Mining giant BHP will switch out coal for renewable energy as the power source for its copper operations, displacing 3 million tons of CO2 emissions each year.
Four contracts have been signed, using energy from existing and future renewable energy projects which will be in place from 2021, to supply electricity for all BHP’s Chilean copper mining operations, enabling a 20% reduction in energy prices for the company.
Separate contracts for the Escondia and Spence copper operations in Chile were awarded to ENEL, with 15-year contracts for 3 TWh per year, alongside 10-year contracts of the same size to Chilean utility Colbun Renewables.
With these mines sitting in the Atacama Desert, and among the largest mines in the world, it makes sense to buy from nearby solar and onshore wind farms, many of which are owned by Enel and Colbun. Last week, Siemens Gamesa signed three new orders to supply 359 MW of onshore wind to undisclosed customers in Chile, possibly that was part of this deal. This would also be consistent with ENEL’s existing projects in Chile, with a greater amount of installed wind (642 MW) than PV solar (492 MW).
In a press release, BHP has compared the 3 million tons of saved CO2 emissions to the annual emissions of around 700,000 combustion engine cars and highlighted that the financial benefit of the project will also be seen in the cancellation of $780 million worth of coal contracts.
The sudden switch in BHPs focus to renewables follows a wave of pressure from both media and shareholders, with the UK Guardian newspaper exposing BHP last week, as one of the 20 carbon emitters worldwide who are responsible between them for a third of global emissions.
BHP has been among the plethora of companies using natural gas as a façade for ‘going green’, by transitioning from coal to gas at the Kelar Power plant. With research from Cornell University dispelling myths and showing that fracking, not cows, releases the majority of methane into the environment, this move to gas will only worsen BHP’s contribution to global warming.
Pressure from investors has also been seen, with more than one in five shareholders of the company backing a resolution, demanding that BHP cut ties with industry associates who are not consistent in following the Paris climate change agreement. A large component of this was to leave the Australian Minerals Council, a group dedicated to developing low-emission technology, but simultaneously spending millions on pro-coal advertising.
While this resolution failed due to lack of support, shareholder pressure has clearly been a driver for BHPs change of tack.
It’s difficult to predict how long this movement will take to impact the entirety of BHPs operations, or if other large emitters will follow suit in shifting to renewables. The fact that shareholders clearly influenced this decision is encouraging, but this week for BHP this is simply a financial case for powering its mining operations, fossil fuels are far more integral for other emitting giants such as ExxonMobil, Saudi Aramco and Chevron. Any significant movement in this case is likely to come from pressure by shareholders to align decision making with social and environmental value, as realistically that is who these economic behemoths cater to.