Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The mining industry is falling short on cutting greenhouse-gas emissions enough to limit global warming, even after stepping up efforts to help combat climate change.
Only 11 out of 46 metal and mining companies analyzed by Bloomberg Intelligence have carbon-reduction targets that match levels needed for the United Nations’ goal of limiting global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, according to a Bloomberg Intelligence report.
Big miners have been working to improve sustainability reports, showing awareness of how hard their business can be hit if they ignore those calls
The group includes global giants such as Anglo American Plc and Newmont Corp., the world’s largest gold producer.
Australia’s Fortescue Metals Group Ltd and Sweden’s Boliden AB are the leaders of the group, indicating better preparedness for a low-carbon transition and suggesting the best combination of current and forecasted performance on curbing emissions, according to Bloomberg Intelligence’s carbon score ranking. The top five companies, based on their overall carbon score, are:
| Company Name | Overall Score |
|---|---|
| Fortescue Metals Group Ltd. | 9.84 |
| Boliden AB | 9.75 |
| Kumba Iron Ore Ltd. | 9.73 |
| Newmont Corp. | 9.53 |
| BHP Group Ltd. | 8.84 |
The BI ranking measures the companies on reduction trends, current and future carbon-dioxide intensity, planned cuts and positioning to the end of the decade compared to a temperature-aligned benchmark, using data through April 1. Of the companies analyzed, only Fortescue has set a carbon-neutral target for 2030. Fourteen companies aim to zero out emissions with the target date ranging from 2030 to 2050 as part of a long-term transition.
The mining industry faces increasing scrutiny from investors and regulators demanding greater emphasis on environmental, social and governance issues. Big miners have been working to improve sustainability reports, showing awareness of how hard their business can be hit if they ignore those calls, and a number of producers have set goals to reduce emissions or adopted more ambitious targets in the past couple years.
Related read: UN says IPCC’s climate report “code red for humanity”
Aluminum producers face the highest risks due to carbon-intensive operations, according to the BI report. Those companies need to reduce emissions 49% by 2030, compared to the 20% cutback needed by other diversified and precious metals miners.
“Having carbon-reduction goals is important to aluminum companies because they’re more carbon-intensive than most other metals,” Shaheen Contractor, a Bloomberg Intelligence analyst, said. “That might be why for other miners like precious metal companies, few have set carbon emission goals as of April 1.”
European aluminum companies could see costs of as much as 1.5% of earnings before interest, taxes, depreciation and amortization to 2024, according to the report. A proposal to cut emissions in the European Union 55% by the end of the decade “may mean more headwinds”.
(By Mariana Durao)
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