How reducing climate risk exposure can improve productivity
The mining sector is a significant contributor to greenhouse gas emissions as well as being exposed to risks associated with the impacts of climate change. According to Australia’s most recent National Greenhouse Inventory (for 2013), the industry is responsible for 11.6 per cent of Australia’s direct greenhouse gas emissions (EY analysis of Commonwealth of Australia, 2015a). At the same time, climate change poses risks to physical assets and infrastructure, supply chains through disruption to transport networks, the availability of water and energy resources and the health and safety of site-based employees. These risks are amplified by the already challenging geographies and climates in which many mines are located.
Research by EY into the risk priorities of the mining and metals sector for 2015-16 also indicates that climate change is on the radar of mining company executives. It found that their key concerns included: maintaining a social license to operate, access to water and the implications of stranded assets and climate change (EY, 2015) (Figure 1).
The Australian mining sector has increased its emissions by 22 per cent since 2005. This increase contrasts with the Australian Government’s target of a 26 to 28 per cent reduction in emissions by 2030 from the 2005 baseline (Commonwealth of Australia, 2015b). In this context, significant greenhouse gas reductions will need to be made if the sector is to contribute to this target.
So, how is the mining sector responding to the challenge of climate change, both in terms of contributing to emissions reductions and adapting to the impacts of climate change?
In this article, we examine key innovation and technology responses as well as examples of leadership being demonstrated within the sector that are not only reducing climate risk exposure, but also improving productivity.
The key innovation and technology responses considered include:
- fugitive emissions capture
- carbon capture and storage
- alternative energy sources
- vehicle automation
- mine mapping technology
- climate risk assessment and adaptation planning
- connecting to a different perspective.
- Fugitive emissions capture
- Once considered a waste and health hazard, waste coal mine gas is now viewed as a valuable resource. While waste coal mine gas must typically be released in advance of underground mining for safety reasons, the scale of the resultant fugitive emissions can be significant, particularly when the global warming potential of methane is considered.
While the impact of methane emissions can be considerably reduced through flaring (the conversion of methane to carbon dioxide and water), a number of operations exist where an underground mine and coal seam gas-powered electricity generation plant have been located adjacent to each other so that captured methane can be used as a fuel source. One example is Energy Developments Limited’s Moranbah North Power Project (EDL, 2011), which takes waste coal mine gas and uses it to generate electricity, thereby significantly reducing fugitive emissions associated with the adjacent coal mine.
Other technologies are also being developed and trialled to capture ventilation air methane at lower concentrations, but this is much more challenging to address due to the large volumes of gas produced.
Carbon capture and storage
Carbon capture and storage (CCS) has been described as ‘the critical enabling technology to help reduce CO2 emissions’ (MIT, 2007). However, while CCS’s ability to simultaneously address climate concerns and support the long-run value of coal assets should make it an attractive option for industry, government and society, the implementation of the technology has been limited to date. CCS plants around the world are currently removing around 0.1 per cent of the world’s annual CO2 emissions (Global CCS Institute, 2015).
Unlike some of the other responses outlined here, CCS contributes additional cost (in this case to electricity generation and other industrial processes). So the question becomes what additional technology might support the wider adoption of CCS? We note that when combined with enhanced oil recovery, oil field production benefits can offset the additional capital and operational costs (EY analysis based on Global CCS Institute, 2015). Emissions trading schemes also offer a potential source of revenue; however, political and price certainty would be required to create the long-term incentives for investment necessary for CCS to achieve significant take up.
Alternative energy sources
Developments in renewable energy technologies have reduced the cost of renewables significantly, making them comparable to traditional sources. Developments in battery storage will further improve the cost comparison, particularly if they can remove the need for significant backup generation capacity in remote locations.
Climate change represents a physical risk to operations subject to existing extreme weather conditions. In the case of the Rio Tinto majority-owned Diavik diamond mine in the Northwest Territories of Canada, this is particularly true. The mine is located on a dyked island in a subarctic lake. A year’s worth of supplies, including diesel for mining and power generation, is transported during an approximate eight-week window over a 350 km ice road (Rio Tinto, 2015a). The duration of the ice road’s availability is subject to each winter’s climatic conditions.
As a result of the risk of an undersupply of fuel during a short winter and the subsequent need to fly fuel into the site, the company initiated a three-year feasibility study to investigate opportunities to mitigate the risk. This resulted in the approval to install four wind turbines with a total capacity of 9.2 MW, which were commissioned by October 2012. The wind farm has reduced Diavik’s diesel use for electricity generation by 10 per cent, saving 12 000 tonnes of CO2-equivalent emissions annually (Rio Tinto, 2015a).
Regional and remote mine sites across Australia are also increasingly using solar power and diesel generation to reduce fuel consumption rates.
The automation of vehicles and equipment has the potential to improve safety, increase productivity and reduce fuel consumption and greenhouse gas emissions.
While Google’s self-driving cars have received significant attention, there has also been activity in the Australian Pilbara, where three of Australia’s largest miners have been trialling autonomous trucks. Rio Tinto is leading the way with a growing fleet of 69 autonomous trucks undertaking mining activities (Rio Tinto, 2015b).
Autonomous vehicles are evolving, and systems are now available that range from remote control to semi-autonomous and fully autonomous operation. In the case of autonomous haul systems, each autonomous dump truck is equipped with vehicle controllers, a high-precision GPS system, an obstacle detection system and a wireless network system. These features allow the dump truck to safely operate through a complex load, haul and dump cycle and integrate with the dozers, loaders and shovels that are also part of the autonomous system.
Mine mapping technology
Linked to the use of autonomous vehicles and equipment is the need to gather extremely precise information and synthesise significant quantities of data to produce a detailed 3D model of a mine site. As part of its Mine of the Future™ program, Rio Tinto has deployed a new 3D mapping technology called RTVis™ that it combines with its autonomous vehicles to improve the efficiency of mining operations.
RTVis software interprets complex data sets and creates a user-friendly 3D display of a mine that is easily and quickly understood by pit controllers, geologists, drill-and-blast teams, mine planners and supervisors. It allows them to make informed decisions while working remotely from the machines (Rio Tinto, 2015c). Deployed at Rio Tinto’s West Angelas iron ore mine in Western Australia, the 3D software provides pinpoint accurate mapping, which was previously not available, to improve the efficiency of mining activity by ensuring that it is tightly focused on removing high-value ore. This significantly reduces both waste and operational (including fuel) costs.
Climate risk assessment and adaptation planning
Intense rainfall events in the Bowen Basin in 2011 led to extensive flooding of mine pits, damage to transportation routes, ongoing disruption to the production and export of coal, reduced state royalties and community concern about the effects of released pit water on downstream water quality. Under climate change scenarios, such events are predicted to occur more regularly.
If mining companies are to respond to the challenge of climate change, they need to not only reduce greenhouse gas emissions, but also adapt to changing weather patterns. In response, some of the leading mining companies are now conducting regular climate risk assessments of their sites and developing climate change adaptation plans for those identified as high risk.
Guidance has also been published by the National Climate Change Adaptation Research Facility, including Climate change adaptation for Australian minerals industry professionals (Mason and Giurco, 2013). The CSIRO has also developed and trialled a tool known as CRATER (Climate Related Adaptation from Terrain Evaluation Results), which can identify flooding vulnerabilities using detailed geographic information system data to support decision making.
Connecting to a different perspective
Sometimes, a different perspective is all that is required for innovation. An illustration of the potential of such an approach is the series of five ‘Unearthed’ events held around Australia in 2015. These events brought together software developers, designers, data scientists and students and provided them with access to proprietary industry and government data so that they could develop prototype solutions to mining sector problems. At each event, industry presented ‘real-life’ operational problems and data sets to participating teams. A number of the prize-winning ideas involved solutions that would deliver improved energy productivity (and therefore emissions reduction) benefits.
Innovation and technology are shaping all aspects of industry and society. Through the range of climate change responses examined in this article and the examples of leadership demonstrated within the sector, we note that innovation and technology responses have the potential to not only reduce climate risk exposure, but also to improve productivity.
The views expressed in this article are the views of the author, not Ernst & Young. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.
Commonwealth of Australia, 2015a. Australian Greenhouse Emissions Information System. Available from: http://ageis.climatechange.gov.au/ANZSIC.aspx
Commonwealth of Australia, 2015b. Australia’s 2030 Emission Reduction Target. Available from: http://www.environment.gov.au/climate-change/international
Energy Developments Limited (EDL), 2011. Moranbah North Project. Available from: http://www.energydevelopments.com.au/01_cms/details.asp?ID=85
EY, 2015. Business risks facing mining and metals 2015–2016: moving from the back seat to the driver’s seat. Available from: http://www.ey.com/Publication/vwLUAssets/EY-business-risks-in-mining-and-metals-2015-2016/$FILE/EY-business-risks-in-mining-and-metals-2015-2016.pdf
Global CCS Institute, 2015. Large Scale CCS Projects. Available from: http://www.globalccsinstitute.com/projects/large-scale-ccs-projects
Mason L and Giurco D, 2013. Climate change adaptation for Australian minerals industry professionals, National Climate Change Adaptation Research Facility, Gold Coast.
MIT, 2007. The future of coal: options for a carbon-constrained world. Available from: http://web.mit.edu/coal
Rio Tinto, 2015a. Lift off for Diavik wind farm, M2M: Mines to Markets, issue 1. Available from: http://m2m.riotinto.com/issue/1/article/lift-diavik-wind-farm
Rio Tinto, 2015b. Mine of the Future™. Available from: http://www.riotinto.com/ironore/mine-of-the-future-9603.aspx
Rio Tinto, 2015c. Mine of the Future™ – Next-generation mining: people and technology working together. Available from: http://www.riotinto.com/documents/Mine_of_The_Future_Brochure.pdf