The mining industry is clearly taking active steps to improve its environmental record, but this will continue to be a very long transformation process. Mining companies will need to continue to improve their ESG credentials across their operations and supply chains to implement meaningful change. Any mining company’s environmental strategy must address improving the efficiency of the energy used on site, such as expanding capacity to recycle scrap metals, increasing investment into methane and carbon capture storage technologies, and switching to cleaner energy sources, including hydrogen in the trucks and HGVs that are used on site and renewable power for electricity supply wherever possible.
It is therefore very clear that the mining and renewable energy industries will have, and need to have, a strong future, symbiotic relationship. The renewable energy industry needs metals and minerals to be mined to enable the path towards net zero carbon. Likewise, the mining industry will rely more and more on renewable energy to drive its development from a dirty image to a clean one, and thereby maintain and enhance investor appetite. One of the keys to this relationship is the rapid development of suitable renewable power supplies to both existing and new mining operations. Whether this is achieved through co-located power, off-grid opportunities, virtual PPAs or other solutions that may still be on the drawing board, is, in some ways, irrelevant. The impetus will only lead further in that direction, and the sooner mining operators adapt their model to accommodate this, the sooner they will be able to persuade investors and lenders and, equally importantly, offtakers to support them.
Investors and lenders will also need to be part of the solution. Instead of being put off the crypto mining industry as an investment opportunity, investors and lenders should, and are needed to, work with mining companies to implement ESG improvements and a successful transition to becoming green. A stringent covenant package, or a marked increase in lender control, will not suffice – it requires forward thinking and open mindedness to invest in an industry that, whilst historically perceived as dirty, is essential for the global roll out of renewable energy and to show the way to a greener world.
