Key trends impacting ESG performance in the mining sector

Sustainability in mining covers a wide range of activities, from community engagement and development prior to a mine’s construction through to rehabilitation.

At the same time, there is rising pressure from investors and customers, with the latter increasingly seeking greater transparency with regards to the products they purchase. Key elements of sustainable mining are the management and reduction of energy use and associated emissions and, in this regard, miners are working to reduce their Scope 1 and 2 emissions, with a long-term goal of being carbon neutral, typically by 2050.

This is taking several forms but includes sourcing a greater share of energy from renewable sources, with rising use of solar power, as well as minimising carbon emissions from operations, such as through a shift to battery-powered vehicles. While the use of trolley-assisted trucks and battery or electric underground loaders and trucks is increasing, the limited options for battery-operated surface fleets means that diesel displacement is not expected by many miners until well into the next decade.

In the meantime, energy efficiency and a shift to low carbon fuels or renewables will support them in achieving their short-term goals, typically a 30% reduction in operational emissions by 2030.

Meanwhile, safety levels have improved, supported by the implementation of various programs and technologies. A recent survey by GlobalData showed that expectations for investment in safety-related technology such as collision avoidance and fatigue detection are higher than many other technologies, including drones and predictive maintenance.

Internet of Things (IoT)

IoT describes the use of connected sensors and actuators to control and monitor the environment, the things that move within it, and the people that act within it. IoT technology enables mining companies to operate in mines more safely, improve productivity and reduce costs.

Use cases include autonomous drilling, driverless haul trucks, fatigue management, underground communication and predictive maintenance. For example, proximity detection systems (PDS) and vehicle control systems (VCS) detect people and vehicles near an enabled vehicle and provide alerts.

Autonomous Vehicles (AVs)

The popularity of autonomous haul trucks is gradually growing across surface mines, with miners taking advantage of improvements to productivity, reductions in accidents and operating costs, increased machine life and tire life and lower fuel consumption.

Haul trucks specifically are just one example of AV technology, but is one particularly relevant to the industrial sectors. Between May 2021 and May 2022, the number of autonomous haul trucks in operation globally rose from 769 to 1,068, an increase of 39%, with the figure expected to exceed 1,800 by the end of 2025.

Artificial Intelligence (AI)

By automating non-trivial tasks, AI allows mining companies to remove humans from the most dangerous areas of mining and processing, helping to ensure the safety of the workforce.

Drilling or digging to look for resources can have huge environmental implications. Therefore, miners should aim only to explore areas that are likely to have rich deposits to avoid sunk environmental costs in areas with no mining potential. Using AI to identify areas of high ore concentration without the need for extensive excavation beforehand can significantly enhance the environmental footprint of mining.

Energy prices

Mining is incredibly energy-intensive, and energy use often represents a significant amount of a mine’s overall carbon dioxide emissions.

Switching to renewable energy is an important and financially viable opportunity to improve environmental performance. Furthermore, switching to electric vehicles improves air quality both above and below ground and saves ventilation costs, as electric vehicles emit no diesel particulate matter or other harmful carcinogens.

Activist investors

Activist investors buy significant stakes in a public company and then use their voting rights to put pressure on the company’s management. ESG issues are increasingly at the top of the agenda for activist investors. BlackRock, the world’s largest asset manager, has promised to take voting action against companies it feels are not doing enough on ESG.

In March 2020, investors in Rio Tinto represented by activist group Market Forces urged the company to set downstream emissions targets. This effectively forced the world's biggest iron ore miner to commit to targets that would scale back emissions of its customers, in line with the Paris Agreement.

Capital raising

Banks and other investors are increasingly scrutinising a company’s ESG performance in their investment criteria. ESG presents a sizeable risk, and both investors and insurers are increasingly shunning thermal coal.

Green bonds — sometimes referred to as climate bonds — are a type of fixed-income instrument where the proceeds are earmarked for projects that deliver environmental benefits. In 2020, a total of $305.3 billion was issued in green bonds.