As the world embraces sustainable practices, the ability to add tangible value to corporations and consumers remains untapped.

The trailblazers of eco-friendly initiatives have successfully integrated specific and quantifiable sustainable practices into their modus operandi, aligning with their long-term strategies and fortifying their financial performance. This is especially evident in the metal and mining sector.

One specific example stands out as remarkable. A particular mining company developed a way to convert methane into electricity, a dangerous gas in underground working environments.

Methane is dangerous, but innovation always helps 

 Methane is a potent greenhouse gas that has a greater impact on climate change when compared to carbon dioxide emissions. It has more than 80 times the warming power of carbon dioxide over the first 20 years after it reaches the atmosphere. Even though CO2 has a more long-lasting effect, methane sets the pace for warming in the near term. At least 30% of today’s global warming is caused by methane. 

Methane encountered in underground mining operations must be removed or diluted due to its highly explosive nature. Removing and venting subterranean methane to the surface contributes to the overall safety of the mine and reduces global warming.

Considering the current volatile gas markets and the need for enhanced economic feasibility and energy self-sufficiency, it is important to address the issue of methane leakage as well. Methane is being leaked at alarming rates advocating the case for compelling action on abatement. In 2021 alone, methane leaks from fossil fuel operations could have provided an additional 180 billion cubic meters of gas to the market if captured and marketed. This amount is equivalent to the total gas consumption of Europe’s power sector and would have significantly alleviated current price pressures. It is essential to take action to capture and utilise this valuable resource. 

One of the ways to positively utilise Methane is to turn it into electricity. Electricity generation from extracted mine methane not only expends the methane but also reduces the carbon emissions from purchased electricity. This is because the mine consumes methane-generated electricity, proportionally displacing electricity purchased from the operator.  

Quantifying Methane for the Better 

The amount of methane is measured with sensors and recorded within the company database on a 24/7 monitoring basis. This data then gets incorporated into other operational software for strategic and operational planning purposes.   

In 2013, a sustainability-orientated initiative was commissioned by the company, and with the help of a partner, was registered under the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC). From this VCUs (A verified carbon unit represents one ton of carbon dioxide equivalent) are recorded in the Markit Registry.  

The Markit Registry allows account holders to manage all their global carbon, water, and biodiversity credits in a central financial markets-based registry system. It contains environmental portfolios and reinforces existing and emerging ecological programmes and markets.  

Based on the country's carbon taxation policy, the company can further offset a certain percentage of the carbon tax liability. From an ESG perspective, this improves workplace safety while mitigating environmental harm.  

These were achieved by applying a sustainability framework with digital tools to measure, track and enhance operations while being more environmentally and socially sustainable. Ultimately, the initiative reduced energy consumption costs by around 2.5% to 5%. However, this isn’t always true for all mining companies.  

Challenges and opportunities for mining companies during the energy transition

Due to the cyclical nature of mining in general, many smaller and mid-tier mining companies are often on the back foot, while most top-tier companies have the resources at their disposal to anticipate market changes, weather the storm, and continue to focus on long-term sustainable growth.

In general, the lag factor for many mines is the exploration gap of five to ten years, with reduced exploration budgets when margins are squeezed and ultimately unable to keep up with the demand when the market rebounds. This squeezing of capital allocation has knock-on effects on operational flexibility and sustainability that companies can now attempt to address through ESG frameworks leveraged through digital solutions.

Globally, the metal and mining industry plays a multifaceted role in the energy transition. The industry procures batteries and rare earth metals such as cobalt, lithium, and dysprosium in solar panels, electric vehicles, and other sustainable solutions.

However, environmental risks and regulations have emerged as the primary industry concerns, with the need for social licenses to operate ranking a close third. An overwhelming majority of mining executives concur that ESG will be a significant disruptor in the industry in the next three years.

Rising demand for mining raw materials to meet sustainability goals

With the worldwide implementation of sustainable solutions, the demand for the underlying raw materials is escalating exponentially. Nevertheless, years of capital constraints and under-investment in strategic metals may present risks to mining companies striving to fulfil burgeoning demand both now and in the future.

The projected shares of total copper, nickel, and cobalt demand are expected to rise significantly over the next two decades. However, companies are facing mounting pressure to comply with increasingly stringent environmental regulations, social impacts, and intricate governance structures, all of this in addition to the cyclical nature of the business.

Companies are experiencing pressure from customers with their carbon reduction objectives to align with the global reductions stipulated in the Paris Agreement on climate change. The transition towards eco-friendliness entails substantial upfront costs, and in some instances, novel lower-emission technologies must be developed for either enhanced carbon sequestration or elimination.

The advantages of integrating sustainability into corporate strategy

Socially responsible investors and funds seek to invest in companies with low emissions, thereby augmenting their valuations. Additionally, customers are willing to pay a premium. A prime example is the price premium duty paid for in-warehouse aluminium, which was nearly 11% higher for a zero-carbon product.

As downstream customers increasingly gravitate towards products with smaller carbon footprints, many companies are responding accordingly. The five largest mining companies have pledged to eliminate or offset their Scope 1 and Scope 2 emissions by 2050 or sooner.

Mitigating compliance risks and enhancing operational efficiency

While many mining companies have demonstrated a commitment to achieving net-zero emissions and enhancing sustainability, the reality is that many lack the sophisticated tools required to measure and improve upon these metrics.

Here, IoT solutions are imperative; without a metallurgical or process optimisation solution powered by a digital twin or IoT solution, it is virtually impossible to measure emissions with the requisite granularity, accuracy, and transparency. This makes it even more challenging to track and improve ESG performance.

Digital transformation and solutions are crucial for thriving in the future across all industries, particularly for metals and mining companies. Digital twins will facilitate ESG compliance, optimise operations, and improve efficiencies, reducing energy consumption and greenhouse gas emissions.

The future of sustainability-focused operations

Enhanced shareholder returns are among the incentives for mining companies with superior ESG ratings, which also benefit from a lower cost of capital. Companies with higher ESG scores appeal more to investors and can access capital at a lower cost. Stakeholders are now demanding that mining companies generate sustainable value.

Sustainable value across all three segments of ESG, including the social benefits encompassing risk reduction, improved safety and working conditions, and more effective engagement with local communities and stakeholders.

From a governance perspective, the advantages include improved transparency, traceability, and accountability, which fosters trust and strengthens relationships for the companies.

Utilising the appropriate digital tools, companies (not restricted to the mining sector) can significantly benefit from the challenges raised by ever-more rigorous compliance and higher sustainability-orientated expectations from consumers and investors while improving the bottom line.

The right digital technologies unlock sustainable growth

ESG, data, and technology are heavily intertwined. Early identification and integration of digital technologies have enormous potential to power an organisation’s ESG strategy and execution.

Companies that have already established sustainability frameworks supported by the appropriate digital tools can create and add more value for all stakeholders.

By partnering with industry and sustainability experts, incorporating these ESG frameworks into a corporate strategy, and installing digital solutions to measure, track and improve operations, firms can realise long-term growth and connect to a profitable and ecological future.

Our expertise to deliver long-term value 

At Metyis, we have extensive experience in data solutions and forging long-lasting impact by developing and implementing impactful yet pragmatic tech solutions across our clients' operations to strengthen their positioning and drive profitable growth.

Our expertise in strategy development, analytics, execution, and implementation of digital technology offers the capacity, knowledge, and experience to solve problems and create long-term capabilities.

Our commitment helps unlock the value potential of Big Data Solutions for clients and partners in the early exploratory stages, offer continued support, and navigate challenges in the execution phase to deliver exponential success.

About the author behind the article

José Salgueiro, a Strategy & Execution Associate at Metyis’ Porto office, who has extensive experience in the mining industry, mineral exploration and extraction, and beneficiation for major gold producers in Southern Africa.