NET ZERO ROADMAP TO 2050 For Copper & Nickel Mining Value Chains CEO’s guide to mining transition for an inclusive low-carbon future FOREWORD As a development finance institution, IFC is committed to climate action and the sustainable development of critical minerals in emerging markets. We support our clients in their decarbonization journeys by catalyzing investment in low-carbon technologies, using green and sustainability-linked financing, mobilizing private capital, and co-sponsoring research, as well as by working in partnership with the public and private sector. To meet the Paris Agreement’s goal of limiting global warming to 1.5°C, the world needs to rapidly transition towards a low-carbon economy. This transition is reliant on mining minerals and metals such as copper and nickel, which are critical inputs to clean energy technologies, from electric vehicles to renewable energy sources like wind and solar and for energy transmission and storage. Nickel and copper are among at least 17 minerals and metals requiring significantly expanded production to meet net zero emissions goals by 2050. And herein lies the challenge: There are significant greenhouse gas (GHG) emissions associated with mining these critical minerals today. To achieve net zero on a global basis by 2050 or sooner, the mining sector must find ways to meet the exponentially growing demand for these critical minerals while operating on a net zero basis itself. To this end, the industry’s net zero commitments must: include credible, science-based plans, with interim targets on scope 1, 2, and material scope 3 GHG emissions; lay out technological deployment pathways and associated resourcing; support positive social and environmental outcomes; build community and supply chain resilience; ensure a just transition; and be intentional about collaboration. Scaling the existing and emerging technology solutions at the necessary rate will require extensive collaboration across the mineral value chain. Positive examples of such collaboration with upstream and downstream suppliers and customers are described in this roadmap. On behalf of the World Bank Group’s Climate Smart Mining (CSM) initiative, I am pleased to bring you IFC’s net zero roadmap for copper and nickel value chains. This document was developed in partnership with the Carbon Trust, Rocky Mountain Institute (RMI), the Colorado School of Mines, and the Columbia Center on Sustainable Investment at Columbia University. We hope that this resource will support mining companies in building their decarbonization action plans and encourage continued collaboration among industry players, policymakers, communities and sustainable finance investors to ensure the metals and minerals for green technologies are supplied in a resilient, equitable, and sustainable manner. Namrata Thapar Veronica Nyhan Jones IFC Global Mining IFC Sustainable Infrastructure Advisory Manager Manager 2 ACKNOWLEDGEMENTS Sponsored by The Net Zero Roadmap for Copper and Nickel Mining was prepared by International Finance Corporation (IFC) as part of the World Bank Group’s Climate Smart Mining Initiative. We thank the project’s steering committee and technical working group members for their input, diligent reviews, and support spanning the 12 months of development, Prepared by and the many subject experts that were interviewed and assisted with peer reviews. These contributors are listed at the back of this report. The roadmap was coordinated by IFC (Arjun Bhalla, Krishna Matturi, Ross Hamilton). The analysis and development of the roadmap were undertaken by the Carbon Trust (Paul Huggins, Christelle van Vuuren, Renata Lawton-Misra, Reinhardt Arp, Juliana Meng, Tim Delivered by Mew, Zaira Renteria), RMI (Paolo Natali, Lachlan Wright, Alastaire Dick, Sravan Chalasani, Valentina Guido), The Payne Institute for Public Policy at the Colorado School of Mines (Jordy Lee), and Columbia Center on Sustainable Investment (Perrine Toledano, Martin Dietrich Brauch, Jack Arnold, Bryan Sherill, and Sarah Ahmad). Further information and references supporting this Roadmap can be found in the Net Zero Roadmap for Copper and Nickel Technical Report. 3 BAU Business-as-usual BVCM Beyond Value Chain Mitigation CO2e Carbon dioxide equivalent CSM Climate Smart Mining Initiative CSP Concentrated Solar Power ETMs Energy transition metals ACRONYMS & ICE ICMM Internal Combustion Engine International Council on Mining and Metals ABBREVIATIONS IFC IPPs International Finance Corporation Independent Power Producers MtCO2e Metric tons of carbon dioxide equivalent MVR Mechanical Vapor Compression NDCs Nationally Determined Contributions NZCB Net Zero carbon budget RD&D Research Design and Development RE Renewable Energy PPAs Power Purchasing Agreements WACC Weighted Average Cost of Capital 4 EXECUTIVE SUMMARY Key Takeaways for CEOs The net zero roadmap for copper and nickel mining value • Demand for Energy Transition Metals (ETMs) doubles GHG emissions: to reach net chains is a solutions guide aimed at decarbonizing the mining zero, ETM emissions will need to reduce by 90%. of critical minerals. The roadmap addresses the greenhouse gas emissions (GHG) from mining and processing operations, • Technological solutions are already or soon will be available: Three waves of outlining tangible decarbonization actions the industry can technology deployment: (i) Renewable energy, site operational energy efficiency take to cut emissions by 90 percent and reach net-zero improvements, and process optimization; (ii) zero-emissions haulage trucks; (iii) emissions goals by 2050. It offers a range of solutions, process heat electrification and green hydrogen. including renewable and low-carbon technologies, energy • Material ESG risks associated with rising ETM demand: For example, many copper efficiency, and digitization. Designed to encourage cross- and nickel reserves are located in high water risk and high biodiversity areas industry collaboration among mining value-chain companies, respectively, necessitating proactive and responsible management. policymakers, and sustainable finance investors, the roadmap identifies ways to capture potential environmental and social • Just Transition: mining companies, governments and other actors have an benefits and highlights opportunities to invest in technology important role in enabling communities to reimagine their future at the center of a innovation. Copper and nickel mining value chains were used new climate economy and in the process build community resilience. as test cases to explore the challenges and opportunities that will occur between now and 2050 as the global energy • Collaboration is key to achieving net zero: Mining companies and value chain actors must work together to accelerate the development, deployment and co-investment in transition accelerates. The roadmap learnings are adaptable to the technological innovations required for the mine of the future, and to develop net other metals needed ensure a successful global energy zero industry standards, regulations, and frameworks. transition. 5 TABLE OF CONTENTS 01 Energy-Transition Metals: Keys to Low-Carbon Future 8 02 Why Copper and Nickel: Pathway to Net Zero Future 11 03 The Copper Value Chain: Net Zero Challenges 15 04 The Nickel Value Chain: Net Zero Challenges 22 05 Addressing the Challenges: Transition to Net Zero Mines 29 06 Investing in Decarbonization 39 07 Opportunities for Environmental and Social Co-Benefits 42 08 Call-to-Action for Mining Companies 47 6 Achieving net zero by 2050 requires deep decarbonization of the global energy sector. INTRODUCTION Transition towards renewable energy sources and low-carbon technologies (e.g., solar) is underway and will become the norm. Energy transition technologies are mineral intensive. Rapid energy technology change to decarbonize is inevitable, cost effective, and beneficial. Technology interventions are already or will be available within the next 10 years. Decarbonization of the mining sector should be inclusive and just to support regional resilience. Sustainable finance mechanisms support responsible climate action and risk mitigation while providing favorable rates. Policy, legal, and regulatory barriers can be addressed through engagement with governments. The roadmaps for copper and nickel aim to give mining companies a framework to decarbonize their value chains and plan for climate action. 1 ENERGY- TRANSITION METALS Keys to Low-Carbon Future ENERGY TRANSITION METALS ENERGY-TRANSITION Energy Storage TECHNOLOGIES ARE MINERAL- Geothermal Solar PV Nuclear Hydro Wind INTENSIVE CSP Aluminum Chromium 17 minerals and metals will require significantly expanded Cobalt production to meet global net zero emissions goals by 2050. Copper Graphite Indium But without massive, transformative change, GHG emissions from Iron scaled-up production will increase exponentially. Lead Lithium Manganese Mining value chains will need to reduce absolute emissions by Molybdenum ~90% from 2020 levels, and remove remaining emissions, to Neodymium achieve net zero by 2050. Nickel Silver Titanium Vanadium Zinc Sources: Azadi, M., Northey, A., Ali, S.H. and M. Edraki, Transparency on greenhouse gas emissions from mining to enable climate change mitigation, 2020, Nature Geoscience, Vol 13, 100-104; IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA, Paris https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions, License: CC BY 4.0 9 ENERGY TRANSITION METALS Mineral and metal production across all market segments is responsible for ~10% OF GLOBAL GHG EMISSIONS All mining emissions today are Annual Global GHG emissions+ equivalent to the global 2050 net 60.0 zero carbon budget (NZCB) NDCs Without ambitious action by 2030 50.0 +1.4% p.a.* the 1.5˚C carbon budget will be exhausted GtCO2e 40.0 -7.6% p.a. for Paris Some countries and customers alignment 30.0 are acting quickly to secure long- term supply of ETMs (e.g., ICE phase 20.0 out, RE scale up) 10.0 Achieving mining’s NZCB of 0.5 GtCO2e will require dramatic - Mining GHG emissions Carbon budget transformation of energy use, 1990 2000 2010 2020 2030 2040 2050 equipment, processes, transport, and materials Sources: Azadi, M., Northey, A., Ali, S.H. and M. Edraki, Transparency on greenhouse gas emissions from mining to enable climate change mitigation, 2020, Nature Geoscience, Vol 13, 100-104; Carbon Trust analysis, +Trends in global CO2 and total greenhouse gas emissions: 2021 report. Netherlands Environmental Assessment Agency . * Average annual emissions growth excluding LULUCF. NDCs – Nationally Determined Contributions. 10 2 WHY COPPER & NICKEL Pathway to Net Zero Future WHY COPPER AND NICKEL The Copper and Nickel Roadmap Ni Ni PAVES THE WAY for other ETMs and sector transitions for a low-carbon future Geothermal Batteries Many low-carbon technologies use copper and nickel To meet demand, copper production will need to Cu Ni Cu increase 230% and nickel production will need to triple by 2050 Without decarbonization, GHG emissions from copper and metal production will double by 2050 Nickel and copper production must be Wind Charging sustainable; 90% reduction in today’s GHG emissions level is needed Potential for long-lasting societal benefits and a priority for limiting negative environmental Cu Cu effects 85 to 8.5 88 to 8.8 Cu Ni MtCO2e/y MtCO2e/y Distribution Solar PV12 WHY COPPER AND NICKEL THE NET ZERO ROADMAP guides a just transition to rapid, responsible, & scaled-up nickel and copper production 1.5°C-Aligned Technology-Focused Assessed for ESG Risks Industry-Led and Opportunities 13 WHY COPPER AND NICKEL NET ZERO ROADMAP EMISSIONS SCOPE includes majority of key emissions sources for metal production Mining Milling Smelter Refinery Copper Copper Cathode Fuel Nickel Electricity Class 1 Nickel Purchased Goods Class 2 Nickel Cradle-to-gate boundary—corresponding to typical mining company’s emissions scopes—includes all emissions from fuel, electricity, and purchased goods Included Included Partial Inclusion* Category 1: Purchased goods and services SCOPE SCOPE SCOPE 1 2 3 Category 3: Fuel and energy related activities Category 4: Upstream transportation Category 9: Downstream transportation and distribution Category 10: Processing of sold products if the company sells intermediate products e.g., *Only material categories were included for Scope 3 emissions concentrate 14 3 THE COPPER VALUE CHAIN Net Zero Challenges THE COPPER VALUE CHAIN By 2050 copper supply needs to match 230%+ INCREASE IN DEMAND Global Copper Demand (Mt/y) Global Copper Supply (Mt/y) Before fabrication loss 60 Mining ~doubles 2.3x growth 60 Recycling ~triples +3.0%/year 14.6 27.4 50 11.7 20.1 40 6.9 40 11.5 30 0.9 8.4 43.8 20 37.7 20 40.6 39.0 30.6 34.0 23.8 10 21.6 0 0 2021 2030 2040 2050 2021 2030 2040 2050 Organic Renewable Energy and Transmission EV Batteries Primary Recycled Source: RMI stock and flow analysis based on Glöser, et. al (2013) and using growth rates for 11 key clean energy technologies from the IEA Net Zero Emissions scenario 16 THE COPPER VALUE CHAIN Without decarbonization, GHG emissions from copper production WILL MORE THAN DOUBLE BY 2050 BAU Global Primary Copper Production Emissions Annual Change in Emissions (MtCO2e/y) Net Zero vs. BAU scenarios (%) 200 192 Emissions from new mines 150 2.6% 150 GHG emissions (MtCO2e/y) 121 100 92 50 -7.6% 0 Net zero BAU increase without Net Zero target BAU 2021 2030 2040 2050 decarbonization 1 year delay in decarbonizing ≡ ~10% year-on-year deviation away from Net Zero, requiring larger capital allocation later 17 THE NET ZERO CHALLENGE Copper production emissions are PRIMARILY CAUSED BY ENERGY USE Footprint Mining Milling Smelter Refinery Boundary Carbon Footprint Copper Oxide 4.3 Heap Leach tCO2/t Cu Copper Sulphide 3.7 Underground tCO2/t Cu Copper Sulphide 2.0 4.2 Open Pit tCO2/t Cu tCO2/t Cu Fossil Fuel Use (Scope 1) Electricity Use (Scope 2) Input Materials/Reagents (Scope 3) Note: excludes transportation emissions 18 THE COPPER VALUE CHAIN As copper mining expands, emissions from land-use change WILL RISE THREEFOLD ANNUAL EMISSIONS Land-Use Change GHG Emissions from Increased Copper Mining 1,200,000 2020 0.3 MtCO2e 1,000,000 2030 0.6 MtCO2e GHG emissions (tCO2e) 800,000 600,000 400,000 2050 1.1 MtCO2e 200,000 Cumulative emissions 0 2020–2050 2020 2030 2040 2050 Chile Peru Russia ROW Indirect land-use change ~22.7 MtCO2e Source: Carbon Trust analysis based on Murguia, D. 2015. Global Area Disturbed and Pressures on Biodiversity by Large-Scale Metal Mining. Kassel University Press. http://www.uni-kassel.de/upress/online/OpenAccess/978-3-7376-0040-8.OpenAccess.pdf. Iwatsuki, Y., Nakajima, K., Yamano, H., Otsuki, A. and Murakami, S. 2018. Variation and changes in land-use intensities behind nickel mining: Coupling operational and satellite data. Resources, Conservation and Recycling, 134: 361-366. Nakajima K., Nansai K., Matsubae K., Tomita M., Takayanagi W. and Nagasaka T. 2017. Global land-use change hidden behind nickel consumption. Science of the Total Environment, 586: 730-737. IPCC. 2019. Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories, vol. 4, Agriculture, Forestry and Other Land Use. https://www.ipcc-nggip.iges.or.jp/public/2019rf/vol4.html. 19 THE COPPER VALUE CHAIN Net Zero Global Primary Copper Production Emissions (MtCO2e/y) 200 180 TO ACHIEVE 160 NET ZERO BAU emissions source 140 100 -95% 120 we must reduce GHG New mines 100 emissions from copper 80 Existing mines -90% production by >90% from today’s levels 60 92 40 20 <9 0 2050 BAU 2050 Net Zero Emissions compatible with a 1.5°C trajectory 20 THE COPPER VALUE CHAIN Doubling copper supply will significantly INCREASE COMPETITION FOR WATER 33% Canada Russia 7% of copper reserves are 1% in high water-risk countries China USA Mexico 5% 3% 6% SOLUTION** Adopt a water DRC Zambia Australia 10% stewardship approach Peru 2% 2% to address water 10% challenges and build trust** Chile 23% Copper reserves Relative share of global copper reserves *Water Risk is based on “water scarcity,” which refers to the physical abundance or lack of freshwater resources, which Source: Carbon Trust analysis based on WWF Water Risk Filter 2021: significantly impact business https://waterriskfilter.org/explore/map.; USGS. 2021. U.S. Geological Survey, Mineral Commodity **For practical guidance: IFC Performance Standards and ICMM Environmental Resilience Summaries: Copper. https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-copper.pdf. 21 4 THE NICKEL VALUE CHAIN Net Zero Challenges THE NICKEL VALUE CHAIN NICKEL DEMAND WILL TRIPLE BY 2050 recycled sources become the dominant supply route Global Nickel Demand (Mt/y) Global Nickel Supply (Mt/y) Before fabrication loss 4.3x growth 15 +5.1%/year 15 5.2 Primary supply ~doubles 3x growth Recycled ~quintuples 10 3.5 10 +3.8%/year 7.2 2.8 4.9 1.6 2.4 5 0.2 5 7.7 6.2 1.4 6.1 4.8 5.8 5.6 3.6 2.7 0 0 2021 2030 2040 2050 2021 2030 2040 2050 Organic Renewable Energy Primary Recycled EV Batteries High Ni Battery Scenario 23 THE NICKEL VALUE CHAIN Without decarbonization, GHG emissions from nickel production WILL NEARLY DOUBLE BY 2050 BAU Global Primary Nickel Production Emissions Annual Change in Emissions (MtCO2e/y) Net Zero vs. BAU scenarios (%) 166 168 156 Emissions 150 from new mines 2.2% GHG emissions (MtCO2e/y) 100 89 50 -7.6% Net Zero BAU increase without 0 Net-zero Target BAU decarbonization 2021 2030 2040 2050 1 year delay ≡ ~10% year-on-year deviation away from Net Zero outcome requiring larger capital allocation later 24 THE NICKEL VALUE CHAIN Most nickel production emissions ARE CAUSED BY ENERGY USE INCLUDING HEAT Footprint Mining Milling Smelter Refinery Boundary Carbon Footprint Class 1 via 12 Sulphide Smelter tCO2/t Ni Class 1 via High 28 Pressure Leach tCO2/t Ni Class 2 via Rotary Kiln – Electric 43 tCO2/t Ni Furnace Class 2 as Nickel 70 78 Pig Iron (NPI) tCO2/t Ni tCO2/t Ni Fossil Fuel Use (Scope 1) Electricity Use (Scope 2) Input Materials/Reagents (Scope 3) Note: excludes transportation emissions 25 THE NET ZERO CHALLENGE As nickel mining increases, emissions from land-use change WILL RISE FIVEFOLD ANNUAL EMISSIONS Land-Use Change GHG Emissions From Increased Nickel Mining 700,000 2020 0.15 MtCO2e 600,000 0.45 MtCO2e GHG emissions (tCO2e) 500,000 2030 400,000 300,000 200,000 2050 0.65 MtCO2e 100,000 0 Cumulative emissions 2020 2030 2040 2050 2020–2050 Australia Brazil Indonesia ROW Indirect land-use change ~15 MtCO2e Source: Carbon Trust analysis based on Murguia, D. 2015. Global Area Disturbed and Pressures on Biodiversity by Large-Scale Metal Mining. Kassel University Press. http://www.uni-kassel.de/upress/online/OpenAccess/978-3-7376-0040-8.OpenAccess.pdf. Iwatsuki, Y., Nakajima, K., Yamano, H., Otsuki, A. and Murakami, S. 2018. Variation and changes in land-use intensities behind nickel mining: Coupling operational and satellite data. Resources, Conservation and Recycling, 134: 361-366. Nakajima K., Nansai K., Matsubae K., Tomita M., Takayanagi W. and Nagasaka T. 2017. Global land-use change hidden behind nickel consumption. Science of the Total Environment, 586: 730-737. IPCC. 2019. Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories, vol. 4, Agriculture, Forestry and Other Land Use. https://www.ipcc-nggip.iges.or.jp/public/2019rf/vol4.html. 26 THE NICKEL VALUE CHAIN Net Zero Global Primary Nickel Production Emissions (MtCO2e/y) 200 TO ACHIEVE 180 160 NET ZERO, BAU emissions source 140 79 -95% we must reduce GHG New mines 120 emissions from nickel 100 Existing mines production by >90% 80 -90% from today’s levels 60 89 40 20 <8 0 2050 BAU 2050 Net Zero Emissions compatible with a 1.5°C trajectory 27 THE NICKEL VALUE CHAIN Tripling nickel supply will require PROACTIVE MITIGATION OF BIODIVERSITY RISK 75% Canada Russia 7% of nickel reserves are 3% in high biodiversity countries USA 0.1% China 3% Philippines SOLUTION* 5% Indonesia Cuba 22% 6% The mitigation hierarchy presents a DRC 0.1% best practice approach for addressing Australia Brazil biodiversity impacts. 17% 21% Biodiversity Index Nickel reserves Low biodiversity High biodiversity Relative share of global nickel reserves Biodiversity Index is based on species richness adjusted to country area (Source: Convention on Biological Diversity) Source: Carbon Trust analysis based on: Convention on Biological Diversity, Annex 1: Biodiversity *For practical guidance: IFC Performance Standard 6 and ICMM Mitigation Hierarchy information by country. https://www.cbd.int/gbo1/annex.shtml#note1.; USGS. 2021. U.S. Geological Survey, Mineral Commodity Summaries: Nickel. https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-nickel.pdf. 28 5 ADDRESSING THE CHALLENGES Transition to Net Zero Mines for a Low-Carbon Future A NET ZERO TRANSITION Mine of the Future 30 A NET ZERO TRANSITION Key attributes of a sustainable Net Zero mine A NET ZERO MINE 1. Monitors, measures and reports its Scope uses low-carbon technology, collaborates across 1, 2 and 3 emissions value chains, and leads in delivering additional, 2. Has developed a Net Zero strategy that net-positive environmental and social outcomes has interim targets and is appropriately resourced 3. Implements technologies to reduce ˜90% of current emissions 4. Has an effective residual emissions management plan 5. Avoids and minimizes adverse land-use change, biodiversity impacts, social impacts, and other ESG risks 6. Ensures good governance that enables a just transition 7. Collaborates with local and global stakeholders to realize a 1.5˚C world 8. Ensures a planned closure of the mine when exhausted, creating shared value with the community in the future 31 A NET ZERO TRANSITION Technology interventions are already available or will be Technology ready | cost competitive Technology requires innovation | no WITHIN THE NEXT 10 YEARS current cost competitive Technology close to market | costs Some technologies ready, others nearing competitiveness close to market | some cost competitive or nearing competitive Emissions Abatement Technology Readiness Cost Available at Scale Potential* Notes 5-10% Efficient Equipment Now Best-in-class motors, variable speed drives 10-20% Mine-to-mill, high-intensity selective blasting, coarse Process Optimization <5 years ore flotation & ore sorting 5-10% Digitization & Automation <5 years Haul truck automation to reduce fuel use 70-100% On-site RE hybridized with diesel can provide 70% Renewable Energy Now emissions reduction 100% Enables complete RE penetration. Mines have Energy Storage <5 years unique storage options (compressed/liquid air) 30-70% Even without blending ~30% of emissions remain, Sustainable Biofuels Now typical 20%–30% premium 100% Used in large haul truck or for high temperature heat. Green Hydrogen 5–10 years May have indirect global warming impacts Underground: Now 100% BEVs already used at underground mines. Larger Battery-Electric Vehicles Open Pit: BEVs for open pit mines in development. 5–10 years Conveyors & Trolley 30% Now Mature, cost-competitive haulage electrification. Assist *Refers to scope 1 and 2 reductions with respect to the typical business-as-usual alternative 32 A NET ZERO TRANSITION RENEWABLE ENERGY EXAMPLES COST DECLINES Cost competitive with fossil alternatives Onshore Wind Offshore Wind Solar Power Purchase Agreement 300 $/MWh Cost decline Cost decline BHP signed RE PPAs for 6 Cost decline TWh/y of electricity in 2021 for 59% 61% 89% its Chilean copper operations, cancelling its previous coal- based PPAs. 200 Fossil fuel range in 2022 Onsite Generation Rio Tinto is installing a 34 MW 100 solar facility at its new Gudai- Darri facility which will provide Gas combined cycle in 2021 65% of the mine’s average electricity demand. 0 2011 2021 2011 2021 2011 2021 Source: BNEF; Lazard 33 A NET ZERO TRANSITION BATTERY & ELECTROLYZER EXAMPLES & COST DECLINES INITIATIVES Cost competitive haulage electrification before 2030 Hydrogen Truck Batteries Electrolyzers Anglo American is testing a 900 3000 US$/kW Cost decline 2MW hydrogen-battery hybrid US$/kWh Cost decline truck at its Mogalakwena 83% 56% mine in South Africa. Battery Electric Truck 600 2000 Glencore’s Onaping Depth mine is planning to use an all-electric underground fleet providing savings of 44% and 30% on Equivalent TCO mine ventilation and cooling. with $0.90/L diesel 1000 300 Forecast: Innovation Challenge 13% learning rate Equivalent TCO The Charge On Innovation with $0.60/L diesel Challenge brings together mining companies and Forecast: 18% learning rate 0 0 equipment providers to 2010 2020 2030 2010 2020 2030 develop solutions for in-haul fast charging to further drive Source: BNEF; INET Oxford – TCO (total cost of ownership) analysis based on 290t haul truck with 2MWh battery, 3MW charging rate, 10,000-hour battery life and $60/MWh electricity. down costs. 34 A NET ZERO TRANSITION HEAT COST DECLINES WITH EXAMPLES ELECTRICITY PRICE High efficiency will be key to enable cost competitive electric heat Heat Pumps/MVR1 Electric Boilers High Temp.2 MVR 150 Efficiency Efficiency Efficiency Alcoa is testing MVR at its 300-500% 95-99% 60-90% Wagerup plant in Western Cost of Energy ($/MWh of heat) Australia, which could reduce alumina refinery 100 Variation due to Efficiency Range emissions by 70%. 50 Green Hydrogen Typical Natural Gas Price Aurubis is testing the use of green hydrogen to replace natural gas in anode 0 furnaces at its copper 70 Electricity ($/MWh) 20 70 20 70 20 smelter in Hamburg. <400°C 400-1000°C >1000°C Source: Silvia Madeddu et al 2020 Environ. Res. Lett. 15 124004. 1 – Mechanical Vapor Recompression. 2 – High temperature options cover multiple technologies including induction furnace, electric arc furnace, resistance furnace, plasma technology and green H2 burners. 35 A NET ZERO TRANSITION STAGED IMPLEMENTATION OF TECHNOLOGY Will be needed to achieve net zero Renewables Deployment Solar PV, wind, batteries Zero Emissions Haulage Battery electric, green H2 haul trucks Process Heat Electrification Heat pumps, MVR, plasma torches, green H2 Removals to Offset Residual Emissions Direct air capture, carbon mineralization, land-use Operational Energy Efficiency Best-in-class motors, heat recovery, automation, digital twins Process Intensification Mine-to-mill optimization, high-intensity selective blasting, bulk ore sorting, coarse particle flotation 2020 2030 2040 2050 36 A NET ZERO TRANSITION Example: NET ZERO COPPER PRODUCTION Technology interventions to achieve net zero for a large (>20 Mtpa ore processed) sulphide open pit, remote (off- grid) copper mine supplying concentrate a short distance (via road) to a grid connected smelter and refinery 4.0 16% Emissions Intensity (t CO2/t Cu) 3.5 6% 3.0 15% 2.5 25% IPCC 2030 decarbonization target 2.0 1.5 17% 1.0 1% 8% 0.5 12% 0.0 Current Solar PV Only Energy Efficiency Smelter & Mine Site 100% Green Hydrogen Concentrate Green Heat for Zero-Carbon (Ore Sorting) Refinery PPA RE Minigrid or BEV Haulage Transport Smelting & Explosives & Refining Reagents Mine Concentrator Smelter and Refinery Transport Interventions Impacting Multiple Areas Note: ‘Solar PV Only’ refers to onsite solar hybridized with diesel generators, percentage reductions refer to the total emis sions footprint. 37 A NET ZERO TRANSITION Example: NET ZERO CLASS 1 NICKEL PRODUCTION Technology interventions to achieve net zero for a nickel laterite operation (~2 Mtpa feed) using high pressure acid leach to produce Class 1 nickel at a grid-connected mine site 30 5% 6% Emissions Intensity (t CO2/t Cu) 25 15% 3% 20 15 33% IPCC 2030 decarbonization target 10 5 37% 0 Current Solar PV Only Efficiency (Heat Rewneable Energy Green H2 or BEV Electric Heat Green Reagents Recovery) PPA Haulage Mine Refinery Interventions Impacting Multiple Areas Note: ‘Solar PV Only’ refers to onsite solar with remaining power needs provided from the grid, percentage reductions refer t o the total emissions footprint. 38 6 INVESTING IN DECARBONIZATION through Sustainable Finance INVESTING IN DECARBONIZATION SUSTAINABLE FINANCE instruments can enable the technology deployment 2022 Sustainable Debt Market, Growth by Product Type (US$, 1,702 bn 1800 billons) 1600 Bonds • 2022 YTD Issuance: $503 billion 1400 • Green bonds: $306 billion 1200 • Sustainability bonds: $84 billion • Social bonds: $61 billion 1000 US$ (bn) 611 bn • Sustainability-linked bonds: $52 billion 717 bn 800 Loans 611 bn • 2022 YTD: $214 billion 600 • Green loans: $27 billion 318 bn 400 245 bn • Sustainability-linked loans: $186 billion 145 bn 68.2 bn 88.7 bn 200 28.6 bn 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Green bonds Green loans Social bonds Sustainability bonds Sustainability-linked bonds Sustainability-linked loans Source: BNEF Sustainable finance database 40 INVESTING IN DECARBONIZATION SUSTAINABLE FINANCE PROVIDES INDEPENDENT VALIDATION of a company’s funded decarbonization activities; reduces perception of greenwashing Instrument Sustainable bonds and loans Sustainability-linked bonds Sustainable concessional/ Listed green equity (use of proceeds) and loans (target-driven) blended finance Funding Funding mature Funding general corporate Suitable for smaller Funding general corporate objective low-carbon technologies sustainability action companies in developing sustainability interventions (e.g., RE, EE) where use meeting sustainability countries or innovative by large listed mining of proceeds can be performance targets technologies on the cusp companies with mature monitored tied to debt pricing of being commercial sustainability strategies Examples Climate Investor One SQM and Livent Anglo American secured provides early-stage Armadale Capital, Corporation each raised a $100M sustainability- project development, Harvest Minerals Ltd, green bonds ($700M and linked loan from IFC; the construction financing, Tirupati Graphite Plc, $225M) to finance first in the global mining and refinancing to Goldplat are listed on the energy efficiency and sector to exclusively renewable energy London Stock Exchange transport electrification focus on social projects in developing Green Economy Mark projects indicators countries ($850M budget in 2019) Sources: SQM. 2021. Green Bond Framework. https://s25.q4cdn.com/757756353/files/doc_downloads/2021/09/SQM-Green-Bond-Framework_Sept2021.vFINAL.pdf. Anglo American. 2022. Anglo American agrees sustainability-linked loan with International Finance Corporation. https://www.angloamerican.com/media/press-releases/2022/09-06- 2022#:~:text=Anglo%20American%20has%20signed%20a,Anglo%20American's%20Sustainable%20Mining%20Plan. Climate Fund Managers. Climate Investor1. https://climatefundmanagers.com/funds/#CIO. 41 7 OPPORTUNITIES for Environmental and Social Co-Benefits OPPORTUNITIES Low-carbon technology interventions can deliver ENVIRONMENTAL AND SOCIAL CO-BENEFITS ENVIRONMENTAL CONSIDERATIONS SOCIAL CONSIDERATIONS Employment, Human rights, Water Energy Climate risk & Health & livelihoods, & security, and Community management demand Pollution Biodiversity adaptation Safety decent work inclusion relationships Energy efficiency: Operational efficiency Energy efficiency: Process optimization Automation & digitization Renewable energy (solar & wind) Energy storage (batteries) Sustainable biofuels Green hydrogen Trollies, BEVs, & conveyors Potential co-benefits Uncertain due to competing Potential risks No or uncertain KEY from deployment risks and co-benefits from deployment risk/co-benefit Sources: Carbon Trust analysis based on an extensive literature review and stakeholder engagements on each low-carbon technology intervention and their potential environmental and social risks and co-benefits. 43 OPPORTUNITIES TO ACHIEVE NET ZERO Hard to abate emissions need to be balanced using carbon removal offsets 2020 to ~2045 i Prioritize absolute GHG emissions reductions in Deep and urgent decarbonization line with a 1.5°C trajectory 30% - 45% reduction by 2030* 90% reduction by 2050; remaining 10% balanced using ii carbon removal offsets Support "beyond value chain mitigation" while GHG emissions minimizing own emissions to help societal decarbonization occur more quickly Beyond ~2045 iv iii Neutralize residual, hard-to-abate emissions using high-quality carbon removal offsets 2020 2025 2030 2035 2040 2045 2050 > 2050 iv Beyond value chain mitigation GHG emissions mitigation Balance the Net Zero equation ~10% residual emissions = carbon removal offsets Neutralization offsets Emissions reduction to net zero *Note: IFC’s good practice recommendation is to pursue a 45% emission reduction by 2030 to limit global warming to 1.5C. Delaying emission reductions means more aggressive annual emission reductions will be required post 2030 to achieve net zero by 2050 44 OPPORTUNITIES A JUST MINING TRANSITION ENABLES communities to reimagine their future at the center of a new climate economy​ The Just Energy Transition Framework for Company Action* UNIVERSAL NET-ZERO WORKFORCE EVOLUTION COMMUNITY RESILIENCE COLLABORATION & ENERGY Evolving the energy Building community TRANSPARENCY Supporting universal workforce to support a resilience Fostering collaboration access to energy and a low and zero carbon and transparency net-zero emissions world. energy future throughout the process Principles for - Sustainable future for all​ - Social consensus and due participation​ a just mining - Fair and decent work​ - Diversity and inclusion​ transition - Workers’ rights and social dialogue​ - Collaboration and transparency​ - Community led approach​ *Source: https://www.inclusivecapitalism.com/ 45 OPPORTUNITIES The net zero mining transition can be a PLATFORM FOR DELIVERING A JUST TRANSITION CASE STUDIES De Beers’ Accelerating Women Enel’s Global Framework Anglo Americans’ Sustainable Owned Micro-Enterprises Agreement2 Mining Plan, pillar two: Thriving (AWOME)1 Communities3 Enel agreed to a Global framework Provides mentoring, network, agreement with international unions The “Thriving Communities” pillar business, and life skills training, and a just transition agreement with aims to build thriving communities which in turn, creates new jobs, its Italian sector unions that includes with better health, education and regular wages and a wider range of apprenticeships to ensure levels of employment. businesses to help local knowledge transfer of competences They work with local governments, communities to thrive. from elderly to young workers; community leaders, and NGOs to commitment to retention, retraining contribute to community needs, from and redeployment, as opposed to housing and infrastructure to retrenchment, particularly for healthcare, education and workers at thermal plants; Early recreation. pension for older workers; and dedicated training for qualification and employability of workers 1 De Beers’ AWOME program; 2 Enel Global Framework Agreement; 3 AA Sustainable Mining Plan 46 8 CALL TO ACTION For Mining Companies to Achieve Net Zero & Deliver Shared Benefits CALL-TO-ACTION RAPID DECARBONIZATION REQUIRES a collaborative multi-stakeholder approach for ecosystem change aligned with best practice PARTNERSHIP LOW-CARBON TECHNOLOGY APPROACHES: INITIATIVES Digital Transformation Initiative Supports low-carbon technology Energy and Mining Collaboration deployment and RD&D RESPONSIBLE & SUSTAINABLE Supports MINING INITIATIVES Mining & Metals World Bank Group sustainable mining Industry Community Climate-Smart Mining practices and good ESG performance CROSS-CUTTING COLLABORATIVE INITIATIVES Supports ambitious climate action and a just transition VOLUNTARY CARBON OFFSET STANDARDS Supports credible carbon offsetting COPPER INDUSTRY KEY Supports copper and ASSOCIATIONS Mapping initiatives against the mining value chain nickel value chain actors NICKEL INDUSTRY ASSOCIATIONS Extraction Processing Transport 48 CALL-TO-ACTION ENGAGE POLICYMAKERS to address legal and regulatory barriers to mining decarbonization Policy & Regulatory Barriers in Copper Mining & Smelting Countries Policy & Regulatory Barriers in Nickel Mining & Smelting Countries Key Takeaways Energy Policy Weak access to power purchasing agreements and independent Policy & Regulatory Environments Smelting power producers Copper and nickel mining Copper Weak Nickel Mining Legal Limited or no incentives to encourage energy efficiency or Framework renewable energy use; and counterincentives Moderately enabling Unsupportive Enabling Enabling Climate Weak nationally determined contributions and Net Zero Change Policy commitments Sources: CCSI analysis based on an extensive literature review. For more information, please refer to the Net Zero Roadmap for Copper and Nickel Technical Report 49 CALL-TO-ACTION 7 STEPS TO GUIDE COMPANY’S ON THEIR 2021 EMISSIONS NET ZERO PATHWAY 85 88 (MtCO2e/y) STEP 1 Understand your Scope 1, 2 & 3 emissions Benchmark to harvest lessons from peers on their STEP 2 decarbonization approach Apply an internal carbon price and 30%–45% EMISSIONS REDUCTION STEP 3 other ESG criteria to inform investment decisions BY 2030 (MtCO2e/y) 47 48.5 Identify solutions to reduce emissions STEP 4 and enhance resilience Set an ambitious net-zero goal with interim STEP 5 targets and a detailed plan 90% EMISSIONS REDUCTION TO Engage your people and collaborate with ACHIEVE NET ZERO BY 2050 & BEYOND STEP 6 other value chain actors (MtCO2e/y) Transparently disclose progress, lessons learned STEP 7 and collaboration opportunities 8.5 8.8 Cu Ni ACKNOWLEDGEMENTS We would like to thank the Roadmap’s steering committee and technical working group members for their continuous review, input, and support, and the subject experts that were interviewed and assisted with conducting peer reviews. They include: Steering Committee: Jonathan Dunn, Anglo American Veronica Nyhan Jones, IFC Arjun Bhalla, IFC Stan Pillay, Anglo American David Poulter, IFC Ross Hamilton, IFC Daniele La Porta (previously World Bank) Jonathan Grant, Rio Tinto Krishna Matturi, IFC Veronica Martinez, ICMM Todd Malan, Talon Metals John Drexhage, World Bank Technical Working Group: Fernando Lucchini, Alta Ley Bernard Respaut, International Copper Association Gerardo Alvear Flores, Rio Tinto Ben Davies, Anglo American Louise Assem, International Copper Association Rachael Davis, Rio Tinto Kathryn Horlin, BHP Veronica Martinez, ICMM Oxana Meggle, Société Générale Sophie Lu, BHP Steven Potter, IFC Steven Brown, Steven Brown Consulting Marielle Canter Weikel, Center for Environmental Aaron Cosbey, IISD Antonina Scheer, Transition Pathway Initiative Leadership in Business Michele Brulhart, Copper Mark Michael Lewis, Komatsu Ferdinand Maubrey, Tesla Koen Langie, Engie Brendan Marshall, Mining Association of Canada Saleem Ali, University of Delaware Fleming Voetmann, FLSmidth Daniel Hill, Natural Resources Canada Vivian MacKnight, Vale Andrea Vaccari, Freeport-McMoRan Mark Mistry, Nickel Institute Jörgen Sandström, World Economic Forum Diego Arrigorriaga, Haldeman Mining Company Nicola Steen, Redshaw Advisors Subject Matter Experts: Charles Akefu, ALSF Tracy Bame, Freeport-McMoRan Nicola Woodroffe, NRGI Alex Powel-Davies, Carbon Trust Stephanie Bouackert, IEA Patrick Heller, NRGI Benjamin Curnier (previously Carbon Trust) Ignacio De Calonje, IFC Cecilia Perla, Rio Tinto Gina Hall (previously Carbon Trust) Neil Pereira, IFC Paul Kluge, Rio Tinto Helen Andrews Tipper, Carbon Trust Yanilka Fernandez, IFC Justine Morven Sylvester, World Bank Khodani Mulaudzi (previously Carbon Trust) Philippe Olivier, IFC Wolfhart Pohl, World Bank Pietro Rocco, Carbon Trust Edward Cameron, IFC Ann Moline, World Bank Meredith Sumpter, Council for Inclusive Capitalism Isabel Ramdoo, IGF Rikki Campbell Ogden, Pixie Design Silvia Burgos Rodríguez, Enel Foundation Howard Mann, IISD Luca Spinosa, Enel Foundation Yunshu Li, IRENA Amy Sexton, Freeport-McMoRan Nadim Kara, Natural Resources Canada We apologize if we have excluded an individual or institution that may have contributed towards the development of this document. 51 CONTACTS LINKS NAMRATA THAPAR Global Mining Manager, IFC nthapar@ifc.org IFC Mining VERONICA NYHAN JONES Sustainable Infrastructure Advisory IFC IFC CommDev vnyhanjones@ifc.org ARJUN BHALLA Senior Operations Officer, IFC abhalla@ifc.org 52 NET ZERO ROADMAP TO 2050 For Copper & Nickel Mining Value Chains Thank You