The mining industry, an important driver of the global revolution of electronic vehicles and renewable sources of energy, is constantly looking to improve its own sustainable working practices
For a mining company, sustainable practices are at the core of its license to operate. More and more companies have come to realize that the only way to be economically viable is to operate environmentally and socially responsible. The themes of climate change, resource scarcity and energy efficiency strongly resonate with the mining industry as they have been grappling with those topics in their day-to-day business. At ING we are strongly committed to sustainability and we want to support those companies that are working for tomorrow’s economy.
Mining companies typically have professional teams that are making sure the activities comply with regulations and activities are conducted in a responsible manner, ensuring safety for its employees, as well as the communities and the environment in which they operate. More and more, the finance function is actively involved in this discussion. The sustainable development discussion is not only focused on the reputational or legal aspects, but increasingly innovative design and the economic return.
An example is Minera Media Luna in Mexico where early on in the mine’s development the decision was taken to incorporate a rope conveyer to transport ore down the mountain as opposed to trucking it down a steep slope. This not only decreased the use of diesel-fueled trucks, but also significantly improved the safety of the operations. The pay-back of that initial investment comes from lower operational costs. As an added benefit, the friction of the cable produces energy that is used to power the plant. ING has been an early supporter of this mine development and was Joint Bookrunner and Mandated Lead Arranger in the refinancing in 2017.
With operations in remote areas, mining companies are acutely aware of the limitation of the natural resources, including sources to produce energy. As mining operations are often in remote locations, it is expensive to connect to the grid; and often separate power facilities need to be build or diesel is used that needs to be brought onsite. Increasingly, mining companies are turning to renewable energy sources like solar or wind farms to power the operations. A recent example is B2Gold, a Canadian mining company with operations globally and an important client for ING. B2Gold announced the development of a 7MW solar plant to power its Otjikoto mine in Namibia. The solar plant will decrease emissions, provide cost efficient power and reduce fuel costs, a win-win example of sustainable development.
Water is another scarce resource that is a consideration for many mining companies. As opposed to using fresh ground water, companies have turned to sea water. For the development of the Minera Esperanza mine in Northern Chile, financed by a consortium of institutions including ING, Antofagasta Plc decided to build a 145km seawater pipeline to use in the operations. As desalination plants have become more technologically advanced and more cost effective, several mining companies have built desalination plants along the coast in Chile to supply the operations. ING has recently been mandated to finance the Caitan desalination plant, owned by Mitsi and Tedagua that will supply the Minera Spence mine.
Future Sustainable Growth
The evolution of electric vehicles and renewable energy has an enormous impact on demand for metals and therefore the mining industry. Cobalt and lithium are mentioned often, as these are specialty metals used in re-chargeable batteries. More importantly, copper is the metal of the future, as copper is used in batteries, electric wiring in cars, motors of electric vehicles as well as transmission lines. To shape a climate-change proof future, with more electric vehicles and renewable energy, raw materials will be needed and those resources need to be mined sustainably.