Mining companies around the world are facing mounting public pressure to offset carbon emissions and push for a cleaner future, fueled by an increased awareness of environmental damage. Rio Tinto’s recently released statement responds to this shift, expressing the need for a technology-neutral energy policy and promising to partner solely with those whose “advocacy is consistent with [its] own public position and the Paris Agreement.”
The conglomerate is not alone in this changing rhetoric, with the Minerals Council of Australia (MCA) recently updating its stance on Australia’s climate policy to argue that ‘sustained global action is required to reduce the risks of human-induced climate change.’ This is compared to its 2017 position that new coal-fired plants would help reduce the country’s emissions by replacing older, carbon-heavy generators.
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While statements such as these are, for many, a welcome sign of a new environmental focus, doubts still remain as to whether wider industry efforts are sufficient to reach a cleaner future.
What is Rio Tinto doing?
Rio Tinto has made it clear that climate change has become a key part of its business strategy. Last year it announced a joint venture with Canadian company Alcoa to develop a carbon-free aluminium smelting process, with the project becoming available for commercial sale in 2024. The corporation has also begun to exit the coal industry, turning its focus instead on iron ore and copper – materials that can be used in renewable technologies and electric systems, respectively.
Such strides mean the company’s rebranding as a green miner may be a relatively smooth process, and its strong industry position has led some to hope its actions will encourage others to follow suit.
“Rio Tinto is providing important leadership at time when the world’s scientists are telling us we must rapidly accelerate our response to climate change,” says Fergus Kinnard, economic analyst at the Australian Conservation Foundation. “Rio is an influential member of several major industry associations including the MCA and the Business Council of Australia. Therefore, by raising their own ambition to climate change they encourage these associations and their members to examine their own response.”
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By GlobalDataHowever, actions have to meet promises if other industry members are to be convinced.
“Investors are going to expect action,” says Tom Swann, senior researcher at thinktank The Australia Institute. “Rio Tinto has been a member of the Minerals Council through a period of outrageous climate obstruction, and putting out a statement is no longer enough.”
What can lobby groups do?
According to Swann the first move should be for lobby groups to stop actively promoting new fossil fuel expansion, instead remaining passive on such issues and working to promote the responsible mining of other minerals required to tackle climate change (such as battery materials lithium and cobalt).
“High emission companies should demand that mining lobby groups stop undermining their attempts to tackle climate change,” he says. “They need to stop promoting new coal mines and expansions of gas reserves, then we can start to think about ways of building on the resources that we have to find economic opportunities.”
Similarly, Kinnard says the first, crucial step will be a widespread acknowledgement of the dangers posed by climate change to the Australian population, economy and businesses.
“In doing so, they can advocate for responsible climate and energy policies that reflect the urgent need to decarbonise our economy,” he says, adding “The science of climate change is clear, our need to rapidly transition our economy means that actions like those by BHP and must become the expectation, not the exception.”
Is the industry ready?
Others argue that a change in the wider industry framework is needed before real progress can be made, with a lack of stable policy leaving some saying the sector is not yet able to support climate needs.
“The stop-start policies that we’ve had for the last decade are a major impediment to the transition that needs to happen,” says Carl Kitchen, communications manager for the Australian Energy Council. “It’s also – from our point of view – the thing that’s impacted our membership the most because investment decisions can’t be made, as we don’t know what the policy is going to be in the future.”
He adds that it has proven a particular drag on generation development in Australia, though he says a policy such as the National Energy Guarantee (NEG) proposed in 2017 offered a possible framework for effective change.
“The overarching thing that we’re continually arguing for is a consistent national energy and climate policy so the sector can make appropriate investment decisions,” he says. “If it’s not the NEG then it needs to be some kind of national framework that needs to be agreed upon and put in place, and left to allow the market to make the transition.”
For Swann, the fault lies with big businesses, saying a lack of stable climate policy is due to the fact that they, and their lobby groups, have ‘worked tirelessly’ to undermine it.
“It’s in nobody’s interest to have this constant turmoil and policy uncertainty as it just pushes prices up,” he says. “Big business and mining lobbies should admit they have helped generate so much uncertainty.”
An industry at a crossroads
Regardless of the reasons for the slow pace of change, there is a sense that priorities within the sector are changing. Rio Tinto’s comments are indicative of a growing divide in the industry, separating the ‘dirty’ coal-reliant companies from those striving to champion clean energy sources in pursuit of a carbon-free future.
A 2018 study from The Australia Institute speaks of a ‘crisis in public trust’ of the mining industry, with coal mining being particularly out of favour. Polling company Ipsos was commissioned to conduct the research by the Queensland Resources Council due to a perceived ‘decline in positive (public) sentiment’ and fear for the ‘reputation of [the] Queensland resources sector’ overall.
The shift in public perception means investors are anticipated to begin calling companies up on what they’re doing to offset carbon emissions and as such, regardless of how it is achieved it is now in the reputational interests of companies to come good on environmental promises.
