Mining giant Rio Tinto promises that it will be carbon-neutral by 2050
Rio Tinto Group’s CEO has said that the world must be prepared to sacrifice growth to achieve climate goals as the natural-resources industry comes under increasing pressure to curb emissions.
“The challenge for the world, and for the resources industry, is to continue the focus on poverty reduction and wealth creation while delivering climate action,” Jean-Sébastien Jacques told investors on Wednesday. “This will require complex trade-offs.”
Jacques said consumers, governments and shareholders all had to make sacrifices in the form of lower consumption, growth and returns to meet climate targets.
The mining industry, a key pillar of growth in many developing countries, is facing investor demands to cut the scale of emissions created by its products, from thermal coal to iron ore.
“There are no easy answers,” Jacques said. “There is no clear pathway right now for the world to get to net zero emissions by 2050. The ambition is clear, but the pathway is not.”
Earlier, Rio reiterated its position on refusing to set any targets for reducing carbon emissions generated by its customers, taking a firm stance on an issue that’s quickly dividing the natural resources industry.
Instead, the world’s number two mining company put the focus on its own operations. In a presentation on Wednesday accompanying the release of its full-year earnings, Rio said its own business would be carbonneutral by 2050, and promised to spend $1bn over the next five years to make that happen. The announcement drew a sharp line between Rio and other extraction companies amid a debate about who bears responsibility for scope 3 greenhouse gas emissions, the pollution created when customers burn or process a company’s raw materials. The producer can take a different approach on addressing scope 3 emissions because it sold off coal mines and doesn’t have oil assets, according to Jacques.
“People are totally mixing drinks, because scope 3 for a company such as Shell and for a company such as Rio Tinto is completely different,” Jacques said. “I’m not selling coal, I’m not selling carbon, and I’m not selling oil and gas, and therefore we’re not starting from the same point.”
Still, Rio has huge iron-ore operations that create the vital ingredient for steelmaking, a highly polluting industry that involves adding coking coal to make carbon steel. It was a surge in iron-ore prices last year that helped Rio post an 18% increase in underlying earnings to the highest since 2011.
AT ODDS WITH RIVALS
Rio argues that any targets on its scope 3 emissions would be impossible to meet as it has no control over how steelmakers use iron ore. It’s a stance that sets Rio at odds with its biggest rival, BHP Group, which has urged the industry to take responsibility. BHP and Vale have promised to introduce targets on scope 3 emissions. In the oil industry, BP has vowed to cut almost all its customer emissions by 2050.
Yet no-one is providing much detail about their plans and the deadlines are usually decades away. While Rio’s refusal to set targets may draw the ire of some investors who have been pushing for concrete plans, the company may find support elsewhere.
Last week, the CEO of Glencore, the biggest coal shipper, criticised BP’s announcement.
“2050 is a long way to go, and we don’t want to come out with wishy-washy ideas,” said Glencore boss Ivan Glasenberg. Instead, Glencore said its scope 3 emissions would fall as coal mines were depleted.
Rio said previously it would work with China’s top steel producer China Baowu Steel Group to find methods to lower the sector’s emissions and improve its environmental performance.
On Wednesday, the company also said that any future growth projects between now and 2030 would also have to be carbonneutral. It planned to expand the electrification of equipment and use more renewable energy.