Over the past 10 years, global carbon dioxide (CO2) emissions are estimated to have increased by 6.5% to 36.44 billion tones. Increased production of greenhouse gases has far-ranging effects on our planet, affecting our climate by trapping heat and affecting our health from exposure to air pollution.

As one of the world’s two critical primary industries (alongside the agricultural industry) that supply source materials required for almost all secondary and tertiary industries, the mining industry has long been labelled as a major polluter and producer of greenhouse gases, including CO2.

But are these preconceptions deserved?

To examine this question, we have looked at the greenhouse gas emissions of the world’s three largest mining companies, Glencore PLC (LON:GLEN), BHP Group PLC (LON:BHP) and Rio Tinto PLC (LON:RIO) over the past 10 years.

Between 2011 and 2013, greenhouse gas emissions from these three companies increased by 25.7%, to 121.2 million tonnes (Mt) of carbon dioxide equivalent (Co2e) but rather surprisingly since 2013, these three companies have collectively reduced their greenhouse gas emissions by a staggering 45% (54.9Mt Co2e) to 66.3Mt Co2e (Figure 1).

Greenhouse gases from the world's largest mining companies

Figure 1: Greenhouse Gas Emissions from the World’s Largest Mining Companies

Source: Mining and Metals Research Corporation Ltd.

Is this a real reduction in emissions or does it simply reflect lower-operational levels from these companies during the period?

Since 2013 the collective underlying earnings (EBITDA) from these three companies is up 4%, which suggests lower operational levels are not influencing the reduced greenhouse gas emissions.

To confirm this, we have examined the amount of EBITDA generated by these companies to produce 1t of Co2e over a ten-year period. This gives a clearer picture of the increase, or decrease, of these companies’ greenhouse gas emission efficiency over time, and also allows environmentally conscientious investors to assess the greenhouse gas footprint of their investments.

This data shows that operations from the world three largest mining companies have become much more environmentally efficient over the past seven years, generating 102% more EBITDA for every tonne of Co2e they produce, when compared to 2013.

Which miner is leading the way?

Well, it’s not an even improvement across the board; BHP Group PLC has increased the amount of EBITDA it generates for every tonne of greenhouse gas it produces by 211% since 2013, while Rio Tinto PLC has increased its EBITDA/t Co2e by 59% and Glencore by 35% (Figure 2).

EBITDA per tonne of greenhouse gas emissions

Figure 2: EBITDA per tonne of Greenhouse Gas Emissions from the World’s Largest Mining Companies

Source: Mining and Metals Research Corporation Ltd.

As a result, BHP Group PLC is the most environmentally efficient major mining company, as it generates the highest level of EBITDA for every tonne of greenhouse gas produced by some way, US$1,399/t Co2e, compared to US$912/t Co2e for Rio Tinto PLC and US$477/t Co2e for Glencore.

How have the majors improved the environmental footprint of their operations?

A large part of this improvement has been driven by a reduction in energy consumption. Since 2013, the three major mining companies have reduced their energy consumption by 27% (Figure 3). That’s 285 petajoules of energy, which to give some context is equivalent to 4.5% of the UK’s total energy consumption in 2019.

Energy consumption by the world's largest mining companies

Figure 3: Energy Consumption from the World’s Largest Mining Companies

Source: Mining and Metals Research Corporation Ltd.

Also contributing to this improvement is a change in the energy sources used by the majors with both Rio Tinto and BHP Billiton and increasing their use of hydropower and other renewables and or reducing their use of coal-based power sources.

Is mining a green industry?

Clearly, the leaders of the mining industry have come a long way in the past seven years reducing their greenhouse gas production by nearly half is an amazing achievement.

While these companies can still improve, and indeed plan to improve, perhaps the stereotypical view of mining as an industry that is destroying the planet needs to be re-examined.

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