Mining giant Rio Tinto says it wants its globe-spanning operations to reach net zero greenhouse gas emissions by 2050 and will spend US$1bn over the next five years to reduce its carbon footprint.
The second biggest miner in the world has also committed to reducing its emissions by 15% by 2030.
Rio Tinto’s decision, which follows pressure from investors, puts it in line with Australian business groups and unions and at odds with an Australian government that has devoted itself to attacking the Labor opposition over its commitment to the same net zero target.
Its commitment to cut emissions is easier for Rio Tinto than BHP and other big global miners because unlike BHP, it does not mine coal or oil.
However, unlike BHP, Rio Tinto has refused to set a target to reduce so-called “scope 3” emissions produced by its customers.
Announcing Rio Tinto’s full-year results on Wednesday, the company’s chief executive Jean-Sébastien Jacques also warned that the coronavirus outbreak could hurt its operations.
Chinese steel mills are major Rio Tinto customers, however Jacques said the company’s iron order books were full.
“But we are likely to see some short term impacts such as supply chains and possibly even provision of services from Chinese suppliers,” Jacques said.
“We acknowledge that there will be some short-term volatility and uncertainty, but we are very well positioned.”
He said Rio Tinto’s new commitments on climate added to a 46% cut in the company’s emissions since 2008, although much of that reduction was due to it selling operations that produce a lot of pollution.
To reduce its total emissions by 15% by 2030, every new business opened by Rio Tinto in the next decade will need to be carbon neutral.
Jacques said the company was open to buying carbon offsets if necessary but this was a “last port of call”.
He said the emissions cut to 2030 would be achieved using existing technology but Rio Tinto would also be investing part of the $1bn on developing new ways of eliminating carbon production.
“We have approved around US$100m last week for the Pilbara, I think it would be a good example of things we may look at going forward,” he said.
“It’s a 34MW solar photovoltaic plant and a battery system of 12MW per hour storage facility at one of our operations.
“By doing this investment … we’ll be able to take out about 90,000 tonnes compared to commercial gas power generation.”
This was equivalent to taking 28,000 cars off the road or about 3% of the company’s emissions from the Pilbara, he said.
“At the same time we are investing serious money in order to find the technology for the future. We have only a pathway for the next 10 years. If we don’t work today on options beyond the next 10 years, we’ll never get there.”
He defended Rio Tinto’s decision not to set scope 3 targets – something rival BHP did in July as part of a $400m program to cut its emissions.
“We will not set targets for our customers,” Jaques said.
“Having said that, we are looking to partner with our customers and the customers of our customers to look for ways to work together in order to improve emissions across the value chain.”
He said examples included a deal the company struck with giant Chinese steel mill and key customer Baosteel in September to reduce emissions from steelmaking and another deal struck with Apple and the government of Quebec two years ago relating to aluminium.
“Remember, we are the only large diversified mining and metal company that is not selling either coal, and the carbon associated with coal, or drilling oil and gas and the carbon associated with oil and gas.
“So if you step back, if you believe in climate change – and we do believe in climate change – we know we need to have more high quality copper, high quality aluminium, in order to be part of the solution.”
Australian prime minister Scott Morrison’s conservative Coalition government campaigned hard against Labor’s net zero target as part of its re-election strategy at the federal election last May, and in recent weeks has revived its attacks on the opposition over the policy by demanding costings and raising the spectre of soaring energy prices.
Asked if Rio Tinto would like the government to commit to net zero by 2050, Jaques said: “I don’t think that would make a massive difference.”
“What is absolutely clear is that for us to be able to meet our net carbon target by 2050, there will be a need for new technology.
“Any government – so I’d make a broad point – that can provide us with some smart, clever policy to create a pathway, a framework for us to accelerate our development in that space, would be more than welcome.”
Andrew Gray, the head of environmental, social and governance issues at Australia’s biggest superannuation fund, the $175bn AustralianSuper, said Rio Tinto’s move followed pressure from investor group Climate Action 100+.
“These are issues that AustralianSuper as a lead investor has been engaging with Rio on for more than two years as part of the Climate Action 100+ initiative,” he said.
“We look forward to continuing to engage with Rio to fulfil these commitments.”
The company declared a profit after tax for 2019 of US$7bn, down from US$13.9bn the previous year.