Facing increasing pressure from customers, some miners are turning to renewable energy

SURWAKU, Indonesia (AP) — Red-hot sparks fly through the air as a worker in a heat-resistant suit inserts a long metal rod into a nickel smelter, extracting molten metal from a crucible at a processing facility on the Indonesian island of Sulawesi. . .

The smelter, run by the international mining company Vale and powered by electricity from three dams, produces 75,000 tons of nickel annually for use in batteries, electric cars, appliances, and many other products.

While smelting produces heavy emissions of greenhouse gases, the energy used is relatively clean. These potential emissions reductions come as demand for critical minerals such as nickel and cobalt increases, as climate change accelerates the shift to renewable energy.

Mining operations account for about 4% to 7% of global greenhouse gas emissions, according to Global consulting firm McKinsey & Company. But some miners are moving to reduce the use of fossil fuels in extraction and refining, partly due to pressure from downstream customers who want more sustainable supply chains.

Located next to a crystal blue lake in the verdant forest of Surwako, South Sulawesi, Vale Indonesia – a subsidiary of Vale International – runs its smelters entirely from hydroelectric power. Valley It says it can reduce its emissions by More than 1.115 million tons of CO2 equivalent per year compared to using diesel. Vale claims to have reduced greenhouse gas emissions by about a fifth since 2017.

As demand for materials for batteries, solar panels and other components vital to reducing global emissions grows, carbon emissions from miners and refiners will likewise rise unless companies actively work to decarbonise.

Experts say improved technology, pressure from customers and enforcement of clean energy policies are all necessary to continue moving toward more sustainable mining and refining practices while increasing production to keep pace with global needs to transition away from reliance on polluting fossil fuels.

Other companies and countries around the world are also working to reduce the use of fossil fuels in their mining operations. Solar power plants in Chile help power the mining sector, which consumes much of the country’s electricity demand to produce copper, lithium and other materials. In recent years, wind energy has helped electrify the Raglan mine in Canada.

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Michael Goodsight, vice chancellor and professor of civil and environmental engineering at the University of Adelaide in Australia, said companies are learning from past mistakes of the industrial revolution, where reliance on fossil fuels was critical to development.

“I think when you see the future of some processes, you will see them transform,” he said. “The way they transition and how they transition from fossil fuel operations to other energy sources can and should be learned by others.” “

Indonesia is the world’s largest producer of nickel, and Indonesian President Joko Widodo has encouraged the country to develop its own industries.

Efforts to reduce emissions and use clean energy have been supported by investment and interest from governments and multinational corporations. Volvo, Mercedes, Hyundai, Apple and other manufacturers need materials made in a more sustainable way to meet their environmental, social and governance, or ESG, commitments.

Widodo visited Vale Indonesia’s Soroako facilities in March, the same month a deal to build a $4.5 billion nickel manufacturing plant was signed by Vale Indonesia with investment from Ford Motor Co.

“Ford can help ensure the nickel we use in electric vehicle batteries is mined and produced under the same environmental, social and governance standards as … our businesses around the world,” Christopher Smith, Ford’s chief government affairs officer, said during the signing ceremony. A new $4.5 billion nickel processing plant in Indonesia with Vale Indonesia in March this year.

Even companies that are already taking steps to decarbonize still rely on at least some fossil fuels.

At Vale Indonesia in Surwako, coal is still used to operate drying and reduction kilns. The company’s CEO, Febriani Edi, said it plans to convert such operations to liquefied natural gas, which is cleaner but another fossil fuel.

“It’s the best option available given current technology,” she said in an interview with The Associated Press.

“I have two options: I keep saying there is no viable option, and that we will wait until the perfect solution comes along, which (could take) the next 15 or 20 years. Or I will work with LNG first, knowing that it is not a perfect solution,” Eddy said. Knowing that it is only a transformation. But by switching to LNG, I can reduce my emissions by 40%.”

Climate experts have objected to the use of liquefied natural gas as a bridge fuel, as the fuel releases greenhouse gases methane and carbon dioxide when produced, transported and burned.

The upfront costs of converting to, expanding and building new renewable energy infrastructure are another major constraint.

It has taken decades to recover the costs of building the three hydroelectric dams in the remote, sparsely populated region, which are used to power Vale’s Soroaco facilities. But now, having this infrastructure means significant savings at a time when global energy prices are rising.

“Hydropower not only reduces our carbon emissions, but it also reduces our costs today because we are no longer (vulnerable to) the costs of fuel and coal — because we have hydropower,” Eddy said.

Mining operations powered by renewable sources rather than fossil fuels could also help unlock green finance and attract future investors, said Aimee Boulanger, executive director of the Responsible Mining Ensure Initiative.

“The finance and investment sector has become more attuned than ever to the environmental and social responsibility of supply chains and their investments in them. They are looking at greenhouse gas emissions,” she said. “As the world recovers from a global pandemic and confronts the global crisis of climate change, there has never been a time when they “He is more concerned with these issues.”

While many companies are stepping up efforts to decarbonize their supply chains, others – such as many that make green energy materials in China – have less stringent requirements for their materials.

“We can find jurisdictions all over the world that — if they are able to do things inexpensively because they have access to fossil fuels and already have the capital assets and capital expenditures — will continue to do it,” Goodsight said. When asked about Chinese companies.

Ultimately, investors and consumers play a vital role in convincing companies to clean up their operations, he said.

But phasing out the mining industry’s dependence on fossil fuels will be costly, especially as the United States and other countries build capacity to move production of critical materials onshore.

“If end users care about them coming from… a green energy-based process… we should all be prepared to pay a significant amount for that,” Goodsight said.

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