related to saleable product
My personal preference from a mineral economics and finance perspective
4
Relationships – GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018)
0
200
400
600
800
1,000
1,200
1,400
1,600
0 200 400 600 800 1,000 1,200 1,400 1,600
Real A
ISC
(U
S$/o
z)
GHG Emissions Intensity (kg CO2-e/oz AuEq)
0
200
400
600
800
1,000
1,200
1,400
1,600
0 200 400 600 800 1,000 1,200 1,400 1,600
Real A
ISC
(U
S$/o
z)
GHG Emissions Intensity (kg CO2-e/oz AuEq)
UG
OP & UG
OP
Outlier
Low Cost
Low GHG
High Grade
Low Cost
High GHG
Low Grade
High Cost
High GHG
Low Grade
High Cost
Low GHG
High Grade
Cadia
Mean AISC
Mean G
HG
em
issio
ns
Mt Carlton
Edna May
Telfer
Boddington
Gwalia
Sunrise Dam
Circle size represents gold grade
Simple Relationships ExistHigher grade → Lower GHG
emissions intensityHigher grade → Lower costs
OutliersFosterville & Stawell minesVictorian grid electricity –
Brown Coal
Energy SourceImportant to understand
each mines main sources of energy
5
Australia GHG Emissions Intensity Curve30 June 2018
1. Gwalia; 2. Mt Carlton; 3. Agnew; 4. Granny Smith; 5. Tanami; 6. Peak; 7. Fosterville; 8. Carosue Dam; 9. Cracow; 10. Sunrise Dam; 11. Mount Monger; 12. St Ives; 13. Combined Jundee, Kalgoorlie and Paulsens; 14. Tropicana; 15. Combined Duketon North and South; 16. Plutonic; 17. Combined Central Murchison, Fortnum, Higginsville and South Kalgoorlie; 18. Tomingley; 19. Kalgoorlie (KCGM); 20. Mungari; 21. Combined Mt Magnet Operations and Edna May; 22. Thunderbox; 23. Matilda-Wiluna; 24. Paddington; 25. Cadia Valley; 26. Darlot; 27. Ravenswood; 28. Boddington; 29. Telfer; 30. Mt Rawdon; 31. Cowal.
Source: Ulrich et al., 2020a
6
Relationship – GHG Emissions Intensity, AISC with Mined Ore Source
0
200
400
600
800
1,000
1,200
0
100
200
300
400
500
600
700
800
900
0 2 4 6 8 10 12 14 16 18 20
Real A
ISC
(U
S$/o
z)
GH
G Inte
nsity (
kg C
O2-e
/oz A
uE
q)
Years
Phase 1OP Mining
Phase 2OP & UG Mining
Phase 3UG Mining
Mean Real AISC
Mean GHG Emissions Intensity
• OP mines – Lowest costs, highest GHG emissions intensity• OP & UG mines – Highest costs lower GHG emissions intensity• UG mines – Lowest GHG emissions intensity and costs higher than
OP, but lower than OP & UG
Source: Ulrich et al., 2020a
7
Country Average GHG Emissions Intensity Curve
1. Finland, 2. Bulgaria, 3. Canada, 4. Armenia, 5. Argentina, 6. Brazil, 7. New Zealand, 8. Democratic Republic of the Congo, 9. Tanzania, 10. Chile, 11. Indonesia, 12. Senegal, 13. Peru, 14. Laos, 15. Suriname, 16. Ghana, 17. Turkey, 18. Philippines, 19. Guinea, 20. Côte d'Ivoire, 21. United States of America, 22. Mexico, 23. Burkina Faso, 24. Mali, 25. Australia, 26. Papua New Guinea, 27. Kyrgyz Republic, 28. Namibia, 29. Egypt, 30. Russian Federation, 31. Dominican Republic, 32. Mauritania, 33. Greece, 34. Kazakhstan, 35. South Africa.
Can
ada
USA Au
stra
lia
Ru
ssia
Sou
th A
fric
a
Gh
ana
Source: Ulrich et al., 2020b
Impact of a Carbon Price Geographically
Hypothetical US$50/t and US$100/t carbon price used
Competitive advantage exists between countries due to primary energy sources• Low emissions energy (hydro, nuclear, solar, wind) versus High emissions
energy (fossil fuels - coal, diesel, gas). • Example Canada v Australia v South Africa
Source: Ulrich et al., 2020b
9
Declining Gold Grades
1991-2006 Study Average
40
%
2014-2018Study Average
616 kg CO2-e/oz Au
439 kg CO2-e/oz Au2006 - 2.44 g/t Au
2017 - 1.83 g/t Au
Forecast2029 - 1.02 g/t Au
49
%
32
%
34
%
OP
UGOP & UG
2029Forecast GHG
Emissions Intensity
Declining gold grades can negate the impact of real reductions in GHG emissions on an emissions intensity basis per ounce.
Source: CSA Global 2020b
10
Financial, Investment and Value Implications
Lower Cost of Equity & Debt Capital
Carbon Risk Awareness
Companies
Higher Carbon Risk
Lower Carbon Risk
GHG Emissions Abatement
Funds
Energy Substitution
Energy Efficiencies
Lenders
Source: CSA Global 2020c
Higher Firm Values
StrandedGold Assets?
Potentially
Future – Low-Carbon ‘Green’ Gold Premium
11
Climate Risks are Financial Risks - Considerations
Commodity differentiation, is it important?
Which reporting metrics do I use?
What are Scope 3 Emissions?
Interpretation? What does it mean?
How do I avoid poor disclosure and communication of GHG Emissions?
Do I understand the benefits or what the ramifications are?
Climate Risks are Financial Risks
FINANCIAL BENEFITS EXIST
• Available to junior companies• Access to lower cost debt and equity capital• Lower carbon risk higher firm value.
CHALLENGES
• Declining gold grades• Reporting and messaging• Not understanding the benefits or ramifications.
13
CSA Global, 2020a. Part 1 – An Introduction to GHG emissions in gold mining. https://www.csaglobal.com/videos/
CSA Global, 2020b. Part 2 – GHG emissions in gold mining – Australia in depth. https://www.csaglobal.com/videos/
CSA Global, 2020c. Part 3 – GHG in gold mining globally. https://www.csaglobal.com/videos/
Schodde, R., 2017. Long-term forecast of Australia’s mineral production andrevenue. The outlook for gold: 2017-2057. MinEx Consulting
Ulrich, S., Trench, A., Hagemann, S., 2020a. Greenhouse gas emissions and production cost footprints in Australian gold mines. Journal of Cleaner Production
Ulrich, S., Trench, A., Hagemann, S., 2020b. Climate change and gold mining. University of Western Australia working manuscript.
References