BHP Group has announced plans to decarbonize its mining operations, outlining a process that is likely to become a template for the industry but also showing how different reality is from hope.
In a remarkably frank presentation last week, the world's largest mining company laid out how it intends to achieve net zero emissions across its global operations.
The headline is that BHP believes it will reduce Category 1 and 2 emissions, which cover production processes, by at least 30% from 2020 levels by 2030, and then reach net zero emissions by 2050.
Cutting emissions by 30% by 2030 is likely to disappoint climate activists who want to see faster decarbonisation, and BHP was honest enough in its speech to say that "the path will not be a straight line and it will not be smooth".
BHP preaches a credible and cost-effective process, and those are the goals worth looking into.
BHP is the world's largest producer of coking coal, which is used to make steel, and the third-largest producer of iron ore, the main ingredient in steel.
It is also a major producer of copper and nickel and is expanding its potash business.
Most of China's iron ore and coal is produced at large mines in Australia, which emit the most emissions from diesel, purchased electricity and home-grown natural gas power generation.
Western Australia's iron ore operations account for 76 per cent of diesel emissions, while BHP Mitsubishi Alliance's coking coal mines in the north-eastern state of Queensland account for 45 per cent of emissions.
Most of the diesel is used to transport trucks, with a small amount used in trains and other vehicles.
BHP plans to convert its diesel trucks to battery-powered vehicles, but that will take some time and involve more than just buying new equipment.
It requires significant investment in renewable energy generation and associated battery storage.
This means redesigning operations to ensure batteries can be recharged and replaced to ensure continuous operation, as well as developing skills to operate new machines.
BHP said it expects the operating costs of electric trucks to eventually match those of current diesel trucks.
This is both positive and negative, as it means there is little economic incentive or even penalty for switching to electric vehicles, making achieving decarbonisation targets the main argument.
Renewable energy
Switching to renewable electricity at BHP's iron ore mines will involve significant investments in solar, wind and battery storage, which the company estimates will require up to 200 megawatts (MW) each of wind and solar, and 150 MW of storage.
This would largely, but not entirely, replace the 190 MW gas-fired power plant that currently powers the mine.
BHP's overall message is that it is moving forward with plans to reduce Category 1 and Category 2 emissions.
But the process is not easy and is only really feasible if it makes business sense.
For the economic benefits to accumulate effectively, it means taking longer to buy new assets while letting the life of the existing fleet end.
BHP will no doubt face criticism that its plans are not ambitious enough or take too long.
It may also have to take steps to address scope 3 emissions that arise when the product is used by the end buyer.
In a 2022 report, BHP estimated its 2020 emissions from Scope 1 and 2 at 15.9 million tonnes, only 4.3% of Scope 3's 369.5 million tonnes.
It is clear that most of the work to reduce emissions from the mining value chain is at the Scope 3 level, which includes the maritime transport of ore, as well as the use of coal to make steel and refine other metals such as copper and nickel.
The extent to which mining companies can or should participate in reducing Category 3 emissions is another debate.
For now, BHP has shown that it can reduce emissions from its operations in a way that makes economic sense, even if its pace may be criticized as too slow.
