Dealing with climate change

2020-01-30T12:13:13+00:00 January 30th, 2020|Risk Management|

Mining companies will not only have to adapt to climate change but will need to consider the risks associated with extreme weather conditions in their business plans, writes Leon Louw.

With extreme weather events becoming more common, mining companies will have to decide on how to deal with the most severe impacts of climate change in the future. Many countries within which mining companies operate are not necessarily geared to deal with the consequences and are at the receiving end of extreme weather events.

SRK

Geology determines where mining will take place, not the prevailing weather conditions. Therefore, mining companies will naturally be exposed to extreme events, and it will be beneficial for them to consider climate change as an external risk when developing the company’s business plan. But how real is the threat of climate change and is it something mining companies should be concerned about? African Mining spoke to three experts at SRK Consulting (SA): Andrew van Zyl (AvZ), director and principal consultant; Ashleigh Maritz (AM), senior environmental scientist; and Estie Retief (ER), senior environmental scientist, to find out why climate change should be a prime consideration for mining executives when venturing into new territories.

Extreme events like heatwaves and intense cold spells will continue to have an impact on the way countries develop in the future. Credit: Leon Louw

Extreme events like heatwaves and intense cold spells will continue to have an impact on the way countries develop in the future. Credit: Leon Louw

Although some places in the world have become hotter than the average, other regions in the world are experiencing higher snowfall.Credit: Leon Louw

Although some places in the world have become hotter than the average, other regions in the world are experiencing higher snowfall.Credit: Leon Louw

How serious is the issue of climate change and should we start thinking about managing the impacts?

(AvZ): It is the unexpectedly high rate at which climate change is taking place that is a key concern. Based on historical weather data, it has been observed that rapid temperature increases, and extreme weather events, have raised risk levels in most economic sectors including mining. The scientific evidence is overwhelming. For example, global temperatures are now at their highest since records began; of the 18 years since 2001, 17 have been the warmest on record. In terms of extreme weather events, the city of Houston has experienced three 1-in-500-year floods since 2016.

The seriousness of the issue, and the predicted impacts for the future, is indicated by the proactive response of the mining industry itself. Mining companies have implemented not just mitigation measures but also adaptive strategies to help them respond to current and potential disruptions linked to climate change. Some of their practices protect the value of assets, while others create value through technological innovation, new market opportunities or collaborative initiatives with communities affected by climate change.

Managing the impacts requires changes in mindset and behaviour in every sector. The world is witnessing some extreme responses to climate change by communities and movements – some of which have disrupted daily economic activities. While this is not necessarily the best way to influence changes in mindset, it does reflect how seriously many people globally are responding to climate change issues.

What is your counter-argument when debating with a climate change denialist who argues that climate change is part of a natural cycle and that the human contribution to climate change is minimal?

(AM): There have been natural periods of global warming and cooling over the earth’s history, taking place over thousands of years. The rapid warming which the world is experiencing now, however, is not in line with these natural cycles. Rather, this has occurred over a course of decades, driven largely by increased greenhouse gas emissions largely due to our reliance on fossil fuels.

Data from Antarctic ice cores show that temperature and carbon dioxide levels have been in sync throughout history, however both have risen quickly, now reaching their highest levels recorded. Since the late 1800s, the earth’s average surface temperature has risen about 0.9 degrees Celsius. The oceans absorb a great deal of this increased heat, and records since 1969 indicate that the heat energy stored in the top 700m of ocean have increased, leading to thermal expansion.

Melting of land ice (ice sheets and glaciers), combined with the thermal expansion of seawater as the oceans warm, is causing sea levels to rise with evidence showing the rise to be about eight inches in the last century.

Satellite observations reveal that the amount of spring snow cover in the northern hemisphere has decreased over the past five decades and that the snow is melting earlier in the season.
Ocean acidification is another interesting indicator, as the upper layer of the oceans absorb carbon dioxide from the atmosphere. Since the beginning of the Industrial Revolution, the acidity of surface ocean waters has increased by about 30%, and the amount of carbon dioxide being absorbed by the ocean is increasing by approximately 2 billion tons per year.

How is climate change affecting our daily life and what is its most severe impact?

(ER): Climate change impacts are already evident, as observed recently with the drought in the Western Cape and other regions within South Africa. Not only is the volume of rainfall affected but the epicentre of rainfall events can shift, altering the position of the catchment area. This had a drastic effect on residents and businesses, especially agricultural industries. Timing of rainfall can also affect crop growing cycles – and hence the prevailing market demand and prices that farmers can achieve. This could even render certain farming choices unviable, while creating opportunities for new crops. Food security could be compromised by these observed changes if we fail to adapt.

(AM): The search for water can force populations to migrate, especially in rural areas, and this can lead to rivalry and conflict – as limited resources have to be shared. On a larger scale, migration across the world can result in global instability. Water scarcity in rural areas also results in increased urbanisation, which presents its own challenges. It is important to remember that impacts of water scarcity also tend to be immediate; people cannot wait long before they act if water runs out. It therefore becomes a crisis demanding urgent responses and solutions.
The use of coal for power generation is claimed to be one of the biggest contributors to climate change. In Africa, and especially in South Africa, coal still forms the backbone of the energy sector and coal miners are of the opinion that developing countries will only grow if their economy is powered by coal. What is your opinion?

(ER): South Africa recently released the Integrated Resource Plan, which foresees a situation in which coal will generate 60% of our electricity by 2030, down from 77% today. While this may not be considered by everyone as enough of a decrease, it is important that we engineer a ‘just transition’ away from coal and towards renewable sources. This shift needs to be well managed so that it avoids disastrous disruptions – either to electricity consumers, utility employees, or communities reliant on coal-fired power plants.

The move to renewable energy holds many benefits for the country and society, not least in terms of air quality and health. Growth in the renewable sector will also bring its own opportunities in skills, technology and other aspects of its value chain.

The lack of surface water in the arid regions of Africa will increasingly become a headache for mining companies. Credit: Leon Louw

The lack of surface water in the arid regions of Africa will increasingly become a headache for mining companies. Credit: Leon Louw

How is climate change affecting the mining industry and its value chain?

(AM): As climatic conditions change, mines are seeing impacts on the stability and effectiveness of their infrastructure and equipment, as well as on their environmental protection and site closure practices. Higher temperatures and water scarcity, for example, would complicate the operation and environmental rehabilitation of mine sites, and could cause direct competition and conflict with local communities. Mines may even find their transportation routes affected. Water and electricity supply may become unreliable and more expensive.

Mining companies themselves are already designing for natural disasters like floods; we are seeing this planning and design taking place in study phases, as mines acknowledge the growing frequency of these disasters. In one example, a mine’s infrastructure is being designed for 1-in-200-year flood event, where previously a 1-in-50-year design may have been considered sufficient. This implies a higher cost for insurance, to cover these extreme weather events.

Efficient water management is already a concern receiving constant attention at most mines; with further impacts from climate change, there will be a significant investment in water treatment options.

(ER): Financing is a vital aspect of the mining industry that is already affected by climate change considerations. Large international funders like the International Finance Corporation now require a climate change assessment with science-based targets, before it considers financing a mining project. This is one factor behind the growing demand for environmental engineering in the sector.

As significant energy users, mines will be substantially affected by carbon tax, although the carbon tax rate for 2021 onwards (phase 2) is currently unknown. The current (phase 1) carbon tax rate is R120 per ton of carbon dioxide equivalent (CO2e); however, global rates are far higher, suggesting that South Africa will start by under-taxing in global terms – creating the possibility that increases in future phases will be high. Increasingly, mines will be required to report on their downstream and upstream suppliers’ carbon footprints as well as their own. Mines may even need to build the capacity of their small-scale suppliers to comply, as the use of these suppliers is a requirement of the Mining Charter and the Social and Labour Plan (SLP) commitments.

(AvZ): Mining and exploration opportunities are likely to open up for minerals used in large energy storage solutions – such as platinum, cobalt, vanadium, lithium and copper – as this technology evolves and gains ever-growing markets. Mines themselves are likely to make increasing use of renewable, off-grid energy as battery storage solutions become more effective and affordable. Demand, and hence price, is likely to remain volatile while new technologies are developed and optimised.

How big a role should climate change play in the strategic planning of mining companies and how should they make provision for its possible negative affects?

(AM): Strategic planning for climate change cannot allocated to a specific group within a mining company. It is a function that needs to be integrated across all business units within the company. This will allow both mitigation and adaptation measures to gain traction. Mitigation measures can be put in place to reduce the carbon impact that business has, for instance; but the impacts of climate change are already being felt, so it is also vital to apply adaptation measures. This includes designing infrastructure to cater for impacts such as more frequent and extreme storm events.

(ER): A company’s climate change strategy also needs to be built into its SLP, as the communities surrounding a mine are not usually well placed to adapt to climate change effects. We are seeing some mining companies even building climate change considerations into their social development spending – assisting local communities to apply water-saving farming techniques. This is an important adaptation that raises the resilience of communities to climate change.

Will climate change directly impact the actual operations of mining companies? I’m thinking especially in dry regions where water will be a scarce resource, or the heat in a pit, or more lightning as a result of severe thunderstorms. Will technology be able to solve these challenges, and how?

(AM): Climate change will definitely impact on the operations of mines, particularly in drier regions. Mining is a water intensive industry, so mines need to re-use their water and generally reduce water consumption. Communities may also have the perception that mines are taking their water, as water becomes more scare due to climate change.

Excessive heat in mining areas could accelerate the application of alternative technologies – like remote and driverless operation of mining equipment.

Some mines are looking at new technologies to reduce their carbon footprints, especially with the introduction of carbon tax. Electric vehicles could be part of this drive, potentially including autonomous functions. This could enhance safety and would in turn impact on the level of skills required to operate and maintain.

In the same way, how would these challenges affect the rehabilitation and closure of mines?

(ER): When temperature and rainfall patterns change, this affects the assumptions that mines can make about their closure design. It may also increase their financial liability and monitoring requirements. For example, insufficient water and high temperatures make it harder to re-establish the necessary vegetation in rehabilitation efforts once mining has ceased in a specific area. On the other hand, heavy rainfall could create risks like tailings dam failure or discharge of contaminated water into surrounding areas. This could lead to remediation costs, greater environmental liability, impacts on community health and safety, and possible reputational damage. There are also concerns that climate change could undermine the success of past rehabilitation of legacy mine sites; these sites might need extra protection measures to ensure stability of waste rock and tailings covers.

(AM): The mine closure planning process must factor in climate change predictions, so that the closure design and infrastructure can withstand these effects in the post-closure phase. Even the selection of which plants and vegetation to use for rehabilitation must ensure resilience to climate change. They might need to be drought-resistant, for example. There is potential to use ‘bio-mining’ as a strategy, involving the growing of fibrous plants on old tailings dams to extract valuable metals and chemicals that might leach into groundwater.

What will the eventual cost of climate change be – not only in financial terms, but in the way mines will need to operate in the future?

(ER): The financial cost of climate change to the mining industry is difficult to estimate, but the cost will also be felt in terms of changing mindsets within the current culture of mining – as well as building new skill sets and collaborating more effectively with stakeholders to address looming challenges. Mining companies certainly need to be ready to invest adequately in meeting these emerging demands. We are seeing impacts in financing, especially the financing of new coal projects and this may extend to other minerals where these have a large carbon footprint.

As a consultant, what would you say to a new mining company regarding taking climate change seriously and to include it in their planning and business plan?

(AM): The effects of climate change on mining are already evident, and mines are starting to take them seriously. The key point for mines is to consider climate change in their planning process, as there are considerable financial, reputational, social and environmental risks to be addressed.

How will we be able to manage the effects of climate change in the future?

(AM): The first step is to understand how climate change is impacting on your mining operation – or may impact it in the future. By undertaking a risk assessment, the company will be able to quantitatively and qualitatively understand their risk so the effects can be mitigated and managed in order to adapt. In fact, the process is more about adapting – and less about mitigating – because the impact of climate change is already affecting industry. The risks identified should be factored into the whole project lifecycle, not just current operations. As a general principle, a less wasteful operation will always have long-run benefits. Consideration should also be given to facilitating change to alternative energy sources and more water-efficient processes to improve the ability to adapt to changing climactic conditions.