Enabling the net zero mineral economy

Environmental, social and governance concerns have once again topped the mining and metals top 10 risks for 2023. 

By Erin Coppins, Research Portfolio Manager, Minerals Research Institute of Western Australia

The 2023 edition of EY’s annual analysis, ‘Top 10 business risks and opportunities for mining and metals’, released in late September, shows an increase in risk associated with geopolitical challenges and supply chain uncertainty, while key environmental, social and governance (ESG)–related concerns, such as decarbonisation and water management, remain at the top of miners’ agendas.

But how can we manage these risks and capture the opportunities?

The clean energy transition and the future mining economy are inextricably linked. As demand for clean energy technologies increases, so too does demand for the critical minerals that are required to manufacture the solar panels, wind turbines and batteries on which we rely to deliver ambitious decarbonisation targets. These targets cannot be achieved without clean energy technologies, which cannot be manufactured or delivered at scale without more metals, and continued mining activity.

International Energy Agency data projects steep increases in demand, with total mineral demand for clean energy technologies doubling under its stated policies scenario and quadrupling under more ambitious policy settings. With electric vehicles and battery storage key contributors, demand for lithium was projected to see the fastest growth rate – increasing 13-fold under existing policy commitments, with more ambitious action having the potential to increase production by over 40 times 2020 levels.

The concept of scaling up mining activities to deliver on emissions reduction targets seems counterintuitive in some ways; however, markets have already experienced global shortages of critical minerals such as lithium and cobalt for electric vehicle production, which will only increase without greater exploration, extraction, and, where possible, recycling. With mineral shortages come supply bottlenecks, higher prices, and more challenging conditions in which to implement decarbonisation initiatives. It is therefore imperative to achieving emissions reduction that the supply of critical minerals keeps pace with demand.

A key challenge for the industry is in delivering on its net zero commitments while increasing supply at the required scale.

Two important enablers for Australia’s net zero mineral economy include decarbonising mining activities at the source, as well as activating downstream opportunities to deliver low- and zero-emissions products to market.

A recent three-part report series published by the Minerals Research Institute of Western Australia (MRIWA) in collaboration with the Clean Energy Finance Corporation tackles the first challenge of decarbonising Australian mining operations.

Targeted at junior and mid-tier mining companies, the report, titled ‘Mining in a low emissions economy’, considers strategic drivers and opportunities, and available and emerging technology options, bringing these together in a practical demonstration of how to build a technologically and economically viable staged decarbonisation roadmap for a simulated brownfield mining operation.

Supported by modelling from ENGIE Impact, the analysis explores four technology-driven decarbonisation pathways in the context of an asset-level roadmap, drawing out logical investment phases starting with a few quick wins that can be implemented now.

Each of the modelled pathways identifies initial common investments that make financial and business sense from the beginning, integrating an optimal level of onsite renewable energy into operations to reduce daytime fossil fuel use.

While integrating renewable energy supply may seem an obvious first step, how this influences mine and fleet planning, asset replacement, and investment in emerging technologies is considered in a way that responds to operational characteristics.

Greater levels of decarbonisation through each pathway consider factors such as risk appetite, technology choice and higher capital investments such as batteries and fleet conversion, offering investment options that can be staged over time to tie in with existing asset-replacement cycles or monitoring of emerging technology developments.

For greenfield operations, even larger benefits can be realised through making strategic initial investments and considering decarbonisation in mine planning and design from the start.

The business models and asset investment strategies required for a decarbonised mining operation differ significantly from the fossil fuel business cases of the past. Up-front capital investment for clean energy technologies increases substantially. For greenfield sites, which may not yet be generating a return, this is a considerable hurdle. While challenging previous financing models, these initial technology investments are often offset by minimal ongoing operation and maintenance costs in comparison to their fossil fuel predecessors, and a range of funding and financing mechanisms exist to support internal financing strategies and attraction of external debt and investment.

This is, however, only a first step. While decarbonising mining activities can address upstream emissions and provide a ‘greener’ supply of minerals to the market, there are increasing economic opportunities for Australia to supply new low-carbon or zero-carbon products and markets.

Speaking to MRIWA’s Net Zero Emission Mining WA Conference on 2 September, live from the Albanese Labor Government’s Jobs and Skills Summit in Canberra, eminent economist Professor Ross Garnaut spoke of the enormous opportunity and economic advantage of onshoring mineral processing in Australia.

To do this will require significant but steady investment and development, which will underpin steady growth and full employment. Drawing on his experience as Australian Ambassador to China during China’s resources boom, Professor Garnaut described how the strength of the economics speak for themselves and will steadily create a shift in international relations and supply chains to support an Australian processing industry.

So, where are these key opportunities?

According to Professor Garnaut, productivity growth can come from stronger specialisation and activities in which we have comparative advantage.

Despite a fall in iron ore prices from record levels in mid 2021, iron ore remained the most valuable mined commodity in Western Australia, accounting for 76 per cent of all mineral sales.

MRIWA’s green steel value chain assessment is considering the green steel opportunity through the lens of positioning Western Australia’s world-class iron ore industry as a key player in a decarbonised future.

The steel industry accounts for approximately seven per cent of global greenhouse gas emissions, and significant decarbonisation opportunities exist at various stages of the steelmaking value chain. The green steel assessment identifies key stages along the value chain in which Western Australia could play a part, adding value to its iron ore resources while enabling the steel industry to reduce its emissions.

Also in Western Australia, rapid increases in lithium pricing drove the value of spodumene concentrate sales up to $6.8 billion in 2021–22 – more than double its previous record. With Australia the world’s largest exporter of lithium, opportunities to capture value from downstream processing are significant, creating supply-chain efficiencies and capitalising on our natural renewable energy resources for low-emissions processing. Recent investments have backed this opportunity, with new facilities in Western Australia to produce value-added products from spodumene concentrate, such as lithium sulphate.

The future is bright, but we cannot do it alone. Critical to this opportunity is collaboration with customers, suppliers and industry peers to accelerate the understanding of what is possible, and to ensure that products and supply chains are responsive to rapidly evolving market demands.

The importance of research and development also cannot be underestimated. There are major challenges still to overcome in efficiencies, scalability and integration of clean-energy technologies into new and existing processes, all while gathering data to demonstrate and simulate the operational conditions that are necessary to build confidence for wider adoption.

MRIWA’s strategic focus areas identify and address significant medium- to long-term challenges and opportunities for Western Australia’s mining industry. To activate innovation in these areas, we seek to invest in high-impact research projects that contribute to new knowledge and technology development to help achieve these goals.

None of this will be easy, but we have abundant natural resources, available technology solutions, research and development capacity and access to capital to enable action now, which will support a responsible transition to net zero emissions. Understanding energy and emissions profiles, making strategic initial investments to futureproof operations, and developing pathways that respond to organisational risk appetites while enabling regular monitoring and review will go a long way towards positioning our minerals economy for a strong future. 

The Minerals Research Institute of Western Australia is a statutory body established by the Western Australian Government for the purpose of fostering and promoting minerals research for impact and benefit to Western Australia.
Key focus areas target the Institute’s work towards high-value opportunities for the state, including net zero emission mining, critical minerals, green steel, mineral carbonation, precision and low impact mining, and alternative uses of tailings and waste.

To access research outputs and engage with the team on new research funding opportunities, visit www.mriwa.wa.gov.au.

Related Articles

Shifting sands

Shifting sands

By Anthony Fensom Australia’s silica sand mining industry is on a growth trajectory, with a takeover bid and a raft of new projects sparking...

read more
The future is golden

The future is golden

By Trevor Keel, Consultant, World Gold Council Gold is critical to many of the technologies we all rely on today, but what might the future hold for...

read more

Be the first to find out when the next edition is released

* indicates required